The Walt Disney Company could lose up to 20 million of its Disney+ subscribers after it bid for the streaming rights to Indian Premier League cricket matches this week.
Media Partners Asia’s estimates mean the company may have trouble reaching its goal of 260 million global Disney+ customers by 2024, according to research firm executive director Vivek Kuto.
“IPL promotes customer acquisition,” he said in an email. “It is not perceived as entertainment only by Indian families – women and men.”
Few consumer products have been as successful as Disney+. The service, which offers unlimited Disney movies and TV shows, gained 10 million subscribers on its first day in November 2019 and claimed around 138 million at last count. Chief Executive Office Bob Chapek made a bold forecast at the end of 2020, predicting that the company will triple its number of customers in four years.
Around 50 million, more than a third of its customers worldwide come from Disney+ Hotstar, a product offered in India and other South Asian countries, and cricket has been a big driver of this.
For months investors have been debating whether the company will need to lower its forecast. Drumbeat began last year after a weak quarter and continued after Netflix Inc. reported its first subscriber loss in a decade in April. Disney shares are down 39% this year.
Disney Cricket lost the bidding war to a group that includes Paramount Global and India’s Reliance Industries.
While Disney lost the streaming rights, it retained the rights to broadcast on traditional TV networks, agreeing to pay nearly $3 billion over five years to air the games. The company has around 70 channels in India, which are distributed by cable and satellite TV operators. In a statement on Tuesday, Disney said it can still use those traditional channels to promote Disney+ Hotstar.
“We made disciplined bids with a focus on long-term value,” the company said.
Disney+ Hotstar members pay an average of only 76 cents per month for the service, while Disney+ pays a standard fee of about $8 per month in the US. This is an annual revenue of less than $500 million, which makes it difficult to justify the high annual IPL rights fee.
Chapek said in February that he did not see the loss of cricket streaming rights affecting the long-term Disney+ forecast as the company has other content it can offer Indian customers. “It’s not like we see business evaporate if we don’t get it,” he said.
Some analysts see an opportunity to replace their guidance with the loss of Cricket for the company.
“It is important for Disney to use the IPL to reset expectations to a more manageable range,” Barclays analyst Kannan Venkateswara wrote in a research note on Tuesday.
“A lower forecast may not have much impact on the stock at this time, as investors are already factoring in that possibility,” he wrote.
Disney did not comment on its customer guidance on Tuesday. It usually does this for investors during quarterly earnings calls and other events.
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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