Market Insight

Indian content producer EROS and US independent studio STX merge to target the Chinese market

June 08, 2020  | Subscribers Only

Constantinos Papavassilopoulos Constantinos Papavassilopoulos Associate Director, Service Providers & Platforms

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Indian content production house EROS International and the US independent content producer STX Entertainment have agreed to a stock-for-stock merger business transaction in early May 2020. The merger will create a new unified entity called EROS STX Global Corporation which will be listed in the New York Stock Exchange (NYSE). EROS and STX will jointly control more than 85% of the shares of the new company, around 43% of shares each.

The merger will create synergies in areas such as financing (servicing debt) and process integration (cutting costs in IT, infrastructure, equipment, leasing and telecoms) which can rise as high as $50 million. The new unified entity is waiting for regulatory approval which is expected to be granted by late June or early July 2020.

Our Analysis

The merger represents the first of its kind between a major Indian content producer and US studio. India is a large and fast-growing content market, especially for content distributed via online video platforms: according to OMDIA, OTT subscriptions in India grew more than 50-fold between 2015 and 2019. India is also a large producer of content which has a strong appeal well beyond the country’s borders. This factor, content production in APAC countries and mainly in India and China, played a major role for the merger.

The main target of the merged entity will not, at least primarily, be the internal markets of either the US or India. EROS will continue operating independently in its home market and the same applies for STX Entertainment for the US market. The key target will be the Chinese market. China has by far the largest market in APAC, but its market has proven to be difficult for US companies to access in full and do business in. both partners have developed over the years ties with the Chinese market and the merger provides both with an opportunity to leverage these ties for the best interest of their business. In the case of STX Entertainment, Chinese companies like Tencent and PCCW are among its main shareholders. The US studio has also content production partnerships with Tencent Films and Alibaba Films in China. EROS from its part has content distribution partnerships with the Shanghai Film Corporation and the China Film Distribution Corporation. Eros Now, the standalone OTT service of Eros International, is also present in the Chinese market since 2019, the first Indian OTT service to enter that market, via a direct carrier billing deal with Chinese telco Wasu. The combination of the content production partnerships of STX with the content distribution ones of EROS provides a powerful vehicle for the merged entity to promote its business in China.

The merged entity’s goal is to produced content for the Chinese market in China, working with its Chinese partners and leveraging the business relationships both EROS and STX have cultivated over the last years. As a result of these relationships, the merged entity has access to a huge pool of talent (actors\actresses, directors, VFX artists, production & post-production professionals etc.). EROS STX Global Corporation will formulate a business strategy, a basic pillar of which will be the twofold approach for producing original Chinese content:

  • By re-making popular Indian films and series, adapted as to appeal to a Chinese audience and
  • By using Chinese original stories.


The project foresees the release of up to 40 original films and around 100+ episodes of original series by end of 2020. However, the COVI-19 pandemic and the related shut-down of all production facilities will have a delaying effect on these plans. Some of the plans have been moved for 2021, however, both partners are confident that by mid-2021 content production business will be running as smoothly as before the pandemic. Part of the original content production will be offered via EROS Now, in China and globally while another part will be offered via the OTT platforms of Netflix, Amazon Prime Video and Hulu, following specific agreements with the three US giants. In order to contain costs, all post-production work for original content will be done in India.

Finally for EROS International, the merger represents the most concrete step towards becoming a truly global company. EROS was the first Indian company to roll-out a global distribution network for its OTT platform, EROS Now, inking deals with Apple for being offered via Apple TV+ (first Indian OTT service to achieve that, followed by ShemarooMe) and with Amazon for being offered via Amazon Channels in the US and the UK.


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