Walt Disney’s video streaming service Disney+ Hotstar could face a significant impact on its 50-million subscriber base after it was outbid by Viacom18 to secure the consolidated digital streaming rights for the Indian Premier League (IPL) tournament.
Disney+ Hotstar could potentially lose 15 million subscribers after failing to secure the IPL digital rights, according to Vivek Couto, Executive Director at Media Partners Asia, a Singapore-based research and consulting firm.
This could further impact the entertainment giant’s forecast of achieving 230-260 million subscribers by 2024 and hurt its ambitions to take on global market leader Netflix.
Viacom18 had secured the consolidated IPL digital streaming rights for the Indian subcontinent for Rs 23,758 crore for the 2023-2027 period in the recently concluded media rights auction. Meanwhile, Walt Disney’s India subsidiary Disney Star had bagged the five-year television rights for the Indian Premier League at Rs 23,575 crore.
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Couto however noted that Disney will still control valuable television ad inventory. “IPL TV distribution fees are solid for Star / Disney India but because of structural dynamics have been impacted past two years, it could be open to disruption from Viacom18 streaming play and Jio distribution across mobile and home broadband,” he said in response to Moneycontrol’s queries.
Focus on other sports rights and original content
Disney Star said in a statement that it will focus on growing its slate of original entertainment content for Disney+ Hotstar and its television channels in the region, apart from exploring other multiplatform cricket rights.
“We made disciplined bids with a focus on long-term value. We chose not to proceed with the digital rights given the price required to secure that package. We will be exploring other multiplatform cricket rights, including future rights for International Cricket Council (ICC) and Board of Control for Cricket in India (BCCI), which we currently hold through the 2023 and 2024 seasons, respectively,” said Rebecca Campbell, Chairman, International Content and Operations, The Walt Disney Company in a statement.
Campbell also mentioned that they hold rights for Pro Kabaddi League, and Indian Super League football, as well as various international sports rights, including the Wimbledon Championships and the English Premier League.
“Hotstar would need to go back to planning with a higher focus on non-sports. Hotstar was getting a significant amount of the subscribers and revenues due to IPL,” said Abneesh Roy of Edelweiss.
Disney+ Hotstar a key driver for Disney’s streaming ambitions
The IPL tournament has been one of the major subscriber growth drivers for Disney+ Hotstar and was considered key to the future growth of the streaming service that recently crossed the 50 million paid subscriber mark.
Disney+ Hotstar accounted for about 36.4 percent of the total paid subscriber base of Walt Disney’s flagship streaming service Disney+ that stood at 137.7 million for the second fiscal quarter ended April 2, 2022. The service also accounted for nearly half of Disney+’s quarterly subscriber growth.
That said, Disney+ Hotstar has been a major drag on Disney+’s overall average revenue per user (ARPU) due to its significantly lower prices. The company made only $0.76 per month from an average Disney+ Hotstar member as compared to $6.32 per month from an average Disney+ customer in the United States or $6.35 per month from an average International customer (excluding Disney+Hotstar).
Disney+ said in May 2022 that it earned an overall average of $4.35 per month from each customer in Q2-FY22. However, if Disney+ Hotstar is excluded, the ARPU rose to $6.33 per month.
In February 2022, Disney CEO Bob Chapek had said during the company’s earnings conference call that the local content they were developing, including the library content from its own brands Disney, Pixar, Marvel, Star Wars and Nat Geo, would mitigate the impact if they don’t win the auction.
“We are very confident that even if we were not to go ahead and win that auction, we would still be able to achieve our 230-260 million Disney+ subscriber goal by the end of fiscal 2024,” he said during the call.
In the statement, Campbell said that they currently have more than 100 local original titles in their content pipeline – with over 80 local originals slated to premiere this fiscal year. She also claimed that the service “was home to seven of the top ten Hindi SVOD (Subscription-based video on demand) entertainment series in India” without disclosing any further details.
Disclaimer: Reliance Industries Ltd, which owns 51 percent in Viacom18, is the sole beneficiary of Independent Media Trust that controls Network18 Media & Investments Ltd.
