How hot is Hotstar now? The over-the-top (OTT) platform launched by the then Star India locally over seven years ago has made steady progress. The opportunity seen was the shifting viewer preference from television to digital. With data and broadband costs dropping sharply starting 2016, post the entry of Reliance Jio, Star (now Disney Star after the global buyout) put its weight behind cricket.
Clinching the Indian Premier League (IPL) bid by forking out Rs 16,348 crore for the 2018-22 period, followed by both Board of Control for Cricket in India (BCCI) and International Cricket Council (ICC) rights, made Hotstar a household name in the new age broadcasting business. Now, with Mukesh Ambani-backed Viacom18 taking the digital rights in its kitty and away from Hotstar, the road ahead looks challenging and not without reason and the numbers demonstrate that.
For FY21, it had revenues of Rs 1,721 crore (grew from Rs 1,13 crore in FY19), with cricket, according to former Hotstar executives, accounting for 80 per cent of that. It is estimated IPL brought in Rs 600 crore of revenue last year for the platform or 45 per cent of the total cricketing revenue. Now that figure is zero with the loss of the rights. The other 35 per cent comes from the BCCI and ICC matches.
That’s not the only rub. Parent company Disney’s stock price on Wall Street is today determined by the number of OTT subscribers and not so much on the basis of profitability.
According to Balu Nayar, former MD of IMG and a key architect of the IPL, Hotstar has been created on the back of the IPL.
“While many drop out after the event, many users go in for annual subscriptions. Now this is of strategic importance for Disney globally, as their investor growth story today is about paid subscribers on Disney+. While the Hotstar subscription fee is way below that of Disney+ in the US, that is of less importance than just the users, since Hotstar [it operates in a few markets in Asia with India accounting for the largest chunk] today accounts for 37 per cent of Disney+'s global paid subscribers and a large component of the growth too,” he says.
To him, “displaying such a steep fall in Disney+ subscribers is an event that will disappoint the markets.”
The disappointment within Disney was palpable, although publicly they did put up a somewhat stoic face. In a statement after the winners of the IPL bid were declared, Rebecca Campbell, Chairman (International Content & Operations), The Walt Disney Company said, “We chose not to proceed with the digital rights given the price required to secure that package.”
The decision comes at a time when the Disney's stock has dropped by over 37 per cent over the last six months – it closed yesterday at $94.22. The fall over the last over is 46 per cent. What the scenario for Disney would be with its Hotstar business, and the way forward for the BCCI and ICC bids, especially in a scenario where Viacom18 is super aggressive, will be interesting to watch.
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