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 users.
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, when the industry expands due to linked TVs and 5G, they will have a competitive advantage because they have a wonderful product and one of the greatest app distribution systems in the digital arena, according to him.
The OTT player has its work cut out for it in catching viewers as the digital streaming scene gets more competitive in India where content expenses are high but ARPUs are low, in light of projected 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.
“Sport content costs are escalating and that’s probably why they shied away from buying the IPL digital streaming rights. They are at a risk of losing 40-50% of their subscriber base because of IPL. We see them trying to curtail that impact by investing in original content and licensed movies. They need to focus on large-scale franchise web series with strong recall so they can make multiple seasons of the same to get a sticky audience,” says Karan Taurani, Senior Vice-President, Elara Capital.
He also notes that several OTT platforms were making significant investments in content due to high valuations and a healthy cash flow. But the global money flow has now slowed considerably.