- In the recently concluded Indian Premier League media auction, Star won the TV rights and Mukesh Ambani’s Viacom18 won the digital rights.
- Now that Disney+ Hotstar has lost one of its flagship properties – the IPL – to Viacom18, it will need to come up with a solid and foolproof counter-strategy to support its subscriber growth in the OTT landscape.
- According to Elara Capital estimates, 70% of Star India’s advertising revenue is driven by IPL, with subscription-based revenue following in large part.
- We try to decode the magnitude of the IPL loss in Hotstar’s business operations.
When Disney-Star bought the Indian Premier League (IPL) digital broadcast rights in 2018 for ₹16,300 crore from the Board of Control for Cricket in India (BCCI), it had hit a gold mine.
Star had cricket’s most wanted property on his lap for five years. However, he put all his eggs in one basket.
Now, after losing media giant Viacom18’s tenure to Mukesh Ambani, Disney+ Hotstar will have to pull up its socks to sustain its growth.
Why the loss of IPL will dent Hotstar’s business
Disney+ Hotstar has been one of India’s leading OTT platforms in terms of subscribers and market share, thanks to IPL. Now the tables have turned and Viacom18’s Voot, which currently has a 2% share of the OTT landscape according to asset management firm CLSA, is set to get ahead.
According to a report by Kotak Institutional Equities, Hotstar earned advertising revenue of ₹1,100 crore (₹15 crore per game) and subscription revenue of ₹1,200 crore (₹16 crore per game) for the 2022 IPL season. It currently has a total of 50 million paid subscribers.
Considering Hotstar’s crown jewel generated 70% of Star India’s advertising revenue, according to financial advisory firm Elara Capital, the streaming platform is likely to face crisis in 2023.
Hotstar’s Plan B After Losing IPL Media Rights
In a statement sent to the media, The Walt Disney Co’s President of Content and International Operations, Rebecca Campbell, explained why Disney+ Hotstar chose to waive the digital mandate.
“We made disciplined offers with a focus on long-term value. We chose not to pursue digital rights given the price required to secure this package,” she said.
Now, the platform has started working on its Plan B, which, surprise-surprise, revolves around cricket and other sports.
“We will explore further cross-platform cricket rights, including future rights for the International Cricket Council (ICC) and the Board of Control for Cricket in India (BCCI), which we currently hold for the 2023 and 2024 seasons, respectively. “, she pointed out.
“In addition, we own the rights to the Pro Kabaddi League, the football rights to the Indian Super League, as well as various international sports rights, including the Wimbledon Championships and the English Premier League,” Campbell said in a statement. Press.
Campbell also shared that Hotstar currently has over 100 local original titles in its content pipeline – with over 80 local originals slated to premiere this fiscal year.
Sport attracts subscribers, experts say
Brand expert and founder of Trust Research Advisory (TRA), N Chandramouli, said: “Sports viewership has been known to increase OTT and Disney-Hotstar subscribers, having lost the digital rights to IPL to of Viacom, should use its investments in other sports franchises to build their global subscriber base.
Chandramouli also said that while Disney+ Hotstar bet big on IPL digital rights, it was “not big enough”.
“It is likely that they [Hotstar] have losers remorse and will do their best to secure the rights to other global sports franchises. The question of whether IPL’s media rights will make a profit is still there,” he added.
A silver lining in the loss of IPL rights
Although Hotstar won the lottery ticket with IPL’s digital mandate for the previous cycle of 2018-2022, it did not have a significant impact on its earnings.
Despite adding new subscribers and incredible growth in ad revenue, Disney+ Hotstar’s overall revenue of ₹1,500 crore was lower than Netflix’s at ₹1,700 crore.
According to industry estimates, Netflix subscribers in FY21 were nearly 7 times less than Disney+ Hotstar.
|Platform||Model||To plan||The subscribers||Revenue|
|Youtube||Free or Ad||N / A||Non pertinent||₹4,000cr|
|MX reader||Free or Ad||N / A||Non pertinent||₹500cr|
|StarDisney+||Free, advertising and SVOD||VIP: ₹399 (per year) Premium: ₹1,499 (per year) Premium: ₹299 (per month)||42.7 mins||₹1500cr|
|SonyLIV||Paid||₹299/month, ₹699 – 6 months ₹999 – annual||18.2 mins||₹1,200cr|
|Amazon Prime Video||Paid||Monthly: ₹129 Yearly: ₹999||14 mins||₹1,300cr|
|netflix||Paid||Mobile: ₹149 Basic: ₹199 Standard: ₹499 Premium: ₹649||5.9 mins||₹1,700|
Source: Elara Capital, Comscore, Media Partners Asia
According to another report by Elara Capital, the winner of media rights has to bear heavy content production and marketing costs.
The report states, “Financial data from Star and Hotstar suggests that obtaining broadcast rights in the previous cycle does not appear to have had a significant positive impact on profitability.”
So, not winning the IPL broadcast rights might actually turn out to be a boon in some ways for Hotstar as it didn’t make any profit in the previous cycle.