Disney+ Hotstar, the leading streaming service in India, has experienced a surprising financial advantage after losing the streaming rights to the highly lucrative Indian Premier League (IPL) cricket tournament.
While Disney secured the broadcasting rights, rival JioCinema, owned by billionaire Mukesh Ambani, obtained the streaming rights. According to a study conducted by Ampere Analysis, this move saved streamer an amount nearly twice its total streaming revenue from the past five years.
Despite a recent decline in subscribers, Disney+ Hotstar continues to dominate the market, holding a 29% share of the streaming market, as stated by Ampere. In the first quarter of 2023, the service had approximately 50 million subscriptions, surpassing other global streaming platforms in India such as Amazon Prime Video (12.4 million) and Netflix (6.2 million). However, this number represents a decrease from the 61 million subscribers it had in October 2022.
The study suggests that declining advertising revenues have prompted platform to shift its focus towards profitability and increasing the Average Revenue per User (ARPU). To support ARPU growth, Disney+ Hotstar needs to reconsider its partnership deals with mobile telecom operators and encourage direct subscriptions.
Currently, the service has distribution agreements with Reliance Jio, Bharti Airtel, and Vodafone, which offer free access to the platform for certain mobile or broadband customers. While these bundling deals increase service adoption and expand ad sales reach, they negatively impact subscription ARPU. In the first quarter of 2023, Disney+ Hotstar’s ARPU stood at just $0.59, which is significantly lower than the global Disney+ service’s ARPU of $6.47.
Ampere also highlights the need for Disney+ Hotstar to review its spending on acquired content. The study points out that Disney terminated its licensing deal with Warner Bros. Discovery and did not bid for the rights to distribute titles from Paramount and NBCU, resulting in JioCinema obtaining content from these three Hollywood studios.
Looking ahead, as India is expected to remain the world’s third-largest subscription video-on-demand (SVOD) market, reaching 180 million subscriptions by 2027, Disney+ Hotstar must strike a balance between content expenditure and subscription retention and acquisition.