Why is Disney+Hotstar looking at monetising IPL via subscription revenues?
Industry watchers say getting viewers to pay for quality content is key to finding a balance between subscribers and average daily active users
With fan login registrations and pre-recorded cheers and applause, the Indian Premier League (IPL) 2020 finally kicked off on Saturday amidst the pandemic. Unlike previous years, Disney+ Hotstar has been pushing to monetise IPL 2020 through subscription revenues this year — either by keeping the live telecast accessible only to subscribers of Disney+ Hotstar VIP and Disney+ Hotstar Premium or via special recharge deals with telecom operators like Jio and Airtel.
Media analysts attribute this to: lesser travel due to Covid, other content of Disney+ Hotstar failing to pick up during the first half of the year, and overall tepid advertising scenario due to which players in the sector are looking to balance between subscribers and daily active users.
Explaining the scenario further, Karan Taurani, VP – Research Analyst (Media), Elara Securities (India) Private Limited, said: “There could be couple of reasons why Star is looking betting big on subscription revenue this time. Firstly, there has not been any cricketing content the entire year and Disney+ Hotstar has lost out on a sizeable subscriber base. Secondly, the OTT platform had invested in a big way on its movie content ‘First Day First Show’, but apparently none of those films have been able to gain traction. Now, people generally watch Disney+ Hotstar for catch up content of television and/or while they are travelling. In the current scenario, when mobility of people is less, and IPL matches start by 7:30 pm, viewers would then rather watch IPL matches on television than on Hotstar.”
Ajit Gurnani, CCO, Media Planning, Zenith India, feels getting viewers to pay for quality content is a normal progression in the sector to find a balance between subscribers and average daily active users. “In an otherwise fickle SVOD market where getting viewers to pay for quality content has been a challenge, IPL offers Disney+ Hotstar an opportunity to attract and convert higher number of paid subscribers given the stickiness of the month and half long window. This trend of more paying subscribers has been accentuated during the last 6 months of lockdown/WFH, and also led to an increase in cord-cutting behaviour amongst the urban affluent, including growth in connected TVs. Most broadcaster OTTs who are working with the freemium model also realise that finding a balance between subscribers and average daily active users – a large proportion of who are catch up TV audiences is critical to long-term profitable and sustainable growth. Secondly for telecom operators, these partnerships are critical business requirements and for Disney+ Hotstar it helps build a loyal user base to be able to service the large volume of advertising it has sold on the back of the IPL.”
Kishan Kumar MS, Chief Growth Officer & South – Head, Wavemaker India, reiterates the point that it is quite natural for Star to monetize every viewer who comes on to the Disney+ Hotstar platform. “I think it is a mix of the current economic conditions and the huge opportunity of monetising the potentially large online cricket viewer-base. The Hotstar packages are very affordable, be it Hotstar VIP or telecom bundled offers. And if Star has an ambition to get a significant part of their IPL revenues via Hotstar, subscription revenues are important. It is also a good way to lock-in worthy consumers to broaden the platform base to serve non-cricket content in the future,” he added.
The overall advertising revenue of Disney+ Hotstar is estimated to be around Rs 850 crore out of which Rs 400 crore come from IPL, Rs 250 crore is accounted from other cricket content and the balance Rs 200 crore from GEC and other show content put together.
“Hotstar has a great business model – best of both worlds. Subscription and Free – which means it has the option/needs to grow both revenue streams. Pushing for subscriptions is a great business strategy because that’s your steady state income. Advertising revenues can oscillate depending on market factors. So it makes sense pushing for subscriptions. Also, paying users (for some advertisers) are better than free users. For instance – with IPL 2020, only paying subscription advertisers can watch the entire match, so smaller and more targeted set of users for the advertiser on Hotstar,” explained Prashant Puri, Co-Founder & CEO, AdLift.
Echoing the idea Siddharth Khanna, Co-Founder & CEO, Brand Visage Communications says, “With the market being hit along with the advertising spends, OTT platforms give advertisers highly targeted advertising options that are measurable too. If we compare cost per ‘targeted’ reach, it is much more efficient. The group is absolutely looking forward to subscription revenues, as over the pandemic OTT consumption has increased and now with the broadcast of IPL 2020, the reach will go even higher giving advertisers more impressions.”
There is no doubt that viewers have been waiting for live cricketing content. “However, some budgets might have got shifted from digital to TV because the consumption might be higher there in terms of viewership. So, if Disney+ Hotstar may have projected a growth of 30-40% with IPL, it may fall short by 10-15%,” added Taurani.
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