Strategy: Waiting for Proven Demand
Jio Studios' decision to delay selling streaming rights for its 'Dhurandhar' sequels, initially seen as risky, is now viewed as a smart move. The company chose to prove the franchise's market value through theatrical performance rather than securing immediate cash. After 'Part 1' reportedly grossed over ₹1,300 crore globally, the sequel's demand shifted from speculative potential to a proven asset. This changed how deals are negotiated, allowing each part to be valued as a high-demand product individually. This differs from older deals where platforms like Netflix often bundled content to reduce their risk before release. Professor Manish Gangwar from ISB notes that streaming services now focus more on content that attracts new subscribers and keeps viewers engaged, rather than just continuing a series. The Indian OTT market is expected to grow significantly, from an estimated USD 5.4 billion in 2025 to USD 28.1 billion by 2034, growing at an average annual rate of 19.09%.
JioHotstar Ecosystem Boosts Deal Value
The sequel's move to JioHotstar, despite 'Part 1' being on a different platform, marks a strategic business decision. JioHotstar, formed from the merger of Disney+ Hotstar and JioCinema, is now a major player in India's streaming market. It holds a large market share, expected to be over 25% by the second quarter of 2025, with a goal of reaching 280-300 million subscribers. The platform uses Reliance's extensive telecom network to reach regional markets and integrate with its services. This combination allows for better ways to make money from popular titles, leading to higher bids and more value over time, especially for content with proven demand. The merged service offers a vast library, with local content making up more than 60% of its video-on-demand selection.
Risks and Market Realities
Despite the 'Dhurandhar' strategy succeeding, it carries significant risks. The entire success depends fully on how the first film performed at the box office, a reliance many producers cannot manage. If the theatrical run were less successful, the sequel's streaming rights would become much less valuable, turning a risky bet into an expensive mistake. The Indian OTT market is also intensely competitive. While JioHotstar has gained strength, rivals like Netflix and Amazon Prime Video are competing strongly for content, often pushing up prices. Netflix, for example, has tried offering cheaper subscription plans and invested heavily in Indian originals. Buying rights for big films can cost a fortune; for instance, deals for 'Kalki 2898 AD' reached ₹375 crore and 'RRR' reportedly fetched ₹350 crore. Estimates suggest acquisition costs for non-blockbuster Hindi films have dropped 25-40%, indicating the market may become less willing to pay high prices for films without proven box office success. Additionally, regulatory bodies like the CCI are closely watching market consolidation, as shown by conditions placed on the Reliance-Disney merger regarding ad slots for cricket rights. Reliance Industries itself has a debt-to-equity ratio of 0.36 and a net debt position of -1,507.22 billion.
Outlook for Reliance and OTT Market
Analysts are largely positive on Reliance Industries, with an average price target of INR 1,719.00 and a "Strong Buy" consensus. S&P Global Ratings recently upgraded RIL's long-term issuer credit rating to 'A-' from 'BBB+', noting better cash flow stability from its growing consumer businesses. Its digital services and retail arms are expected to add substantially to operating cash flow. The Indian OTT market is predicted to maintain its strong growth path, fueled by more internet users and increasing demand for varied content, including regional shows and sports. The trend towards valuing content based on performance, as seen with the 'Dhurandhar' sequel deal, is likely to continue, favoring content that clearly shows audience demand and engagement.