Disney CEO Bob Chapek is not afraid of making bold decisions or statements. The embattled executive has repeatedly stated that the company’s signature streaming service Disney+ will hit between 230 and 260 million subscribers by 2024. Currently at 137.7 million global subscribers, the platform has significant work to do to meet that guidance, but perhaps just as important as adding new subscribers is keeping the ones that the service already has.
Of the streamer’s 137.7 million customers, 50.1M are signed up via Disney+ Hotstar, the service’s India-based platform; for comparison, Disney+ reported 44.4 million subscribers in the U.S. and Canada. A major driver of Indian subscriptions is the fact that Hotstar has been the home of Indian Premier League (IPL) cricket since 2018. However, with Disney’s current $2.5 billion rights deal with the league ending this year, maintaining its large Indian subscriber base could be difficult if the company is unable to re-up its agreement.
Over 600 million people tuned in to watch IPL action last year, a significant number that has attracted interest from Amazon, Sony, South African network SuperSport, and others, hoping to bid on the league’s rights next month. The IPL will hold online auctions on June 12 for its linear and streaming rights. Though those two bundles will be sold separately, it is believed that the combined media deals could surpass $7 billion.
If Disney were to theoretically lose the cricket rights to Amazon, who then put them on YouTube or even Prime Video, Disney+ could see significant subscriber churn in its biggest international market, making it nearly impossible for Chapek and company to reach their regularly reiterated subscriber targets.
However, being outbid might not be the only way that Disney doesn’t come away with a new round of IPL streaming rights. Despite having over 50M subscribers on Hotstar, the average monthly revenue per subscriber is only $0.76 on the service. This total stands in stark contrast to the $6.33 per subscriber that Disney+ earns in all other markets.
So, as companies begin to focus more on revenue than simply on raw subscribers in the wake of Netflix’s first quarterly subscriber decline in a decade, analysts are asking whether the inevitably sizeable cost to secure Indian cricket rights is worth the investment given the startlingly small return.
Whether Chapek and Disney execs ultimately decide not to pursue the league’s streaming package or another streamer swoops in to steal the rights away, the result would be the same: Disney+ Hotstar would be without the single most important piece of content on its platform. In a country where people spend roughly $35 USD on entertainment per year, it is unlikely that Disney would be able to maintain its Indian subscriber levels without cricket, hamstringing its chances of reaching 230M+ subscribers in two years.
Short of nailing down the entire streaming package, the calculus for Disney becomes whether it needs to have the full complement of IPL action or just a portion of the rights to hold onto a substantial portion of its Hotstar subscribers. Domestically, sports leagues like the NFL, NBA, and Major League Baseball are increasingly interested in diversifying the platforms that their games appear on, especially with the advent of live sports on streaming.
The NFL appears to be on the verge of moving its signature out-of-market package from DIRECTV to a streaming service (either Apple TV+ or Prime Video) beginning in the 2023 season and MLB has thoroughly embraced streaming this year with games appearing exclusively across the country on Apple TV+ and Peacock.
So perhaps the best outcome for Disney+’s quest to reach 230M subscribers while also appeasing stockholders concerned with the company’s ballooning content budget — which will reach $32 billion this fiscal year — is to land a portion of the IPL’s streaming rights as opposed to the full slate. This would mitigate at least a portion of the exorbitant price tag while also giving Hotstar the best chance to retain as many subscribers as possible.
Ultimately, Chapek’s guidance of 230 to 260 million Disney+ subscribers by 2024 always felt a bit like a moon-shot, especially heading into the inevitable contraction and consolidation phase of the streaming wars. And while an eventual merger of Disney+, Hulu, and ESPN+ could help bolster the numbers domestically — Hulu content is already included on Disney+ in many international markets as part of its Star vertical — to reach 230M will likely require an “expansion-at-all-costs” mentality that might not sit well with Disney’s board or investors in light of recent industry shakeups.
Chapek will undoubtedly have a strategy heading into the IPL rights auction next month, and how aggressively Disney bids on the streaming package should tell us just how dedicated the company is to hittings its projections, regardless of how much money it costs them.
Disney+
Disney+ is a video streaming service with over 13,000 series and films from Disney, Pixar, Marvel, Star Wars, National Geographic, The Muppets, and more. It is available in 61 countries and 21 languages. It is notable for its popular original series like “The Mandalorian,” “Ms. Marvel,” “Loki,” “Obi-Wan Kenobi,” and “Andor.”