Disney’s former chairman & CEO returns! What does it mean for Disney+ Hotstar?

Disney+ Hostar’s parent Disney has brought back former Chairman & CEO Robert Iger to replace Bob Chapek as its top executive amid mounting losses on its streaming business, which includes the largest OTT player in India by user base which has been struck by slowing subscriber addition because of void created by the loss of the Indian Premier League (IPL). 

 “The Board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the Company through this pivotal period,” Susan Arnold, Chairman of the Board, said in a press release early on Monday IST. 

The American entertainment giant has lost $1.5 billion on its streaming business, which includes Disney+ (as Disney+ Hotstar in Asia), Hulu, ESPN+ and the Star service in Europe, just this quarter and around $8 billion over the past three years, according to Q4 results declared 10 days ago. The company follows the October-September calendar. 

Recent results showed that Disney+ Hotstar has a whopping 60.3 million subscribers in Asia. A large majority of it comes from India, making it the largest streamer by user base in the country, way ahead of rivals Amazon Prime Video (approximately 20 million) and Netflix (approximately 6 million). Disney+ Hotstar is also a crucial piece in the global scheme of things as it contributes around 37% to Disney+ ’s 164.2 million-strong global subscriber base. 

The platform managed to attract a large part of that subscriber base because of the cricket IPL tournament, the digital streaming rights of which it has lost to Reliance-backed Viacom18 for the 2023-27 cycle.  

It added fewer than 3 million subscribers in July-September compared to the 8 million in April-June. Besides, the firm expects its user base to decline in the October-December quarter because of the IPL void and stabilise during January-March, Disney’s chief financial officer Christine McCarthy warned in the recent earnings call. Further, the firm in August cut Disney+ Hotstar’s user base growth projection to 80 million by fiscal 2024 compared to its earlier projection of 70-100 million. 

“The loss of digital IPL rights will be a short-term problem for Disney+ Hotstar. Sony had also lost the IPL rights five years ago and they also came out stronger after that by focusing on good content,” says former Sony LIV head and Kurate Digital Consulting’s Founding Partner Uday Sodhi. He says they have a great product and one of the best app distributions in the digital space, giving them a good edge in the long run as the market grows because of connected TVs and 5G. 

At a time of proposed budget cuts and layoffs by parent firm Disney to focus more on profitability, the OTT player has its task cut out in grabbing eyeballs as the digital streaming landscape gets more competitive in India where content costs are high but ARPUs are low. That is, customers are not paying as much to match the platforms’ content investments. 

“Sport content costs are escalating and that’s probably why they shied away from buying the IPL digital streaming rights. They are at a risk of losing 40-50% of subscriber base because of IPL. We see them trying to curtail that impact by investing in original content and licensed movies. They need to focus on large-scale franchise web series with strong recall so they can make multiple seasons of the same to get a sticky audience,” says Karan Taurani, Senior Vice-President, Elara Capital.  

He also points out that a lot of OTT platforms were investing heavily in content because of high valuations and a good flow of money. “But that money flow has slowed down now globally.”  

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