📺 Disney's Break Up with HBO Decoded

Disney+ Hotstar's break up with IPL and HBO could be super costly but necessary for profitability. Here's why.

Hear, hear Disney+ Hotstar users!

We hate to break it to you but you might soon not be able to binge your favourite HBO shows on Disney+ Hotstar from March 31.

No more Game of Thrones, no more Succession, no more House of Dragons and no more Euphoria!

No more of any of these shows:

Wondering why?

Well, the reason behind your heartbreak is HBO and Disney+ Hotstar’s recent break up. 

Umm, why? Well, Disney is reportedly not willing to renew its exclusive deal with HBO.

Because HBO was asking for a lot more money to renew its deal (probably because it plans to launch its own app in India soon and wanted to deal to fall through).

Now while Disney may be saving some money by not going through with this deal, this move is likely to lose 15 million subscribers by the end of 2023!

And this is not the only relationship that Disney+ Hotstar has lost.

Back in October - December quarter, it had lost 3.8 million subscribers after losing IPL rights!

Soon after, in November 2022, Jio also removed Disney+ Hotstar from its telecom bundles. So, no more free Disney+ Hotstar subscription with a Jio plan.

In a country where 85% of viewership volumes of OTT platforms come from telecom bundles, this was a big deal.

It’s been hit by one bad news after another.  Well…

So, why did Disney let IPL and HBO slip from its hands? Let’s take a look…

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🤔 A Change for Disney+ Hotstar

As we’ve already realised, Disney’s been through a lot lately.

So much so that the leadership had to be changed.

CEO Bob Chapek was removed and old CEO Bob Iger was brought in.

Yep, Bob was replaced with Bob. 

And with this, has come a change in strategy.

The focus will now be solely on profitability.

Yes, Disney+ and Disney+ Hotstar are not profitable.

Disney+ Hotstar’s loss in FY21-22 was Rs. 343.16 crores!

Meanwhile, Netflix is profitable.

So, this is Bob Iger’s plan : 

“Like many of our peers, we will no longer be providing long-term subscriber guidance in order to move beyond an emphasis on short-term quarterly metrics – although we will provide color on relevant drivers. Instead, our priority is the enduring growth and profitability of our streaming business.

Our current forecasts indicate Disney+ will hit profitability by the end of fiscal 2024, and achieving that remains our goal.”

Basically, their focus is no more long-term subscriber growth.

All they care about is money.

And that makes sense. Indian startups, please take notes.

So, losing subscribers because of IPL and HBO may not be a nightmare, after all. 

Huh? 

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😯 Subscriber Loss Not Really a Loss?

IPL is a two-month-long festival in India. 

While this could have gotten Disney millions of views and significant ad revenue, it wouldn’t have gotten it a loyal customer base.

You see, people who watch Hotstar only for IPL are not really subscribers of Disney. They will not be buying subscriptions throughout the year or increase impressions for ads on other shows.

They’re guests, not family members.

Disney has gone anti-“atithi devo bhava’ and decided to no longer spend $2.7 billion on these guests

Same goes for a lot of HBO content. 

Disney+ Hotstar now only wants to serve loyalists.

The loyalists who do enjoy IPL and Game of Thrones, but who aren’t going to leave just because these shows aren’t there.

The loyalists who will stay back to watch Toy Story, Marvel movies and Anupama.

And in a world of temporary people and connections, Hotstar has found these loyalists.

Hotstar is probably one of the only OTTs that users open everyday because it broadcasts Star shows for free.

It has become digital cable TV for a lot of people.

So, why not spend money on these loyalists?

You see, Hotstar understands Indian users really well - it has deep insights on what we like and what will keep us hooked.

Now, it can use the two most powerful tools in its armory to become invincible: data and money. 

It can deploy the saved money towards creating original content for its hard-core loyalists. 

But, this plan may not be the ultimate step to victory.

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🔍 The Fault in the Plans?

You see, a lot of loyalists that Disney is relying on include customers on the free plan.

They don’t pay anything. 

Though they could contribute significantly to ad revenue, getting them to pay will be difficult.

And Hotstar’s original content plan could take time to be executed.

Creating original content takes time. And so far, Disney’s original content hasn’t really worked well.

In fact, after Sacred Games, original content hasn’t been working all that well for any OTT.

Netflix is also dialling down on original content and focusing more on securing OTT rights for Indian films.

So, will this strategy work out for Disney and make it profitable in two years?

Let us know what you think of Disney's break-up plans. Will it get a post-break-up makeover or will it be drunk dialling its exes soon?

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