Race for scale: HBO finds a home in India after deal with JioCinema

Does its deal with HBO mean that JioCinema is planning to go pay?

Viacom18’s JioCinema is going all guns blazing for scale. First came the “Fifa for free” in November 2022, then the audacious $3-billion bid (about Rs 24,000 crore) for the digital rights to the Indian Premier League (IPL). And now comes a deal to put all HBO content including shows such as Succession, Game of Thrones and films like Harry Potter on JioCinema.

Just before the Fifa World Cup began streaming in November 2022 “JioCinema was at 8.2 million unique visitors. With Fifa, it went to a high of 71 million before settling at 65 million in March”, says Geet Lulla, vice-president, sales, Asia Pacific, Comscore, quoting from the firm’s data (see charts). Analysts reckon IPL will add another 100 million or so.

But HBO is known for premium programming that was a huge subscription driver for Disney+ Hotstar, the last platform it was on in India. Is Viacom18 planning to take JioCinema pay in the near future?

That is among the first questions Warner Bros. Discovery and Viacom18’s announcement of a new multi-year agreement to house HBO, Max Original and Warner Bros. content from May 2023 throws up. The partnership includes exclusive content rights across digital and linear, says a release from the $34-billion (FY 2022 revenue) Warner Bros. Discovery. Both the firms declined to comment. In an interview with Business Standard, Anil Jayaraj, CEO, sports, Viacom18 Media, said “There are no plans for subscription in sports.”

JioCinema is part of the Rs 4,145-crore (FY22 revenue) Viacom18 Media, which in turn is a joint venture between Reliance Industries and Paramount Global. In 2021, Bodhi Tree Systems — a platform co-owned by James Murdoch’s Lupa Systems and former Disney-Star India CEO Uday Shankar — announced it would pick up a chunk of Viacom18 for $1.78 billion. This was pared down to $528 million earlier this year.

When Disney decided not to renew its five-year agreement with HBO earlier in March there was a lot of speculation on the new home for HBO. “Disney+ Hotstar is in cost-cutting mode, the Zee-Sony merger is yet to go through, so they are in transition. As things stand it will be down to Amazon Prime Video or JioCinema,” said Mihir Shah, vice-president, Media Partners Asia, then.

It seems poetic that JioCinema, a brand that the former Star CEO is invested in, should be getting these properties from Disney+ Hotstar — a brand and company that he’s built. In fact, the recent aggression in Viacom18 can be traced back to Shankar’s entry first as an investor and then as a board member, say analysts The man, who took Star India from Rs 1,600 crore to about Rs 14,000 crore on the back on sports, Hotstar and entertainment programming, is doing what he does best — taking bets on programming and building scale. This ability is what had got Star an estimated valuation of $15 billion when it was sold to Disney (along with Fox). This time Shankar is doing it for a company in which he has a direct stake.

The second question the deal raises is will Max ever launch in India?

Warner had been talking about launching the Indian version of HBO Max, its global streaming service. It had hired a whole team back in 2021.That sort of dulled the $82.7-billion (FY22 revenue) Disney’s desire to promote HBO content on its service.

At 112 million unique visitors in March 2023, Disney+ Hotstar is India’s third largest OTT in reach after YouTube and MX Player. The 3-3.5 million unique visitors that HBO brought to over the years were neither here nor there. Where HBO mattered was in its ability to get high-end subscribers. According to one insider, the contract between the two mandated that every time Disney+ Hotstar’s subscriber numbers rose by a certain number, HBO’s share of revenues would rise, too.

Warner’s global merger with Discovery in the summer of 2022 changed priorities, pushing back the launch of Max. It has been in talks with the who’s who of the Indian OTT space players to park HBO content. But the asking price, a reported $120 million (about Rs 1,000 crore) for 30-36 months, had them baulking. The insider reckons that only at a price of $10-12 million (Rs 82-98 crore) a year, can any of the big subscription-driven players make money on HBO content.

The price may also be the reason Disney let go of the HBO deal. For Viacom18, however, returns are not the priority, building scale and getting people in is. And that, probably, is why it was willing to pay this price. “It (HBO) had only one buyer,” says the insider. Now, if Max is to launch, it will happen only after the three years of this agreement run out.