Losing streaming rights to the lucrative Indian Premier League (IPL) cricket tournament has been a blessing in disguise for Indian market leader Disney+ Hotstar, an Ampere Analysis study reveals.
Disney won broadcasting rights but ceded streaming rights to rival JioCinema, owned by billionaire Mukesh Ambani. Ampere estimates that this “saved the company a figure just short of twice its entire streaming revenue from the past five years.”
Despite recent subscriber declines, Disney+ Hotstar still leads the market and holds a 29% streaming market share, Ampere said. As of the first quarter of 2023, Disney+ Hotstar had some 50 million subscriptions, far higher than other global SVODs in India including Amazon Prime Video (12.4 million) and Netflix (6.2 million). However, that compares with some 61 million subscribers in October 2022.
Declining advertising revenues could prompt a strategic rethink for Disney, Variety had predicted in March and that has proved to be the case. Rather than pursuing new subscribers at any price, Disney+ Hotstar is pivoting towards a focus on profitability and increasing ARPU (Average Revenue per User), the Ampere study says.
Ampere points to a cautiousness around spending on acquired content. It cites examples of Disney ending its licensing deal with Warner Bros. Discovery in March and not bidding for rights to distribute Paramount and NBCU titles in India. All three Hollywood studios’ content are now on Ambani’s JioCinema platform instead.
The Ampere study says that to support ARPU growth, Disney+ Hotstar also needs to review its partnership deals with mobile telcos and encourage direct subscription. Currently, it has distribution deals with Ambani’s Reliance Jio, Bharti Airtel and Vodafone where some mobile or broadband customers have free access to Disney+ Hotstar. These bundling deals increase service adoption and support reach for ad sales, but negatively impact subscription ARPU. Disney+ Hotstar’s ARPU was just $0.59 [per month] in 2023Q1, some 10 times lower than the $6.47 of the global Disney+ service.
Orina Zhao, senior analyst at Ampere Analysis said: “With India set to keep its position as the world’s third largest SVOD market after the U.S. and China with an expected growth to 180 million subscriptions in 2027, it is important for Disney+ Hotstar to balance its content expenditure and subscription retention and acquisition. JioCinema is expected to announce more standard subscription plans later this year which will increase direct competition with existing players and change the ecosystem of the market. Disney+ Hotstar still owns 123 of the top 500 most popular titles in India, by Ampere’s estimates, which places it behind Amazon Prime, but ahead of Netflix (117 titles) and far ahead of JioCinema (38 titles), but now needs to find new sustainable strategies to improve profitability while maintaining its significant subscriber base in India.” JioCinema is in the process of building a 100-title slate of original shows and films.