With Its India Business Struggling, Disney Turns To Free Cricket
The Walt Disney Company is attempting to revive its struggling streaming business in India by offering free cricket on smartphones.
Disney’s India streaming operations have recently turned into a headache for the company, with Disney publically acknowledging that it was looking for strategic partners to help its India business. Last year, Disney+ Hotstar posted a loss of $41.5 million on revenue of $390 million.
How We Got Here
The rise of DIsney+ Hotstar came in 2020, following Disney’s purchase of 21 Century Fox. As part of the acquisition, Disney found itself with the streaming rights to the Indian Premiere League (IPL), the world’s richest cricket league. After Disney made Hotstar a paid service in 2020, they were confident they could grow to 100 million users within years.
Then, everything fell apart. Last year, Indian billionaire Mukesh Ambani outbid Disney for the IPL rights for $2.9 billion and began to stream the games for free.
Photo: BBC
Soon, Disney was bleeding subscribers. Out of their 61 million users in October 2022, roughly 21 million had left by July of this year.
Internally, Disney realized that it misjudged Indians’ willingness to pay for content. They may have lined up for the IPL, but they had no desire to pay for Disney’s other content.
Photo: BBC
“We were bullish on Indian subscribers’ propensity to pay. That’s not worked out,” said one of the sources. “Free cricket is the only bullet left.”
A New Hybrid Model
In order to bolster their struggling services, Disney will stream live matches of cricket’s Asia Cup and the World Cup this fall for free, but there is a catch. The cricket games will only be free on smartphones.
Disney is calling this move a “hybrid model” that will allow them to drive advertising revenues by bringing in smartphone viewers, while still targeting new subscribers to their Hotstar TV app, where watching cricket will still cost money.
Photo:amplitude.com
This strategy is about “how we build a model which will allow us to drive two revenue streams more meaningfully,” says Sajith Sivanandan, head of Disney+ Hotstar.
Even with free cricket, however, there is no guarantee that Disney’s India business will turn around.
Can Disney Turn It Around?
The problem for Disney is that the gigantic Indian middle class remains averse to paying for content. Additionally, there is the issue of price.
Photo: Disney
In the United States, a Disney+ ad-free streaming service is set to rise to $13.99 per month. By contrast, in India, Disney+ Hotstar service costs $3.62 a month.
Because of this price point, the average revenue per user is very low in India at just $0.59, compared to Disney+ in the United States which has an ARPU of $7.31.
According to insiders, Disney has increasingly put pressure on India to speed up the “path to profitability” for Hotstar. Bob Iger’s Chief of Staff, Nancy Lee, even visited the country earlier this year to see if India could be profitable before the end of 2024.
She was reportedly told that a new target would not be possible.
Photo: Getty
While most Disney fans know little about the company’s business in India, Wall Street will be paying attention. If Bob Iger wants to turn around Disney’s stock, he is going to need to figure out India.
Thanks for visiting MickeyBlog.com! Want to go to Disney? For a FREE quote on your next Disney vacation, please fill out the form below and one of the agents from MickeyTravels, a Diamond level Authorized Disney Vacation Planner, will be in touch soon! Also, thanks for reading!
