Streaming titan Walt Disney has encountered substantial setbacks in its Indian streaming enterprise as of late. These challenges have compelled the company to implement impactful measures in order to reinvigorate its standing in one of the globe’s largest markets.
In response, the corporation has ingeniously devised a new approach aimed at revitalizing its Indian streaming venture. According to a report from Reuters, this involves the provision of complimentary access to cricket content on smartphones, marking a strategic move to recapture audience interest.
Revitalizing Hopes: A Strategy to Bolster Ad Revenue and Counter Subscriber Losses Disney’s optimistic outlook rests on the anticipation that this innovative strategy will inject new life into advertising earnings, effectively mitigating the impact of a substantial exodus of subscribers from its streaming platform.
Disney’s Struggles in the Indian Market
Disney has encountered a series of setbacks in the Indian market, as its streaming operations reported a loss of $41.5 million against a revenue of $390 million for the fiscal year ending in March 2022, as per its latest disclosed financial results.
The entertainment powerhouse, headquartered in Burbank, is poised to face even greater challenges on the financial front, with a rapid decline in subscriber numbers. Between October 2022 and July 2023, its user base plummeted by a staggering one-third.
It’s worth noting that Disney acquired the streaming service Hotstar as part of its $71 billion acquisition of select 21st Century Fox Global assets in 2019.
Disney+ Hotstar experienced a surge in its streaming business fortunes after securing the rights to stream the Indian Premier League (IPL), the world’s most lucrative cricket league. Riding on this success, Disney introduced a subscription fee for cricket content on Hotstar in 2020, with ambitious goals of acquiring up to 100 million users over the next few years.
However, Disney’s plans hit rough waters when Mukesh Ambani, the billionaire owner of the conglomerate Reliance Industries Limited, secured the IPL streaming rights with a staggering $2.9 billion bid. Ambani then proceeded to broadcast the matches for free.
This blow was a significant setback for Disney, resulting in approximately 21 million out of its initial 61 million users departing from the streaming platform by July 2023.
Disney Hotstar’s ‘Free Cricket’ Tactic
After grappling with a substantial exodus of subscribers and incurring significant losses, Disney has candidly acknowledged its miscalculation regarding Indian viewers’ willingness to pay, as revealed by two inside sources at Disney who conversed with the news agency. While the allure of Hotstar during the IPL period did attract initial sign-ups, the conversion to higher-tier premium plans for other content didn’t materialize.
“One of our key assumptions regarding Indian subscribers’ payment inclination hasn’t panned out as anticipated,” stated a source quoted in the Reuters article. “The concept of providing free cricket remains our sole recourse.”
Under its new approach, Disney intends to stream live matches from the Asia Cup starting August 30, along with the upcoming World Cup in October-November, all accessible for free on smartphones. This strategic shift could substantially invigorate its subscriber base, as it effectively opens the door for 600 million smartphone users in the nation to stream these high-profile matches.
The unveiling of this fresh strategy coincides with Disney’s exploration of various avenues, including seeking a joint venture partner or potentially divesting its India business altogether, as outlined in the Reuters report.
Disney is convinced that reintroducing the free-cricket streaming model on mobile devices and tablets holds the potential to invigorate its Indian streaming business, effectively bolstering its revenue.
This approach, characterized as a novel “hybrid model,” is strategically engineered to amplify advertising income by capturing a broader audience on smartphones, while concurrently aiming to attract fresh subscribers to the Hotstar TV app. Notably, cricket content will remain within the realm of paid subscription plans on this platform.
In a discussion with Reuters, Sajith Sivanandan, the head of Disney+ Hotstar, articulated the rationale behind this initiative: “We’re shaping a model that allows us to harness two revenue streams in a more impactful manner.” He expressed his confidence in the burgeoning expansion of Disney’s user base in India.
However, the efficacy of Disney’s pioneering strategy is not guaranteed without flaws, as outlined by a prominent analyst. While the new hybrid model is likely to enjoy a degree of success, it might not be entirely foolproof, according to Daoud Jackson, a senior analyst at Omdia, who conveyed his perspective to Reuters.
The notion of free cricket as a surefire success is met with skepticism, considering the exorbitant costs involved in securing streaming rights – an investment that takes years to yield advertising returns, Jackson added.
India’s immense population undoubtedly positions it as a highly promising market for streaming giants. Yet, experts frequently highlight that the number of paying users remains proportionally smaller compared to the overall market size.
Despite these formidable challenges, India’s streaming sector is projected to reach a value of $7 billion by 2027. Notably, industry titans like Netflix and Amazon’s Prime Video are set to vie for supremacy alongside the emerging JioCinema, managed by Vicom18. This intricate landscape underscores the formidable task Disney faces in augmenting its subscriber base in India.