Disney+Hotstar, the streaming service that lost the digital rights to the Indian Premier League (IPL) for the cycle 2023–2027, has suffered a second blow by losing HBO programming.
According to specialists monitoring the over-the-top (OTT) industry, a double-digit reduction in paying users of about 15 million subscribers is anticipated as a result of the loss of HBO programming. During an earnings call, Disney’s chief financial officer Christine McCarthy stated that the absence of the Indian Premier League (IPL) competition will result in a decline in user numbers in Q1 FY23. Disney uses a fiscal year that runs from October to September.
Now that HBO programming will no longer be streamed, including shows like The Last of Us, Game of Thrones, and House of the Dragon among others starting in FY24, the loss of subscribers will get worse as the premium user base will be harmed. According to data from media consultancy firm Ormax, many of these programmes had significant viewership in India, with the Game of Thrones finale collecting 19.3 million views in a day and House of The Dragon clocking in at 28.2 million.
“The loss of the HBO library will have an impact on the churn of members from the top tiers. As a result of losing both HBO content and IPL streaming, Disney+Hotstar may lose both low and high ARPU (average revenue per subscriber) users “Abhishek Nag, a partner at Lightspeed, a venture capital firm that invests in the business and consumer sectors, warned.
Pangs of a paid user
After losing the rights to stream the IPL, the platform has already decreased its subscriber goal to 80 million by the end of FY24. The December 2022 quarter had the biggest-ever quarterly subscriber reduction, with paid users falling by 6% to 57.5 million from 61.3 million in the prior quarter.
According to Karan Taurani, senior VP at Elara Capital, paid memberships at Disney+Hotstar may fall by 25 to 30 percent. In the upcoming three quarters, he anticipates that there will be 42-45 million paid users.
“Losing HBO material is unfortunate because many Indians downloaded Disney+Hotstar just to watch US films, shows, and other media that were debuting on HBO. The following season’s episodes of shows like Succession and Industry won’t be available to subscribers anymore. OTT users will be significantly impacted by it “said Prashant Gupta, founder and chief executive officer of Caerus3 Consultants and Think-Tank.
Mihir Shah, vice-president of Media Partners Asia, stated in an interview with another magazine that there is another estimate that the OTT could lose roughly 15 million members by the end of this year. The quarter ending in June 2023 is projected to see continued subscriber erosion. Also, losing the privilege to stream Indian matches might further hurt the platform’s paying user base. “BCCI is anticipated to renew its contracts for India games this year, and if Hotstar loses that for CY24 and beyond, then it will be a heavier damage as the active paying subscriber base can even fall below 40 million over the medium term,” Taurani added.
Emails sent to Disney+Hotstar asking about the effects of having no HBO content on the platform went unanswered as of the time this article was being written. A decrease in subscription income could result from the loss of IPL and HBO content. Many paid options are currently available on the platform, including mobile subscriptions that run 149 rupees for three months and 499 rupees for a year. Additionally, there are premium subscriptions priced at Rs. 299 per month and Rs. 1,499 per year, as well as an ad-supported plan priced at Rs. 899 per year. For the quarter ending in December 2022, Disney+Hotstar’s average revenue per paying member climbed by 28% to $0.74.
Concentrating on the content
Although the platform may lose members, experts say it has saved money. According to media sources, it will cost about $40 million for four years to broadcast HBO material.
“A portion of the content budget saved from eliminating the HBO catalogue will be used to commission and buy Indian language content. Yet it takes time for that to appear in the catalogue. As a result, Nag said, I anticipate some rocky quarters for subscription growth for Disney+ Hotstar.
Taurani pointed out that investing in original content and new intellectual property required a transition period of 12 to 18 months.
“Due to the loss of Disney content in 2019, Netflix had also experienced some pressure. Nonetheless, they made an investment in creating unique IP and shows, which over the past four years has paid off handsomely. We anticipate Hotstar to make strong investments in new and original programming, which must resonate with the audience in order to guarantee subscriber retention “Added he.
The platform can be proud of numerous critically acclaimed originals, like as Sushmita Sen’s Arya, Pankaj Tripathi’s Criminal Justice, and Ajay Devgn’s Rudra. The OTT has to construct more of these originals, according to Nitin Menon of NV Capital. “They must develop their plans for expanding their content library, both in terms of riveting originals and a larger selection of films. With tent pole originals like Rudra, they have already established that trend “explained he.
According to commentators, regional content will be a major draw for subscribers. Most Indian OTTs have made regional content the focal point of their strategies. Regional content expansion has been a priority across platforms, from Viacom18’s Voot to Zee Entertainment’s streaming subsidiary ZEE5.
According to a report by Ernst & Young, by 2025, regional language consumption on OTT platforms would account for more than half of all streaming platform time. The proportion of regional content in newly produced original shows has climbed from 20 percent three to four years ago to 50 to 60 percent recently.
According to Manish Kalra, the OTT’s chief business officer, streaming platform ZEE5 receives over 50% of its audience from regional language programming.
The OTT platforms
Disney+Hotstar has been dominating the OTT market in terms of subscriptions, whether it be for the IPL or other programming. In India, Disney+Hotstar commands a 50% share of the subscriber market, followed by Amazon Prime (19%) and Netflix (5%).
“When compared to other OTT services, Disney+Hotstar continues to hold the top spot. But, Disney+Hotstar should be concerned about Song LIV’s huge development as well as the launch of the new Jio platform in the future “Malek remarked.
2021 saw 46 million paying users on Disney+Hotstar, compared to 26.3 million in 2020. According to MPA statistics, an advising, consulting, and research organization, Netflix came in second with 5.5 million in 2021 and 4.2 million in 2020, followed by Amazon Prime Video with 21.8 million in 2021 and 17 million in 2020. The question is whether Disney+Hotstar will be able to maintain its top spot in the OTT subscriber market now that IPL and HBO programes are no longer available.
Disney+Hotstar will no longer offer HBO programming as of March 31, but customers may still access its enormous collection of material, which includes more than 100,000 hours of TV series and movies in 10 languages as well as coverage of important international sporting events.
