Walt Disney to Offer Free Cricket on Smartphones in India
Introduction
Walt Disney is attempting to revive the fortunes of its streaming business in India by offering free cricket on smartphones, betting that the strategy will boost advertising revenue and offset the impact of a subscriber exodus.
The Indian Streaming Market
The India streaming operations, which were Disney’s biggest last year globally by users, posted a loss of $41.5 million on revenue of $390 million for the year to March 2022, its last disclosed results.
Subscriber Exodus
With subscriber exits accelerating and slashing the user base by a third between October last year and July, the Burbank-headquartered entertainment giant’s financial performance in the country is only expected to come under more pressure.
Indian Consumer Behavior
Disney’s woes are a cautionary tale about the Indian market where expectations about a swelling middle-class are often frustrated by deeply cost-conscious consumers.
Strategic Misjudgment
The company acquired Indian streaming service Hotstar when it paid $71 billion for some 21st Century Fox global assets in 2019. But Indian billionaire Mukesh Ambani snatched IPL rights away in a $2.9 billion bid last year, and then streamed games for free. Disney subscribers fled – out of 61 million users in October, roughly 21 million had left by July.
Free Cricket to Boost Advertising Revenue
“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.”
New Strategic Approach
The company will stream live matches of the Asia Cup from August 30 as well as the World Cup in October-November that users of 600 million smartphones in the cricket-mad nation can watch without paying anything.
Hybrid Model
Disney renewed its rights to show the International Cricket Council’s tournaments in India from 2024 to 2027 by paying around $3 billion. It retains digital streaming rights but last year licensed the TV broadcast rights to Indian’s Zee Entertainment for around $1.5 billion, a source said.
Revenue Streams and Advertising
Disney is targeting new subscribers for the Hotstar TV app where cricket will remain underpaid plans to drive two revenue streams more meaningfully. It aims to make cricket free on mobile to help “450 million-plus customers to tune in” over 48 days of the 50-over World Cup. Disney is also introducing interactive ads connecting watchers to a brand’s WhatsApp chat to enable purchases of the products.
The Path to Profitability
Research firm Media Partners Asia estimated that India’s streaming market will be worth $7 billion by 2027. However, Disney’s average revenue per user (ARPU) is currently very low in India at just $0.59 compared to Disney+ U.S. service’s $7.31. Disney is under pressure to speed up the “path to profitability” for Hotstar.
Competition
As Ambani promoted IPL on his streaming apps around March, he focused on how people can watch matches on the go on smartphones, and do not need a TV. To counter that, Disney at the time rolled out ads saying cricket was best watched on TV – for which it still has IPL rights.
Conclusion
Disney’s new strategy of offering free cricket on smartphones aims to boost advertising revenue and offset the impact of a subscriber exodus. While there are challenges and competition in the Indian streaming market, Disney hopes that this new approach will help drive additional revenue streams and attract new subscribers.
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