How JioCinema's Free IPL Streaming Redefines the Indian OTT Market

The Indian streaming market has witnessed a seismic shift with JioCinema's disruptive strategy of offering free access to the highly popular Indian Premier League (IPL) matches. This move has caused a significant decline in the subscriber base of Disney+ Hotstar, one of India's leading over-the-top (OTT) platforms. 

Disney's Strategic Considerations for Star India and Hotstar

Disney's acquisition of Star India from 21st Century Fox was a pivotal move aimed at expanding its global streaming business. However, the Indian venture, encompassing TV channels and a movie production house, has faced financial strain, prompting Disney to explore strategic options. Discussions are underway for potential joint ventures or a complete sale of Star India and Hotstar. The objective is to address the financial challenges while ensuring the sustainable growth of Disney's India business. Although these talks are in the early stages, Disney is committed to finding the optimal path forward for its Indian operations.

JioCinema's Impact on Disney+ Hotstar

JioCinema's provision of free IPL streaming has attracted a massive influx of users, resulting in a substantial decline in Disney+ Hotstar's subscriber base. Having lost the bidding war for IPL streaming rights last year, Disney faced a significant setback, making Hotstar's service less appealing to viewers. This decline is estimated to lead to a loss of 8 million to 10 million subscribers in Hotstar's fiscal third quarter. Star India's revenue, including Hotstar, is expected to decrease by approximately 20% for the fiscal year. The impact of JioCinema's free IPL streaming highlights the formidable challenges faced by Hotstar in retaining and expanding its subscriber base.

JioCinema's Disruption of the OTT Business Model

JioCinema's strategy of offering free IPL streaming, coupled with the rising Average Revenue Per User (ARPU) in the telecom industry, poses a formidable challenge to the subscription-based business models of other OTT platforms. India, known for its price sensitivity, has witnessed a gradual shift towards paying for content on digital platforms. However, JioCinema's provision of free IPL matches has disrupted viewers' expectations and preferences. Analysts predict that approximately 50% of the total subscription-video-on-demand (SVOD) viewership may migrate to JioCinema due to its free IPL streaming. This migration significantly impacts the revenue growth projections of other OTT players, forcing them to reevaluate their strategies and adapt to the evolving market dynamics.

“If IPL, the most expensive property, is being offered for free, it’s a further boost to the AVOD (advertising-based video-on-demand) market and a negative impact for the SVOD market because customers were just getting used to shelling out an annual Rs 3,000-4,000 for content. As streaming ARPUs are unlikely to go up anytime soon, OTT players that were poised for 25-30% SVOD revenue growth will probably see 10-15% growth,” says Karan Taurani, Senior Vice President of Elara Capital.  

JioCinema's Rising Popularity and Expansive Content Catalog

JioCinema has experienced remarkable growth, adding over 10 million subscribers in the first quarter of 2023 alone. The platform's appeal stems from its diverse range of content offerings, including movies, TV shows, and original productions. In contrast, Disney+ Hotstar primarily focuses on content from Disney, Pixar, Marvel, Star Wars, and National Geographic. Moreover, Reliance Jio's partnership with Warner Bros Discovery has significantly expanded JioCinema's content library. This collaboration has brought popular Hollywood content, such as acclaimed HBO shows like Game of Thrones and Succession, to JioCinema. The availability of an extensive selection of content enhances JioCinema's appeal and contributes to its growing popularity among Indian viewers.

Disney+ Hotstar's Subscriber Decline and Financial Ramifications

Disney+ Hotstar witnessed a decline of 4 million subscribers in the first quarter of 2023, marking the second consecutive quarterly decline. The loss of IPL streaming rights and subsequent migration of subscribers to JioCinema played a pivotal role in this decline, particularly in India. Additionally, Disney reported worldwide streaming losses of $400 million, with a substantial portion attributed to the decline in Disney+ Hotstar subscriptions. These figures underscore the significant impact that JioCinema's free IPL streaming has had on Hotstar's subscriber base and financial performance.

Uday Sodhi, former head of SonyLIV and Founding Partner of Kurate Digital Consulting, says JioCinema’s immediate priority is to get on as many smartphone screens as possible, and offering the IPL for free is their way of establishing app distribution.

“At some point, JioCinema will move to a subscription model. This is exactly what Hotstar did when they started streaming IPL. If that means the total number of SVOD users will drop or will have a short-term impact, it is okay. They will come back later when it becomes a paid service.”  

The Significance of IPL Streaming for Disney+ Hotstar's International Expansion

India holds paramount importance in Disney+'s global expansion strategy, with approximately one-third of its subscribers based in the country. The loss of IPL streaming rights to Viacom18's Paramount+ has presented challenges for Disney in capturing the Indian market and beyond. Retaining IPL rights was critical for Disney to establish a strong foothold in the international market. The battle for IPL streaming rights reflects the ever-changing dynamics of the Indian streaming market and underscores the importance of securing popular sporting events to attract and retain subscribers.

Impact on Other OTT Platforms and the Shifting Streaming Landscape

The consequences of JioCinema's free IPL streaming extend beyond Disney+ Hotstar, affecting the entire Indian OTT landscape. Other platforms are grappling with the challenges posed by JioCinema's disruptive strategy and the shifting preferences of viewers. The intense competition has necessitated a reassessment of business models and content offerings to remain relevant and competitive. 

According to a study conducted by Accenture in January, an overwhelming 77 percent of consumers in India expressed feeling overwhelmed by the multitude of streaming services available to them. Furthermore, 41 percent of respondents reported unsubscribing from at least one of the top five streaming video-on-demand (VOD) services in the past year. Looking ahead, 42 percent of participants stated their intention to reduce their subscriptions to one or more streaming services within the next 12 months. These findings highlight the growing challenge faced by consumers in selecting and managing their streaming subscriptions in an increasingly crowded market.

Besides, the Ormax study showed that OTT platforms must rely on smaller towns and cities for the next phase of subscriber growth, as metros have reached more than 79 percent OTT penetration. 

“The average number of OTT subscriptions has remained static at 2.4 per paying user. It suggests that subscription growth will come from more people paying for subscriptions, than the same people paying for more subscriptions,” Ormax Founder and CEO Shailesh Kapoor said about the findings. 

But affordability is a challenge in non-metros, as telecom ARPUs are rising. 

“They have cable TV and free AVOD content. Broadband is expensive and telecom ARPUs are inching up. Viewers in the non-metros will not pay for multiple OTT platforms in a big way. There will be a rejig in the growth numbers from the Tier II and III markets,” says Taurani. 

Conclusion

JioCinema's innovative strategy of offering free IPL streaming has disrupted the Indian streaming market, significantly declining Disney+ Hotstar's subscriber base and impacting the broader OTT landscape. The migration of subscribers to JioCinema poses a formidable challenge to the existing business models of other platforms, compelling them to adapt to evolving consumer preferences. The battle between JioCinema and Disney+ Hotstar underscores the intense competition in the Indian streaming market and highlights the need for constant innovation and strategic decision-making. As the industry continues to transform, companies must navigate these challenges and capitalize on opportunities to thrive in this rapidly evolving landscape.