Disney Reportedly Set to Spin Off Indian Hotstar Streaming Business

The Walt Disney Co. has reportedly signed a non-binding term sheet with Reliance Industries Ltd. to merge the companies’ Indian media assets, including the Hotstar streaming platform and JioCinema, the ad-supported free streaming service.

The proposed cash-stock deal — expected to close in February 2024 — would see Reliance own 51% of the new company, with Disney retaining 49%, according to The Economic Times, which first reported the deal. Former Disney senior executive Kevin Mayer, who was brought back by CEO Bob Iger in July as a consultant, is heading the merger for Disney.

India has been key to the evolution of the Disney+ subscription streaming VOD service, with the Hotstar platform accounting for nearly 40% of Disney+ total subscribers after its 2019 launch. Disney acquired Hotstar as part of its $71.3 billion purchase of 21st Century Fox.

Key to Hotstar was the platform’s exclusive streaming rights to the Indian Premier League, a men’s professional cricket league contested by 10 city-based franchise teams. Cricket is the national sport in India. But Hotstar lost the multibillion-dollar IPL rights earlier this year to Viacom18, an Indian-based media company co-owned by Paramount Global and Reliance.

Since that announcement, Disney+ has lost millions of Indian subscribers, including 2.8 million in the most recent fiscal period, with Hotstar accounting for 25% of all Disney+ subscribers.

Disney Reportedly Looking to Sell Indian Media Assets, Including Hotstar

The Walt Disney Co. reportedly plans to sell and/or spin off stakes in its Indian media properties, including streaming giant Hotstar — the platform that helped launch and continues to represent a sizable subscriber stake in the Disney+ service.

First reported by Bloomberg, which cited sources familiar with the situation, Disney has held preliminary talks with numerous Indian media companies, including Sun TV Network Group, the Adani Group, and Reliance Industries, among others. While no parties are commenting, and the talks could amount to nothing, any possible deal could mirror what AT&T did selling minority stakes with operational control in DirecTV and the former WarnerMedia (now Warner Bros. Discovery).

The reported sale/spin-off is part of Disney’s strategy to maximize the value and reduce the operating costs of its expansive asset portfolio. With the direct-to-consumer business not turning a profit as quickly as envisioned for most media companies not named Netflix, the money-losing situation for Disney and Hotstar was magnified by the latter’s loss of exclusive streaming rights to Indian Premier League, the top cricket division for the country’s most-popular sport.

Viacom18, an Indian conglomerate co-owned by Paramount Global, acquired the IPL streaming rights for $2.7 billion, choosing to broadcast them for free (with ads). Disney countered by streaming for free on Hotstar the current Cricket World Cup being held in India.

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Regardless, Disney + Hotstar lost 24% of its subscribers due to the loss of access to the IPL, resulting in 40.4 million subscribers in the most recent fiscal period. Disney+ global subscribers dropped to 146.1 million, down from previous analysts’ estimates of around 155 million. At the same time, Disney+ domestic subscribers continued to fall, offset slightly by international sub gains, excluding India.

Disney reports forth quarter and full-year fiscal results on Nov. 8.

Ampere: Disney+ Adjusting India SVOD Market Strategies

Disney+ is shifting its market priorities in India with a focus on spending and operational profit, according to new data from Ampere Analysis.

With about 53 million paid subscribers through March 31, Disney+ Hotstar is the largest subscription VOD service in India, and represented 33% of the global Disney+ subscriber base of almost 158 million through the first quarter.

Specifically, Ampere contends Disney+ Hotstar is refocusing efforts around live streaming sports rights as illustrated by the company’s withdrawal from the Indian Premier League (IPL) cricket license rights bidding last year. Ampere estimates that this saved Disney+ spending about twice its entire streaming revenue from the past five years combined.

Shutterstock image

Instead, Viacom18 — which is 49% owned by Paramount Global — paid 205 billion rupees ($2.6 billion) for the IPL streaming rights covering 410 cricket matches over a five-year period and streamed on the company’s Jio Cinema platform.

Disney+ Hotstar is also being more careful in its content spending, especially on acquiring titles. It ended its licensing deal with Warner Bros. Discovery in March, and did not bid for rights to distribute Paramount Pictures movies and NBCUniversal titles in India. All three Hollywood studios’ content are now streaming on Jio Cinema.

Disney+ Hotstar still owns streaming rights 123 of the top 500 most popular titles in India, which places it behind Prime Video but ahead of Netflix (117 titles) and Jio Cinema (38 titles), according to Ampere.

“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,” senior analyst Orina Zhao said in a statement.

Jio Cinema is expected to announce more standard subscription plans later this year, which will increase direct competition with existing SVOD players and change the ecosystem of the market, according to Zhao.

“Disney+ Hotstar needs to find new sustainable strategies to improve profitability while maintaining its significant subscriber base in India,” she said.

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Ampere: Disney+, India’s Hotstar Combine to Top Amazon Prime Video Subscriptions

Disney’s branded subscription streaming VOD platform Disney+ and its Indian-based Hotstar streaming platform together have topped Amazon Prime Video as the No. 2 SVOD service in terms of subscribers, according to new data from Ampere Analysis.

Disney+ and Disney+ Hotstar ended the most recent fiscal period with 164.2 million combined subscribers, with Disney+ Hotstar accounting for 61.3 million subs, or 37% of the service’s total base. Prime Video, which doesn’t regularly release its subscriber numbers, ended 2020 with around 150 million.

Market leader Netflix ended the fiscal period with more than 223 million subscribers globally.

The trend underscores ongoing, albeit slower, global SVOD growth that saw global SVOD subscriptions top 1.5 billion, up 500 million subs since June 30, 2020, according to Ampere. The U.S. and China together account for about 50% of global SVOD subscriptions, with U.S. subs topping 400 million.

China prohibits foreign SVOD platforms from operating in the country.

“While mature markets are beginning to reach saturation, there is still room for growth in subscription OTT globally,” research manager Toby Holleran wrote in a post. “Emerging markets will help the total approach 2bn in the next few years, with more than 1bn of those forecast to be from outside of the U.S. and China.”

 

Google’s Sajith Sivanandan Named Head of Disney+ Hotstar in India

Disney has named former Google executive Sajith Sivanandan EVP and head of Disney+ Hotstar, the media company’s key streaming platform in India.

Sivanandan, who begins his new job in October, will be tasked with overseeing Disney+ Hotstar’s overall business operations in India with direct responsibility for defining the streaming service’s strategic business priorities and charting its product roadmap. He will also work closely with local leadership team in international markets as well as with the Disney+ team in the U.S.

Sajith Sivanandan

“[Sajith’s] deep experience in the region, combined with his strong leadership and business management skills will greatly benefit Disney+ Hotstar as the platform embarks on its next phase of growth,” Rebecca Campbell, chairman of Disney’s international content and operations group, to whom Sivanandan reports, said in a statement.

Sivanandan, who was managing director and business head of Google Pay and Google’s Next Billion User Initiatives for Asia Pacific, has his work cut out for him.

Disney+ Hotstar represented 38% of Disney’s branded subscription streaming video platform’s subscriber base at the end of the most-recent fiscal quarter with 58.4 million subscribers. Without Hotstar, which Disney acquired through its acquisition of 21st Century Fox in 2019, Disney+ would have slightly more than 93 million subs worldwide — on par with HBO/HBO Max/Discovery+ (92.1 million).

Yet, rival Paramount Global just acquired away from Hotstar the streaming rights to Indian Premier League cricket — a heretofore sub driver for Disney+. Without those rights, Disney+ Hotstar could see increased subscriber churn going forward.

Sivanandan doesn’t seem concerned.

“Disney and Star are brands with an incredibly rich history of innovation, user focus and storytelling, and Disney+ Hotstar brings those attributes together flawlessly,” he said. “The opportunity to come back home to where I started my career and to work alongside a very talented team to serve Disney+ Hotstar users in India and emerging countries is both a privilege and an honor.”

Disney+ Hotstar Eyeing Fewer Paid Indian Subs by 2024, Underscoring Impact of Cricket Rights Loss

The Indian streaming video platform Hotstar has helped Disney+ explode subscriber growth outside North America. Disney’s recent loss of the IPL professional cricket streaming rights in 2023 to Viacom18 — whose equity stake holder, Paramount Global, aims to exploit the loss when it launches the Paramount+ streaming platform in India next year — is now confirmed to impact Disney+ sub growth going forward.

Speaking on an Aug. 10 fiscal call, CFO Christine McCarthy said India’s continued outsized contribution to the Disney+ subscriber base would now translate into a projected Indian subscriber count of 80 million by the end of fiscal year 2024. That’s down from a previous projection around 100 million Indian Hotstar+ subs.

CFO Christine McCarthy

“We recently made the disciplined decision to not proceed with Indian Premier League digital rights, while evaluating the linear rights with the same discipline,” McCarthy said.

Hotstar added 13.5 million subscribers to Disney+ in the third quarter, due in large part to heightened consumer interest in the conclusion of the IPL in the quarter.

McCarthy said Disney aims to retain the linear rights to the IPL while exorcising the same fiscal discipline it did walking away from the SVOD rights.

“We intend to refine that target over time,” she said, remaining confident Disney+ will achieve profitability in fiscal-year 2024.

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Disney+ Loses Indian Professional Cricket Streaming Rights to Paramount+

In a potential blow to SVOD subscriber growth in India, Disney lost out on its bid to retain Disney + Hotstar streaming rights to Indian Premiere League cricket. Disney lost the rights to Viacom18 — an Indian subsidiary of Paramount Global, parent to the Paramount+ streaming service.

Disney reportedly paid a record 236 billion rupees ($3 billion), while Viacom18 — which is 49% owned by Paramount Global — paid 205 billion rupees ($2.6 billion) for the streaming rights covering 410 matches over a five-year period.

The streaming rights to cricket have been key to driving Disney+ subscriber growth past 137 million in the most-recent fiscal period that ended March 31. Of that tally, more than 50 million subs come from India — largely due to IPL cricket, which is a national sport.

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The winning bid could factor significantly in the success of Paramount+, which is set to launch service in India in 2023 together with Viacom18.

“This year will be monumental for our streaming strategy as we accelerate our global ambitions, rapidly expanding Paramount+ in Europe beginning with the U.K., Italy, Germany, France and more by the end of this year and debut in Asia with South Korea in June,” Raffaele Annecchino, president and CEO of international networks, studios and streaming at Paramount Global, said in a statement last month.

Viacom18/Paramount Global reportedly beat out third-party bids from Sony and Amazon Prime Video.

Disney+ Global Subscriber Base Approaches 130 Million; Costs Increase Too

The Walt Disney Company Feb. 9 said its branded subscription streaming video service, Disney+, ended the first quarter (Jan. 1, 2022) with 129.8 million paid subscribers worldwide, including 42.9 million in North America. That compared with 94.9 million and 36.3 million in North America during the previous-year period. Disney+ launched on Nov. 12, 2019.

International subscribers increased 40% to 41.1 million, from 29.4 million, excluding Disney + Hotstar in India. The Indian segment saw 57% subscriber growth to end the period with 45.9 million subs — the largest market segment for Disney+. The platform, which Disney acquired in the 20th Century Fox deal, ended the previous-year period with 29.2 million paid subs.

ESPN+ increased its paid subscriber base 76% to 21.3 million, from 12.1 million. Hulu saw its base increase 16% to 40.9 million, from 35.4 million last year. Combined with online TV platform Hulu + Live TV, total Hulu subs topped 45.3 million, up from 39.4 million the year before.

Disney said it remains on track to reach 230 million to 260 million global Disney+ subs by the end of fiscal 2024.

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“We’ve had a very strong start to the fiscal year with a significant increase in total subscriptions across our streaming portfolio to 196.4 million,
including 11.8 million Disney+ subscribers added in the first quarter,” CEO Bob Chapek said in a statement.

Direct-to-consumer revenue for the quarter increased 34% to $4.7 billion and operating loss increased 27% to $600 million. The increase in operating loss was due to higher losses at Disney+, and to a lesser extent, ESPN+, partially offset by improved results at Hulu.

Lower results at Disney+ reflected higher programming and production, marketing and technology costs, partially offset by an increase in subscription revenue. Higher subscription revenue was due to subscriber growth and increases in retail pricing. The increases in costs and subscribers reflected growth in existing markets and to a lesser extent, expansion to new markets.

Lower results at ESPN+ were driven by higher sports programming costs, partially offset by subscription revenue growth and higher income from Ultimate Fighting Championship (UFC) pay-per-view events. The increase in subscription revenue was due to subscriber growth and, to a lesser extent, an increase in retail pricing. The increase in income from UFC pay-per-view events was due to higher revenue per event, partially offset by the impact of one less event in the current quarter compared to the prior-year quarter.

The increase at Hulu was due to subscription revenue growth, partially offset by higher programming and production costs. Subscription revenue growth was due to an increase in subscribers and higher rates driven by increases in retail pricing for the Hulu + Live TV service. The increase in programming and production costs was primarily due to higher subscriber-based fees for programming the Live TV service due to rate increases and the carriage of more networks.

JustWatch: Netflix Gained Market Share in 2021

Netflix invented the subscription streaming video market, and has consistently led all competitors with more than 213 million subscribers. Yet, in two key European markets, Germany and Austria , the streaming behemoth only established market dominance this year, supplanting Amazon Prime Video as the top SVOD service, according to new data from JustWatch.

The data/recommendation software tracks more than 20 million users’ monthly streaming decisions across 74 countries.

“We found out that Netflix is the market leader in 56 countries,” a JustWatch representative wrote in an email. “BluTV is leading in Turkey, iQiyi in China and Disney+ Hotstar is the biggest streaming service in India.”

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Netflix, along with all foreign streaming platforms, is not currently available in China. Disney+ continues to benefit from its outsized Indian subscriber presence (38%) following Disney’s $71 billion acquisition of 21st Century Fox assets, which included the Indian Hotstar streaming platform.

Disney+ Hotstar Reveals New Content Slate, Pricing Tiers

With 33% of the 103 million Disney+ subscribers originating from India, the media giant is ramping up its presence in the region, including new original Indian content — and cricket — for the branded Disney+ Hotstar platform.

The platform July 27 disclosed 16 new shows, including four movies: Bhuj: The Pride of India, comedy Hungama 2, thriller Collar Bomb and Bhoot Police. The service will also live-stream cricket tournaments Vivo IPL 2021 and the ICC Men’s T20 World Cup.

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“The content slate demonstrates our relentless pursuit of bringing original and locally relevant stories to our consumers,” Sunil Rayan, president of Disney+ Hotstar, said in a statement.

Disney acquired Hotstar in its $71.3 billion acquisition of select 21st Century Fox assets in 2019, including 20th Century Fox Studio. Disney operates Disney+, Disney+ Hotstar, Star+, Hulu, Hulu + Live TV and ESPN+.

The platform, beginning Sept. 1, will bow new annual subscription plans for a mobile-only single device priced at INR499 ($6.69); two devices at INR899 ($12.06); and INR1499 ($20.12) for four devices. The single mobile-only plan currently costs INR399 ($5.36).

“With the newly introduced subscription plans, we want to make our content more accessible to our viewers by offering best-in-class entertainment while giving them an opportunity to choose the plan that best suits their needs,” Rayan said.