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 the 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.

CFO McCarthy: Disney Bullish on SVOD Despite Headwinds

When Disney announced that its branded SVOD platform Disney+ had topped 103 million subscribers through the second fiscal quarter ended April 3, the tally fell below company and Wall Street projections of 108 million to 110 million, respectively.

Speaking on the May 13 fiscal call, CFO Christine McCarthy put a positive spin on the setback, saying Disney+ added subs at a faster pace in the last month of the second quarter than it did in the first two months.

“And that was despite no major market launches, a price increase in [Europe and the Middle East] and a domestic price increase towards the end of the quarter,” McCarthy said.

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She said Disney’s combined direct-to-consumer portfolio of Disney+, Hulu, Hulu with Live TV, ESPN+, Disney+ Hotstar and pending general entertainment site Star+, remains on track to achieve company guidance of 230 million to 260 million subscribers by the end of fiscal 2024.

That said, Disney is facing increased OTT headwinds going forward, including the fact that its market-leading online TV service, Hulu with Live TV, lost 200,000 subs in the quarter — a decline McCarthy attributed to seasonality of content and a $10 monthly price hike.

While Disney+ has added 30 million subs in the first half of the fiscal year, sub growth is expected to cool in the second half, due in part to ongoing COVID-19 issues in India — which accounts for a third of all Disney+ subscribers. The platform has exclusive streaming rights to Indian Premier League cricket, a sport now sidelined in the world’s second most-populous country due to the pandemic.

McCarthy said about half of the 60 IPL matches that were expected to be played this season have already taken place. The remaining 30 matches on schedule have been canceled, but negotiations are underway to relocate the fields of play outside India.

“If they were able to successfully relocate the tournament, we would hopefully see an impact, especially on advertising,” McCarthy said. “It would be better than if there were no rescheduled matches. So let’s hope they are able to relocate [the tournament].”

In addition, Disney pushed back to Aug. 31  the launch of the Star+ Latin America launch. At the same time, rollouts of Disney+ in Malaysia and Thailand remain on track for June 1 and June 30, respectively. The company expects the pending launch of “Loki” on June 9, starring Tom Hiddleston, to be a strong streaming driver.

“We remain very optimistic about our [streaming] future,” McCarthy said.

The Indian Connection: U.S. Streamers ‘Full Go’ Targeting Second Most-Populous Country

With China effectively shutting the door to U.S. streaming services looking to launch operations in the erstwhile communist country, companies such as Netflix, Amazon and Disney are aggressively targeting India to jumpstart subscriber growth.

With 1.4 billion people, including 1.1 billion on portable media devices such as smartphones, India is fertile ground for SVOD platforms looking for growth to justify multi-billion dollar infrastructure/content investments and the future of their movie/TV program distribution.

In 2020, there were about 60 platforms operating in India, with YouTube, Disney+Hotstar, Netflix, Amazon Prime Video and Facebook representing 85% market share, according to Media Partners Asia. The country’s OTT video market is projected to grow 26% annually, reaching $4.5 billion in revenue by 2025.

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“Subscription based online video services benefited significantly in 2020 as the country went into the lockdown,” MPA executive Mihir Shah said in a statement.

Assisting sub growth is a massive market of affordable smartphones, inexpensive data plans and limited government regulation on foreign content streaming within its borders. The latter could be changing as the government’s ministry of information and broadcasting recently granted itself for the first time jurisdiction over streaming video content.

The Indian SVOD market will remain competitive as Disney+Hotstar continues to scale its business, while Netflix and Prime Video deepen partnerships with mobile and fixed broadband operators, according to Shah.

“Local premium content and sports rights will help broadcaster-backed platforms gain share,” Shah said. “Increased reach and engagement with rural millennials will improve monetization for short-form video platforms.

Indeed, Disney, through its acquisition of 20th Century Fox, inherited Hotstar, the Indian video service streaming movies and shows in 8 Indian languages. The upside to Disney+ has been immediate. The service topped 88 million subscribers last month, with 30% of that growth originating in India via the rebranded Hotstar service.

Netflix’s first original Indian drama, “Sacred Games.”

In 2018, Netflix co-founder/co-CEO Reed Hastings said the SVOD pioneer was shooting for 100 million Indian subs — driven in part by a mobile-only plan priced at 199 rupees ($2.72) per month. Disney+Hotstar has a similarly priced plan. Netflix reportedly spent about $400 million on Indian content in 2019 and 2020 — enjoying global success with original dramas “Sacred Games,” and “Delhi Crime,” among others.

“In the U.S., people pay $50 for mobile phone access,” Hastings told a leadership summit in New Dehli in 2019. “Pricing is very low here, and the market is very large. That’s why our 199 rupees a month pricing is very competitive.”

Amazon Jan. 13 launched a new $1.20 monthly mobile-only video streaming plan — the cheapest among U.S. services operating in India. The service is through a partnership with wireless carrier Bharti Airtel, offering prepaid subs video streaming for 89 rupees ($1.20) a month after a 30-day free trial. The offer also includes 6 gigabytes of data. Airtel has about 300 million subscribers.

Amazon reportedly is eyeing securing Indian Premier League cricket in the future, with Disney+Hotstar’s carriage rights ending in 2023.

“India is one of our fastest growing territories in the world with very high engagement rates,” Jay Marine, VP of Prime Video Worldwide, said in a statement. “Buoyed by this response, we want to double-down by offering our entertainment content to an even larger base of Indian customers.”

Disney Stock Hits Record High After Investor Day News Avalanche; 30% of Disney+ Subs Come From India

The morning after Walt Disney Co.’s epic Investor Day event, which saw every entertainment component of the media giant throw its support behind streaming video, i.e. Disney+, Hulu, ESPN+ and Star, Wall Street responded, sending shares to a record high.

Disney’s stock was up about 14% in Dec. 11 midmorning trading at $176 per share as of 9 a.m. PST. The company now has a market cap of almost $314 billion.

Amid the avalanche of content news on the Dec. 10 event, Disney said it would raise Disney+ subscription pricing by $1 next March, in addition to increasing European pricing by €2 to €8. The company touted more than 137 million paid subscribers through Dec. 2 via Disney+, Hulu and ESPN+.

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Notably, of the 86.8 million Disney+ subscribers, 30% (26.8 million) originate in India, where Disney owns and operates Disney Hotstar and pending Star and Star+ general entertainment streaming services. Disney+ Hotstar launched April 3 in India featuring live cricket matches — a national sport — in addition to more than 17,000 hours of content in seven languages.

“We are uniquely positioned for India because of the rapidly growing middle class and their purchasing power,” Rebecca Campbell, chairman of international operations and direct-to-consumer, said on the Investor Day webcast.