Sony-Zee Merger: SonyLiv-ZEE5 combine set to carve out larger slice of OTT pie 

With the coming together of their complementary strengths of sports and regional shows, the financially stronger SonyLiv-ZEE5 video streaming service combine is set to cement itself as a juggernaut in the hotly contested Indian OTT space where international giants like Netflix and Amazon Prime Video have also been expanding aggressively. 

The combined OTT player is a result of the merger finalised between the two media behemoths of Sony Pictures Networks India (SPNI) and Zee Entertainment Enterprises Ltd. (ZEEL) in what is one of the largest in the media and entertainment space. The larger merged media entity, whose name is not finalised, will now be listed on the stock markets. Their combined revenue is more than Rs 16,000 crore. 

The merged SonyLiv-ZEE5 OTT entity will see Sony bringing sports to the table and Zee contribute its regional programming. ZEE5 is further ramping up its regional focus with original programming in Punjabi, Tamil, Telugu and Bengali for its OTT platform, with 50 per cent of their viewership coming from regional language content. 

Zee5 India Chief Business Officer Manish Kalra had told Business Today earlier that around 30-40 per cent of their content investments will be in the regional space going forward, and that they expect this percentage to increase as they further cater to untapped regions. At another instance, Kalra had argued that content wise, "there’s a lot of synergy (between Zee5 and SonyLiv) simply because we’re strong in Indian and regional languages and we do see cricket and English as a gap on our platform."

Sony’s sports offerings include cricket, football, tennis, Ultimate Fighting Championship and WWE, with the key cricket property of Indian Premier League (IPL) being the missing piece of the puzzle. As far as cricket is concerned, IPL is the crown jewel which is guaranteed to beef up subscriptions for the OTT business as seen in the case of Disney+ Hotstar.

Currently, Star India (and its OTT player Disney+ Hotstar) holds the IPL broadcasting and digital rights for the 2018-22 period, for which it paid a whopping Rs 16,000 crore. With the bidding for the IPL rights for the 2023-27 cycle coming up again sometime next month, the stage seems set for a tough contest with BCCI reportedly setting its sight on selling the broadcasting rights for at least $5 billion (Rs 37,500 crore). 

“The capital that Sony is going to infuse in the merged entity ($1.575 billion or Rs 11,000 crore) will give us the opportunity to invest in premium content, including sports. We will be able to generate great value for our stakeholders,” ZEE MD & CEO Punit Goenka had said at an event last month. 

“Each ZEE and Sony have an OTT revenue base of Rs 370 crore-Rs 400 crore…We estimate FY22-24 revenue CAGR of 22% for the digital platform (OTT), offering better growth prospects for AVOD (ad-based video-on-demand),” said Karan Taurani, SVP, research analyst, Elara Capital, who had earlier estimated that the combined entity’s digital businesses may emerge as the second largest homegrown OTT video streaming service after Disney+ Hotstar in India. 

Taurani adds that a stronger content proposition could also allow the combined OTT entity to command a premium pricing, in line with Disney+ Hotstar at Rs 1,500 per year. “This may prop higher subscription revenues too, which are currently dominated by bundles or partnerships,” he said.  

SonyLiv’s monthly active user (MAU) base is 45 million while Zee5 has 72.6 million MAUs. India’s OTT user base is 353.2 million people and there are 96 million paid users of OTT platforms, according to Ormax Media. 

Also read: Zee Entertainment share slips over 4% after board approves merger with Sony

Also read: Sony-Zee merger: Punit Goenka to lead merged entity; all details here