Disney is considering an exit from India amid increasing customer churn and intensifying competition.
As Disney looks to sell, the likes of Sun TV, Adani Group, and Reliance will race to acquire the business to bolster their own content offering.
The race for market share has forced streamers to offer freebies, which has impacted their revenues. Also, the cost of acquiring media rights for cricket tournaments continues to rise, further burdening market players.
Hit for six by the IPL
Disney is considering selling part of its India operations or finding a joint venture partner amid streaming wars in the country. Disney’s subscriber base in India shrank by 39% year over year to 37.6 million in September 2023, primarily due to the loss of streaming rights for the Indian Premier League (IPL) cricket tournament to Reliance JioCinema and the non-renewal of its HBO content partnership.
Sports streaming, especially cricket, remains a key area of competition in the Indian video streaming market. To gain subscribers, JioCinema offered free streaming of the IPL, reaching 32 million simultaneous viewers in the 2023 IPL. This outpaced Disney’s Hotstar’s previous record of 25 million concurrent views in 2019. In June 2023, Disney’s Hotstar attempted to emulate Jio’s approach and announced the free live streaming of cricket tournaments to mobile users in India. As a result, it achieved a peak concurrent user record of 59 million during the ICC Men’s Cricket World Cup final in 2023.
Although the platforms achieved record viewership, in the long term, offering premium content for free will hurt market dynamics and revenue given the increasing cost of acquiring the media rights for sports tournaments. Reliance paid $2.7bn for IPL media streaming rights, beating competitors Disney and Sony Group. Five years earlier, Disney paid $2.6bn for both the streaming and linear TV rights.
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SVoD platforms are under pressure
The video streaming industry enjoyed strong growth during the pandemic but has since entered choppier waters. This is due to a post-pandemic shift in viewing habits, rising inflation in several markets, and so-called ‘subscription fatigue’.
The push for exclusivity on subscriber video-on-demand (SVoD) platforms has intensified the content wars, and video streaming companies spend eye-watering amounts on content. Disney, for instance, spent $33bn in 2022 alone, which equates to over five times the BBC’s entire $6bn budget. Streamers have begun to tighten their belts, but exclusive content remains a differentiator, and the industry remains under pressure to spend heavily to retain consumers.
Disney’s sale will attract big hitters
Amid intense competition, Disney is weighing various strategic options, including selling its Indian operations or sports rights and regional streaming service, Disney Hotstar. However, as a leader in the Indian SVoD market, it is unlikely that Disney will exit India completely.
Disney was in preliminary talks with Reliance to sell its India business. If the deal goes through, Reliance could become the largest streamer in India. Other potential buyers include Sun TV and Adani Group. These players could benefit from access to Disney’s vast portfolio of over 70 TV channels across films, entertainment, sports, infotainment, kids, and lifestyle content, as well as Disney Hotstar’s user base.
Sun TV, which is one of the leading TV broadcasters in India, could further strengthen its media and entertainment business with this deal. Adani Group, which bought a stake in the New Delhi Television (NDTV) news broadcaster in 2022, could see this deal as a way to expand its media business. Although this deal might strengthen the buyer’s subscribers and content, it will need competitive pricing and compelling content to retain subscribers.