As the media and entertainment (M&E) sector navigates the aftermath of significant transactions in FY25, industry insiders anticipate a strategic pivot towards smaller, yet essential mergers and acquisitions in FY26. Companies are setting their sights on segments like content creation, artificial intelligence (AI), gaming, and sports, aiming to fortify their portfolios for future growth.
Strategic Focus on Key Growth Areas
Experts, including Ashish Pherwani, M&E sector leader at EY India, highlight the necessity for traditional media firms to adapt innovative business models. He explains that as advertising budgets transition to digital platforms, these companies will likely engage in "tuck-in acquisitions" to capitalize on emerging market trends.
- Key Areas of Interest:
- Content Creation
- Artificial Intelligence (AI)
- Gaming
- Sports
Growth of Regional OTT Platforms
In addition to traditional media, the landscape for regional over-the-top (OTT) platforms is becoming increasingly competitive. Companies like Chaupal, Stage, and Aha are actively seeking investment from venture capital and private equity firms to enhance their growth prospects. Pherwani suggests that larger firms may also acquire these regional players to consolidate their market presence.
Recent Acquisitions Driving AI and Marketing Innovation
The M&E sector recently witnessed notable acquisitions that are expected to stimulate further transactions. For instance, Prime Focus made headlines in February with its acquisition of Metaphysic, a London-based AI content firm, in a deal valued at $1.43 billion. Meanwhile, Connekkt Media expanded its portfolio by acquiring Hollywood marketing agency Mob Scene, known for its work on blockbuster films like Barbie and Dune: Part Two.
Varun Mathur, co-founder of Connekkt Media, expressed his enthusiasm for future partnerships: “This acquisition marks a strategic expansion for us into North America. We aim to leverage Mob Scene’s marketing expertise for our global partners and remain open to further acquisitions."
Innovating with AI Tools
The founder of Prime Focus and CEO of DNEG, Namit Malhotra, emphasized the versatility of Brahma’s AI-driven tools, which have applications beyond entertainment, including education and social media engagement. “We’re committed to developing next-generation technology tools powered by artificial intelligence and are keen on validating our approach through strategic acquisitions,” he stated.
Sports and Gaming Sectors Attracting Investment
The sports and gaming industries are also witnessing a surge in investment, as companies seek to tap into their growth potential. For example, the Torrent Group recently acquired a 67% stake in the Indian Premier League (IPL) franchise Gujarat Titans for Rs 5,000 crore. This acquisition, which values Gujarat Titans at Rs 7,453 crore, marks a significant entry into cricket for the Torrent Group, reflecting a 33% increase from its previous valuation by CVC Capital Partners.
Shanthi Vijetha, a partner at Grant Thornton Bharat, noted, “There has been a remarkable increase in sports and gaming deals as companies pursue growth opportunities in these sectors.”
Expanding International Footprints
Additionally, the Sun Group has made waves by acquiring a 100% stake in the English cricket franchise Northern Superchargers, part of the innovative eight-team league known as The Hundred, for over Rs 1,000 crore. This investment positions the Sun Group alongside other major players like the Ambani family and RPSG, who are also involved in The Hundred.
As the M&E landscape evolves, all eyes will be on how these strategic moves unfold in the coming year, shaping the future of media, sports, and gaming.
