Last Updated: 11.29 PM, Feb 20, 2023
Walt Disney’s worldwide cost cuts may prompt its Indian streaming service Disney+ Hotstar to produce fewer originals and focus on regional content, at a time it has lost digital rights for the Indian Premier League tournaments. The company also hasn’t renewed its content deal with HBO, due to which shows like Game of Thrones and House of the Dragon will no longer be available for Indian viewers.
Challenges will arise from the imminent loss of subscribers due to loss of IPL rights, and price hikes not being possible since the tournament is streaming for free on a rival platform.
The company could also see some channel consolidation in the linear television space, over the next year or so, as the pay TV market shrinks.
“It is clear that a certain cost consciousness will come in internationally and will ultimately flow to India. The issue though is that digital hasn’t really taken off versus linear platforms in India and while Disney+ Hotstar is big in the country, it is low on ARPUs (average revenue per user),” said Anuj Gandhi, media analyst and founder of Plug and Play Entertainment, a media tech start-up.
Gandhi was quick to point though that these are pressures faced by all players, where tech costs are killing the business and eating into profits. “Disney is at the forefront of it. But then there are aggressive players like Netflix and Amazon Prime Video to compete with, and the company has already lost the IPL rights,” Gandhi said. Disney India declined to comment on Mint’s queries on possible implications of the global restructuring.
Average monthly revenue per paid subscriber for Disney+ Hotstar was at $0.74 in the December quarter, according to an earnings release. Bob Iger, who was reappointed chief executive of Disney last November, said during an earnings call that the company is targeting $5.5 billion of cost savings, including $3 billion on the content side.
Some industry experts say restructuring was necessary with the loss of the IPL that used to bring 70% of its India revenues. “The move seems to be in line with new developments. They should also not be looking at acquiring movies at hefty costs anymore and instead work with box office benchmarks. The focus on profitability should mean fewer shows and cuts on large Hindi series, while the regional pie continues to grow,” said Karan Taurani, senior vice-president at Elara Capital Ltd. He added that the streaming service should lose about 30% of its older subscribers by June as eyeballs shift to the IPL on Reliance-owned platforms, but then, things should stabilize and bring in some new users depending on other content available. JioCinema is likely to reach 550 million consumers during the upcoming IPL.
A senior executive at a rival streaming platform said on condition of anonymity that Disney India should be looking at strengthening its AVoD (advertising video-on-demand) strategy. This could mean more weekly episodes, free content and more appointment-based programming, which was the idea behind live sports, the person said.
Iger had also emphasized that the company’s priority is the enduring growth and profitability of its streaming business.
“We will aggressively curate our general entertainment content, reassess all markets we have launched in and also determine the right balance between global and local content. We’ll adjust our pricing strategy, including a full examination of our promotional strategies and fine-tune our advertising initiatives on all streaming platforms. We will improve our marketing, better balancing platform and program marketing while also leveraging our legacy distribution platforms for marketing and programming,” he had said.