SUMMARY
Over the last three quarters, Disney+ Hotstar has lost 34% of its total subscriber base, reaching 40.4 Mn as of July 1, 2023
The downward spiral of Disney+ Hotstar started with the loss of IPL media rights, one of the key propositions that hooked subscribers to the platform
The loss of the HBO content partnership deal and persistent low-consumer sentiment in the Indian market may also have triggered the exodus of the paying subscribers
Once a shining star in the Indian over-the-top (OTT) ecosystem, Walt Disney-owned Disney+ Hotstar seems to have hit a rough patch. Since October 2022, the streaming giant has been subjected to a gradual meltdown in the number of its users.
Between July and September, the Disney-owned OTT platform added 2.9 Mn paid subscribers, reaching a total subscriber base of 61.3 Mn by the end of the quarter. It was the last quarter when the streaming giant saw positive growth in its subscribers.
In the three successive quarters, Disney+ Hotstar’s subscriber base has dwindled, and the metric was down 34% to 40.4 Mn as of July 1, 2023.
JioCinema And IPL Impact
The downward spiral began with Disney+ Hotstar losing its IPL media rights, one of the key propositions that hooked subscribers to the platform. When it lost the digital media rights of the popular cricket tournament to Viacom18, analysts predicted that the company would see the exodus of at least around 25 Mn subscribers.
Viacom18-owned JioCinema aired IPL in 2023 for free, which helped the OTT platform gain millions of views and new app downloads. Reliance Industries, in its financial results, claimed that its OTT app, JioCinema, generated higher revenue from the digital streaming of the IPL 2023 compared to its rival Disney Star, which would broadcast the marquee cricket tournament on television.
However, the Jio effect was not merely limited to live sports events.
Earlier this year, Disney+ Hotstar, once the home for premium English content in India, stopped streaming HBO content following the non-renewal of the content partnership deal with Warner Bros.
As a result, Disney+ Hotstar users were no longer able to watch popular shows such as Game of Thrones, Euphoria, Chernobyl, and The Last of Us.
The absence of these premium English shows refrained many subscribers from subscribing to Disney+ Hotstar. Interestingly, these TV shows have now been moved to JioCinema, and the appeal of buying the Disney-backed OTT platform’s subscription seems to have further lost its sheen.
Rising Competition In The Premium Content Segment
Meanwhile, JioCinema signed a content partnership deal with HBO. Following this, JioCinema also signed a multi-year agreement with NBCUniversal Media (NBCU) to bring the latter’s films and TV shows to India. This bolstered the conglomerate’s premium positioning, as it rolled out a premium subscription plan, which started at INR 999 per year.
From mass sports content to premium shows, Disney+ Hotstar has been facing challenges on multiple fronts from the Ambani-backed streaming service. Despite this, Disney+ Hotstar still led the premium VoD (video-on-demand) category consumption in India in the first quarter of 2023, according to a report by Media Partners Asia (MPA). The publishing time of the report is before the glitzy broadcast of IPL 2023 on Jio Cinema.
Besides JioCinema, other streaming majors are also trying to aggressively capture the online video-viewing audience. For example, Amazon’s streaming service Prime Video launched a mobile-only plan in India late last year at INR 599 per year. It will also begin streaming BBC shows, including The Great British Bake Off and Strictly Come Dancing, in India on an add-on channel.
A Fall In Consumer Spending Behaviour Raises Many Concerns
The rising competition comes at a time when consumer spending on non-essential products is dwindling in the country. According to the 2023 PwC Global Consumer Insights Pulse Survey, around 74% of Indian respondents were concerned about their personal finance situation versus 50% globally.
Further, as much as 63% of Indian consumers said they were cutting back on non-essential spending altogether, mirroring the view of 9,180 consumers across 25 territories across the nation. Industries such as virtual online activities are expected to remain under pressure due to the reduction in consumer spending.
A recent RBI consumer survey reveals that consumer confidence has declined in recent months. As per the central bank, the improvement in Indian consumers’ spending power was offset due to higher pessimism around economic uncertainties and employment opportunities.
According to experts, the subscriber loss of Disney+ Hotstar has now largely bottomed out and the OTT streaming platform may see marginal decline over the near term. However, the potential revenue loss is expected to remain in the range of 50%-60%, largely on account of the loss of ad sales from the money-minting IPL tournament.
Disney+ Hotstar’s total revenue stood at INR 3,259.23 Cr in FY22, up 91% from INR 1,704.03 Cr in FY21. The company saw almost 2X growth in its advertisement revenue to INR 1,684.31 Cr in FY22 from INR 829.74 Cr in FY21. In addition, its subscription revenue rose 65.67% to INR 1,373.61 Cr from INR 830.96 Cr in FY21.
As of now, Disney is exploring a strategic sale for Star India and is planning to bring a new policy that will allow its premium users to log in from only four devices, aping Netflix’s move.
Disney+ Hotstar plans to roll out the strategy later this year, and it has already tested the enforcement of the policy internally. While the Netflix crackdown on password sharing gave a boost to its subscriber base, it remains to be seen how it will impact the troubled Disney kid, Hotstar.
