India’s entertainment sector eyes Netflix-Warner deal, fears impact

Netflix’s proposed US$72 billion takeover of Warner Bros. Discovery is stirring concern across India’s entertainment sector, with local players warning that the deal could accelerate a shift away from cinemas and intensify competition in the streaming space.\nThe deal – one of the biggest in the global entertainment industry in years – is expected to strengthen Netflix’s position at the top of the global streaming market by giving it a more extensive content library, including titles from the Warner Bros. film studio and HBO brand.\nThe deal is awaiting regulatory approval and is expected to be concluded in the coming months.\nAnalysts have described Warner Bros. as a “crown jewel” that could boost Netflix’s clout beyond streaming.\nWith a base of 16 million subscribers, Netflix India is third in the country’s streaming market and is one of the biggest contributors to its parent company’s revenue, according to media reports.\nThe Multiplex Association of India recently warned that the deal could undermine local cinemas, which have been trying to recover since the Covid-19 pandemic forced many to close or operate at much lower capacity.\n\nThe acquisition of one of the world’s leading studios by a dominant streaming platform posed a direct competition and threat to India’s cinemas and broader film economy, the Multiplex Association of India said in a statement last month.\n“The Indian theatrical market thrives on choice, scale and cultural diversity. Warner Bros. has historically been a key partner to Indian cinemas, contributing consistently to our release calendar with successful global and local titles,” said Kamal Gianchandani, President of the Multiplex Association of India.\nIf the deal were to go through, it could lead to a reduction in quality content for cinemas and shorten a potential window for the screening of films in cinemas before their shift to non-cinema avenues, the association warned.\n“This would inevitably impact revenues, limit consumer choice and weaken the broader ecosystem of film production, distribution and exhibition in India,” it added.\nNetflix has said it hopes to complete the deal within the next 18 months. Details remain unclear on how Netflix plans to incorporate Warner Bros. and its flagship HBO brand into its entertainment portfolio.\nIn the case of PVR-INOX, India’s dominant cinema company, Hollywood contributes 15 per cent to 20 per cent of its box office revenues with Warner Bros. Discovery’s content accounting for 4 per cent, according to a report by Elara Capital, a London-based investment and brokerage firm.\nNetflix’s ability to potentially shorten the film windows of Indian cinemas could affect the latter’s earnings, Elara Capital said. Any such shift could materially affect these cinemas, especially in the post-Covid era where dependency on big-budget franchise films had increased, it added.\n\nIn addition, there could be a negative impact on cinemas if Netflix were to directly release new film releases on streaming platforms, said Karan Taurani, executive vice-president and media sector analyst at Elara Capital.\n“Netflix may try out this strategy to make further inroads into the Indian [streaming] market. These things could be tried because the box office collection share from the Indian market for large franchise films is very insignificant for them,” he said, referring to global entertainment companies.\nThe impact of a merger between Netflix and Warner Bros. Discovery could also be felt beyond Indian cinemas.\nFor instance, India’s largest media conglomerate JioStar could face competition from the merged entity to draw eyeballs away from its TV and streaming viewers.\nFormed from the merger between Disney Star and Reliance’s Viacom18 in 2024, JioStar has captured significant viewership in India, in part due to its ownership of broadcast and streaming rights to the Indian Premier League cricket tournament.\nJioStar commands about 34 to 35 per cent of television viewership in the country and offers channels ranging from those focusing on local content, such as Star Plus and Colors TV, to Disney’s National Geographic, and owns the streaming service JioHotstar.\n“JioStar will feel the pinch of Netflix becoming larger in content variety. They will have to invest in more original content or acquire more smaller platforms or do partnerships with smaller platforms,” Taurani said.\nOther foreign streaming platforms with a presence in India, such as Amazon Prime, could also be affected by the deal, as Warner’s content would be exclusive to Netflix, he added.\n\nIntensifying competition\nWhile competition is likely to increase, the development could be good for the overall development of India’s entertainment industry, said Lloyd Mathias, a business strategist and an independent director on several company boards.\n“The good part is that there is now going to be a strong competitor in the premium sector for the entertainment sector. Netflix will have access to a lot of premium content,” Mathias said.\nHowever, smaller Indian streaming services such as Sony Liv, Zee 5 and Sun NXT would be affected as Netflix could revise its prices to gain a stronger foothold in the market or release Hollywood blockbusters directly through pay-on-demand, he added.\nUltimately, the biggest winner for the Netflix-Warner Bros. Discovery deal is the Indian consumer market, according to Mathias.\nReferring to “over the top”, a term to describe streaming services, Mathias said: “I hope Netflix starts bringing a lot of local production. The opportunity for growth in India in OTT is limitless. People are entertainment-hungry.”\n