The Big Star (Disney+) Loss

Disney took quite a large hit after they merged Star, their Indian streaming business, with Reliance Industries, taking a reported impairment charge of more than $2 billion. 

Five years prior, Disney shelled out a $71 billion deal through its production company, 21st Century Fox, to give unfiltered access to the Indian TV Network Star. This included dozens of sports and entertainment channels, including its streaming service Hotstar. 

However, times have changed, and Disney is in the process of scaling back its ambitious project by merging Star with Indian telecom giant Reliance Industries in a joint venture worth an estimated $8.5 billion. Disney remains a minority shareholder in the business but is losing an impairment charge of more than $2 billion. This is seen as damaging for its core business, setting the stock back almost 10% in early trading.

Challenges in the Indian Entertainment Market

This decision by Disney truly highlights the scale of the challenges posed by the Indian entertainment market despite its allure and promise of growth. 

While India offers the opportunity to reach millions of potential consumers, competition is fierce in the space, and success requires a significant investment to cut out the market, something that Disney was unwilling to provide due to their current domestic restructuring plans.

India boasts a population of more than 1.4 billion and has become a global media hotspot with project streaming and TV-related growth of more than 11% for 2024 as an industry. Other developing companies have begun to experience market saturation and more muted growth, so this promising region has turned heads for US streaming giants, even with the high entry price. 

Why is the Indian Entertainment Market so Hard to Crack?

On top of the expensive investment required to enter the market, US media companies have found it hard to build a direct and trusting relationship with Indian consumers. Indian residents often rely on mobile operating giants to gain access to streaming services due to their limited broadband infrastructure. 

With fewer TVs in the country as a whole, Indian consumers have low motivation and willingness to pay for streaming platforms thanks to free, ad-supported models from local content providers as well as lax piracy laws in the region. These local content providers understand the needs of their consumers, creating content that closely relates to current interests and trends of the public, which has been difficult for US media companies to follow.

The top four Indian entertainment brands: Star India, Viacom18, Sony, and Zee Entertainment, have all largely integrated their services to India’s vast population spanning different languages and dialects. 

While market saturation is far into the future, competition is surely heating up as Reliance leverages its booming telecom business success, adding yet another competitive layer to the diverse Indian TV market with its merger with Star.