Disney Star said that it will focus on growing its slate of original entertainment content for Disney+ Hotstar and its television channels in the region, apart from exploring other multiplatform cricket rights.
BCCI has wrapped up the auction of the TV and digital media rights for the Indian Premier League (IPL), one of the world’s most lucrative sports leagues. Disney Star won the rights to broadcast the IPL on TV in the Indian subcontinent, or Package A, for a whopping INR 23,575 Cr.
However, Disney Star lost to Reliance-owned Viacom18 for the right to broadcast IPL on digital platforms, ending its five-year monopoly on IPL media rights. Viacom18 won the digital rights for both exclusive and non-exclusive matches, Packages B and C, for a collective INR 23,758 Cr.
The auction was for the 2023-27 period, which means Viacom18 will have the digital rights for five years and Disney Star will have to make do with the TV rights. Viacom18 also emerged as the winner for international TV and digital rights, along with Times Internet.
Although the much-celebrated tournament saw a decline in the viewership this year, it still attracts tens of millions of viewers per match.
According to an October 2021 figure given by BCCI, IPL 2021’s viewership had crossed 380 Mn by around halfway through the season. The BCCI is yet to report the figures for the latest IPL season. However, one thing is certain – IPL is a very lucrative sports league. Multiple media reports suggest that advertisers spent almost INR 17 Lakh for a mere 10-second ad spot during IPL 2022 matches.
At this rate, considering the total ad inventory of 2,300 seconds per match, a broadcaster stands to make INR 39 Cr from just advertisements. This means that Disney Star, which paid a price of INR 57.5 Cr per match to acquire the TV rights, can make almost two-thirds of the money it spent from advertisement alone, subject to it getting the same advertising revenue as it got last year.
However, the loss of digital broadcasting rights has raised questions about the future of its OTT platform Disney+Hotstar. To put the value of IPL’s broadcasting rights into perspective, Star India (which was rebranded as Disney Star after Walt Disney acquired 20th Century Fox in 2018) had won the TV and digital rights for the IPL for a five-year period during the 2017 auction for just INR 16,348 Cr.
The digital rights for the marquee cricket tournament helped Disney+Hotstar grow, in both size and influence, as the premier Indian OTT platform. It had a 50% market share in Subscription Video on Demand (SVoD) OTT as of April 2022, according to an OMDIA report.
In an earnings report for the quarter ended April 2, 2022, Disney+ noted that Hotstar accounted for 50 Mn of its 138 Mn paid subscribers around the world. While its competitors such as Amazon Prime Video and Netflix boast 22million and 5.5 million paid subscribers respectively.
Hotstar was launched in 2015 at a time when India’s OTT landscape was relatively barren. At that time, none of its international rivals, including Netflix and Amazon Prime Video, had entered the Indian OTT market and many homegrown OTT platforms were not launched. Hotstar was later rebranded as Disney+Hotstar following Disney’s Fox acquisition
Two years later, with the IPL coming to it, Disney Star banked heavily on the high demand for sports content to build Disney+Hotstar. Since then, the OTT platform has also introduced Formula 1, the English Premier League, and FA Cup, among other sports offerings.
Disney+ has also been banking hard on sports, earmarking $10.6 Bn for sports broadcast in FY22. According to an Emkay global report, IPL and India’s cricket rights led to app downloads of 500mn+ for Hotstar. On the revenue side, according to the report, Hotstar garnered ad revenues of Rs11 bn (Rs150 mn/match) and subscription revenues of Rs12 bn (Rs160 mn/match) for the IPL 2022 season.
Christine McCarthy, senior executive vice-president and CFO, of Disney+, had attributed Disney+Hotstar’s growth to the start of the new IPL season in April 2022.
Rebecca Campbell, the chairman of international content and operations at The Walt Disney Company was quoted as saying in various reports that the media giant “chose not to proceed with the digital rights given the price required to secure that package”.
Now, Disney+Hostar is likely to lose a fair bit of its consumer base. The OTT platform recently hit the 50 Mn mark for paid subscriptions.
Mihir Shah, vice president of advisory and research firm Media Partners Asia, said, “Disney+ Hotstar could potentially lose 15 Mn subscribers on losing the IPL digital rights.” This represents about 33% of the total paid subscribers it has at the moment. Losing IPL Digital rights now means that Disney would have had to invest a significant amount to improve its streaming service.
