Walt Disney is attempting to revive the fortunes of its streaming business in India by offering free cricket on smartphones, betting that the strategy will boost advertising revenue and offset the impact of a subscriber exodus.
The India streaming operations, which were Disney’s biggest last year globally by users, posted a loss of $41.5 million on revenue of $390 million for the year to March 2022, its last disclosed results.
With subscriber exits accelerating and slashing the user base by a third between October last year and July, the Burbank-based entertainment giant’s financial performance in the country is only expected to come under more pressure. Disney’s woes are a cautionary tale about the Indian market where expectations about a swelling middle-class are often frustrated by deeply cost-conscious consumers.
The company acquired Indian streaming service Hotstar when it paid $71 billion for some 21st Century Fox global assets in 2019.
With the streaming rights of the Indian Premier League (IPL), the world’s richest cricket league, in the bag, Disney made cricket on Hotstar a paid service in 2020 and was confident about garnering up to 100 million users within years.
But Mukesh Ambani snatched IPL rights away in a $2.9 billion bid last year, and then streamed games for free. Soon, Disney subscribers fled — out of 61 million users in October, roughly 21 million had left by July.
Disney India woes
Disney internally recognises it misjudged Indians’ willingness to pay — people signed up for Hotstar when it had IPL, but didn’t stick around to buy more premium plans to watch other content, two Disney sources told Reuters.
“We were bullish on Indian subscribers’ propensity to pay. That’s not worked out,” said one of the sources. “Free cricket is the only bullet left.”
The company will stream live matches of the Asia Cup from August 30 as well as the World Cup in October-November that users of 600 million smartphones in India can watch without paying anything. The new strategy comes as Disney is also exploring options of finding a joint venture partner or even a sale of its India business.
Hybrid model
Disney renewed its rights to show the International Cricket Council’s tournaments in India from 2024 to 2027 by paying $3 billion. It retains digital streaming rights but last year licensed the TV broadcast rights to Zee Entertainment for $1.5 billion, a source said.
The company has assessed that going back to the free-cricket model on mobile phones and tablets is the strategic pivot needed to shore up revenues. It calls it the “hybrid model” to drive advertising revenues by raising smartphone viewers, while targeting new users for the Hotstar TV app where cricket will remain under paid plans.
