Walt Disney is aiming to revamp its streaming business in India by providing cost-free cricket content on smartphones. This strategic move is anticipated to drive an increase in advertising revenue and counterbalance the effects of a decline in subscribers.
As subscriber dropouts continue to escalate, reducing the user base by a third from October 2022 to July 2023, the financial performance of the Burbank, California, there are warning signs of the entertainment giant facing even greater challenges in India.
In 2019, the company acquired the Indian streaming service Hotstar as part of its $71 billion deal for select 21st Century Fox global assets. After securing the streaming rights to the Indian Premier League (IPL), the world's wealthiest cricket league, Disney converted Hotstar's cricket content into paid service in 2020. Clearly, Disney held high hopes of attracting as many as 100 million users within a few years.
However, Indian billionaire Mukesh Ambani secured the IPL rights with a $2.9 billion bid last year and proceeded to offer game streaming for free. This move prompted a mass exodus of Disney subscribers; from the 61 million users in October, approximately 21 million had departed by July.
Disney is set to livestream the Asia Cup matches starting on August 30, as well as the World Cup in October and November. These broadcasts will be accessible to the 600 million smartphone users in the cricket-loving nation at no cost.
This new approach coincides with Disney's ongoing exploration of potential joint venture partnerships or even the sale of its business in India.
Disney secured an extension of its rights to broadcast the International Cricket Council's tournaments in India from 2024 to 2027, committing approximately $3 billion to the deal. While retaining digital streaming rights, Disney, according to an insider, licensed the TV broadcast rights to India’s Zee Entertainment for an estimated $1.5 billion last year.
The company has determined that the model of offering free cricket content on mobile phones and tablets is the essential strategic shift required to increase revenues. This initiative is referred to as a ‘hybrid model’ aimed at increasing advertising revenues by attracting more smartphone viewers while simultaneously attracting new subscribers to the paid plans of the Hotstar TV app, where cricket content will remain accessible.
The company has set its sights on achieving a new milestone of 50 million concurrent viewers during the World Cup, which is double the number recorded in 2019. This figure would also mark a 56% increase compared to the viewership that JioCinema, led by Ambani, garnered during this year’s IPL finals in May.
In the United States, the subscription rates for the ad-free Disney+ streaming service are slated to increase by 27%, reaching $13.99 per month. In contrast, the Disney+ Hotstar service in India is priced at $3.62 per month.
According to Disney's latest quarterly earnings report, the average revenue per user (ARPU) in India is significantly lower, at just $0.59, while the Disney+ service in the US commands an ARPU of $7.31.
In March, as the Ambani group promoted the IPL on its streaming apps, its emphasis was on how people could watch matches on the go, using smartphones, and eliminating the need for a TV. In response, Disney launched advertisements asserting that cricket was best enjoyed on television, a platform for which it still held the IPL rights.
In its recent advertising campaigns, Disney adopted a new approach. It proclaimed, ‘Now, enjoy all the matches from the world's largest tournaments anywhere, on your mobile, completely free.’