In order to stem the growing losses in its streaming business, which includes the largest OTT player in India by user base that has been hit by a slowing subscriber addition due to the void created by the loss of the Indian Premier League, Disney+ Hostar’s parent company has rehired former Chairman & CEO Robert Iger to take over as its top executive (IPL).
Susan Arnold, chairman of the board, stated in a news release early on Monday IST that “the Board has concluded that as Disney embarks on an increasingly challenging phase of industry upheaval, Bob Iger is uniquely equipped to lead the Company through this important period.”
According to Q4 results released ten days ago, the American entertainment giant has lost $1.5 billion on its streaming business, which includes Disney+ (also known as Disney+ Hotstar in Asia), Hulu, ESPN+, and the Star service in Europe, just this quarter and roughly $8 billion over the past three years. The business uses the October–September calendar year.
According to recent statistics, Disney+ Hotstar in Asia has a staggering 60.3 million subscribers. Given that the majority of its users are from India, it has a significantly larger user base than its competitors Amazon Prime Video (which has about 20 million subscribers) and Netflix (approximately 6 million). Disney+ Hotstar is also a key component of the overall picture, contributing about 37% of Disney+’s 164.2 million global subscriber base.
Despite losing the digital streaming rights to the cricket IPL event to Viacom18, which is financed by Reliance, the platform was able to draw in a significant portion of that subscriber base.
Less than 3 million customers were added between July and September compared to 8 million between April and June. In addition, the company anticipates a reduction in user base due to the IPL gap in the October to December quarter, stabilising in the January to March period, Disney’s chief financial officer Christine McCarthy said in the most recent earnings call. Additionally, the company in August reduced its original forecast of 70-100 million users for Disney+ Hotstar to 80 million users by fiscal 2024.
“Disney+ Hotstar will have a short-term issue due to the loss of digital IPL rights. According to Uday Sodhi, a former head of Sony LIV and founding partner of Kurate Digital Consulting, “Sony had also lost the IPL rights five years ago, but they too came out stronger after that by focusing on fantastic content.” In the long run, as the market expands due to connected TVs and 5G, they will have a competitive advantage because they have a great product and one of the best app distribution systems in the digital space, according to him.
The OTT player has its work cut out for it in grabbing eyeballs as the digital streaming landscape gets more competitive in India where content costs are high but ARPUs are low, in light of proposed budget cuts and layoffs by parent company Disney to focus more on profitability. Customers are therefore not contributing as much to the platforms’ content investments.
“Sports content prices are rising, which is likely why they hesitated to purchase the IPL digital streaming rights. Due to IPL, they run the risk of losing 40–50% of their subscriber base. We observe them making investments in both licenced films and original material in an effort to lessen that impact. According to Karan Taurani, Senior Vice-President of Elara Capital, “They need to concentrate on big-budget franchise web series with high recall so they can develop numerous seasons of the same to achieve a sticky audience.”
He also notes that several OTT platforms were making significant investments in content due to high valuations and a healthy cash flow. “But that money flow has now globally slowed down,”