Disney+ Hotstar’s Fate Hangs in the Balance: May Lose 15 Million Paid Subscribers!

Starting on March 31, 2023, HBO content will no longer be available on the Disney+ Hotstar platform. This is another blow for the Walt Disney Co., which lost IPL rights to Viacom18 last year. Will the CEO strategy be paid off, or the OTT platform will continue to lose its paid subscribers?

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Disney+ Hotstar, India’s largest OTT platform, has disrupted the entertainment sector. With its vast collection of movies, TV shows, and live sports events, the platform has become a one-stop destination for all kinds of entertainment needs. However, in a recent development, The Walt Disney Company is restructuring its streaming content business by removing HBO content from the Disney+ Hotstar platform, starting March 31, 2023.

This latest development comes just one month after Disney CEO Bob Iger revealed the company’s plans to reduce costs by $5.5 billion, including $3 billion in non-sports related content and $2.5 billion in non-content related costs. The company has also laid off roughly 7,000 employees, equivalent to around 3.6% of its global workforce.

It is important to note that due to the mounting losses of Disney’s streaming business, the company brought back CEO Robert Allen Iger (Bob Iger) in November 2022, replacing Bob Chapek.

CEO Iger’s top priority is to ensure that Disney’s streaming business becomes profitable by the end of 2024. To accomplish this objective, he stated that the company would not be sidetracked by concentrating on subscriber counts. Therefore, instead of offering projections on its subscriber figures, Disney will solely focus on generating revenue.

Starting March 31, HBO content will be unavailable on Disney+ Hotstar. You can continue enjoying Disney+ Hotstar’s vast library of content spanning over 100,000 hours of TV Shows and Movies in 10 languages and coverage of major global sporting events,” the company said in a tweet.

Disney+ Hotstar loses rights on HBO, IPL.

Losing HBO rights is another setback for The Walt Disney Company, which owns Disney+ Hotstar in India. In August 2022, the media company lost the rights to stream the Indian Premier League (IPL) to Viacom18, a joint venture between Paramount Global and India’s Reliance Industries.

The loss of IPL rights immediately impacted the subscriber base of Disney+ Hotstar. It is worth noting that Disney+ Hotstar lost 3.8 million paying subscribers in FY Q1 2023, which ended on December 31, 2022, bringing the total to 57.5 million. This represented the largest-ever quarterly loss of subscribers recorded since the media and entertainment giant began reporting the paid membership data in April 2020.

With HBO also departing the platform, we may expect more than a quarter of its users to cancel their memberships. This is also because India has a high viewership of the most popular television show, “Game of Thrones,” on Disney+ Hotstar. However, unfortunately, it will stop airing from March 31st.

Karan Taurani, Senior Vice President of Elara Capital, expressed his concern over removing HBO content from the Disney+ Hotstar platform, which will undoubtedly reduce the number of paid subscribers. The platform is estimated to lose around 25-30% of 61.5 million subscribers at its peak. This would result in a loss of 15 million subscribers, lowering the total count to approximately 43-46 million by the end of 2023.

“We believe the above will have a significant negative impact on paid subscribers for Hotstar India; we maintain that the loss of subscribers will continue to happen towards June 2023 quarter due to IPL,” said Karan Taurani, senior vice president, Elara Capital.

Nevertheless, Taurani believes that Star’s existing TV content library, the upcoming T20 World Cup, and the highly sought-after franchises of Star Wars, Marvel, and Pixar would provide some relief.

In addition, the average monthly revenue per paid subscriber at Disney+ Hotstar (India) was $0.74 during the first fiscal quarter of 2023. In contrast, Disney+ reported an average revenue of $5.95 per US and Canadian subscriber.

In December 2015, Disney Star (formerly known as Star India) partnered with HBO for its original programs. The availability of HBO shows, especially Game of Thrones, on the same day as the US broadcast was a crucial part of Hotstar’s strategy to entice paying subscribers in India.

In April 2020, Hotstar was renamed Disney+ Hotstar, allowing the launch of its primary streaming service, Disney+, in conjunction with Hotstar. This happened following Disney’s acquisition of 21st Century Fox for $71.3 billion, which included Star India, and was concluded in 2019.

The future distribution of these shows by HBO remains uncertain at present. Last year, Warner Bros Discovery, a premier global media and entertainment company, abandoned plans to launch the HBO Max streaming service in India as part of the company’s broader restructuring.

The company intends to introduce a global streaming service that combines HBO Max and Discovery+ content but has not provided any details on the rollout schedule.

In July 2022, Warner Bros Discovery entered into a licensing agreement with Amazon Prime Video, under which a selection of original HBO Max content is being offered to viewers in India. This agreement includes 11 original series and 10 original features, such as The Flight Attendant, the Gossip Girl reboot, the Sex and the City sequel titled And Just Like That, and the sci-fi drama Raised By Wolves, all available to Amazon Prime Video customers in India.

Bottom Line

While OTT players such as Disney and Netflix focus on creating shows, movies, and other content, tech giants such as Apple and Amazon are investing heavily in their streaming services, Apple TV+ and Prime Video, respectively. These services are being used as loss leaders to support their primary businesses.

For companies like Disney, whose primary business is content creation, making losses in the long term would not be viable. This is why Bob Iger was brought back from retirement to course-correct, and his initial step was to lay out a $5.5 billion cost-cutting plan.

The Disney+ Hotstar service is currently available only in India, Indonesia, Malaysia, and Thailand. In comparison, Netflix, which is far more expensive than Disney+ Hotstar in India, reported an average revenue per member of $7.69 in the Asia Pacific region, despite a 25% reduction in subscription prices.

Netflix’s premium plan costs ₹7,788 per year, whereas Disney+ Hotstar’s most expensive plan costs ₹1,499 per year, making Disney+ Hotstar’s top-tier plan still cheaper than Netflix’s most basic plan.

In contrast, Viacom18, which secured the valuable IPL streaming rights for ₹23,758 crore, will provide free 4K streaming via the JioCinema app.

Disney+ Hotstar must make bold investments in producing original content that resonates with viewers who are accustomed to HBO’s popular collection. CEO Bob’s recent risky decision has altered the subscriber structure for Disney+ Hotstar. Now the time will tell whether the company’s decision to bring him back will be a wise and lucrative move.


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