Reliance ADAG owned, Reliance Entertainment has announced that it will merge the toys and games business of Zapak Games with Reliance Home Video as a part of the company’s effort to reorganize operations for more synergy. According to a company statement, the new entity will be called Reliance Home Video and Games, and that the move will “ensure growth of both home video and games business with enhanced funding, improved infrastructure and larger product offerings.”

Zapak Games distributes merchandise, games and toys from leading international toys and gaming companies like Moose, Spinmasters, Codemasters, Jakks Pacific, Crayola and others, while Reliance Home Video distributes both Indian and Hollywood films. Reliance Home Video claims to be the exclusive licensee to Warner Bros, Paramount Studios, Universal Studios and Dreamworks for all their new and catalogue films.

According to the company, the merger makes sense because Home Video and Games are similar in terms of consumer demographics, marketing and distribution.

Financials

As per Zapak’s 2010 Annual Report, the company’s licensing and merchandising business has 4250 retail outlets and 467 SKUs and tie-ups with toy brands, and has presence in 135 Indian cities.

The company’s income from the sale of merchandise was Rs 16,38,73,171 in 2009-10 and Rs 9,42,94,597 in 2008-09, a growth of 74%. In 2007-08, the revenue from merchandise was Rs 1,14,97,672.

Looking at the performance of Zapak’s merchandise business, sales revenue has been witnessing a positive growth. Reliance certainly wants to take advantage of Zapak’s merchandise network as well as retail presence to boost the Home Video business, and perhaps there is greater synergy between the retail businesses than with the online games business. What do you think?