Walt Disney is exploring strategic options for its Star India business, including a joint venture or a sale, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.

The talks are in the early stages and it is unclear which options, if any, Disney might pursue, WSJ said.

Disney’s India business comprises Disney+ Hotstar streaming service and Star India, which it took over when it acquired the entertainment assets of 21st Century Fox in 2019.

Star’s overall revenue for the fiscal year ending September 2023 is expected to drop around 20 per cent to slightly less than $2 billion, according to WSJ. Its earnings before interest, taxes, depreciation and amortisation is expected to fall roughly 50 per cent for that period, from about $200 million last year.

Hotstar is expected to lose 8 million to 10 million subscribers in its fiscal third quarter, the report added.

Threat of Reliance’s freemium model

With JioCinema’s dynamic debut with IPL, Disney’s South Asian OTT venture has lost massive ground. The company’s earning report in May stated that that Disney Hostar lost over 4.6 million subscribers. Despite being the largest streaming platform in India, Disney has struggled to increase revenues and monetisation for its platform.

In the days after IPL, Disney had to remove its HBO content slate from Disney+ Hotstar, after HBO’s asking price for deal renewal became too much to justify the deal with renewal. 

The biggest threat beleaguring Disney right now, is Reliance’s freemium model when it comes to offering content on its streaming platform. To boost subscription numbers, JioCinema aired IPL for free. With large cash reserves, Reliance does not have to worry about monetisation at this point. It has also nabbed the HBO titles let go by Disney, as well as adding NBC Universal’s content slate into its fold. With titles like Succession, Game of Thrones and Downton Abbey, JioCinema aims to draw India’s English-speaking audience to its platform. 

Reliance targets TV base, too

Meanwhile the Reliance camp is not just going after the subscriber base of streaming giants like Disney, Netflix and Amazon Prime, the freemium model dependent on ad cents is also directing them to target the linear TV base, which is a substantial number in India. In a recent interview with Financial Times, Uday Shankar, an investor and director in JioCinema’s parent company Viacom18 said that the goal was to build a platform with audience volumes to rival television in scale. 

“We see television as our competition. Until you are able to get a large number of people to not watch TV, and watch their content on JioCinema, the mission is not complete,” Shankar said. 

Even in the absence of the JioCinema threat, this is exactly where top tier OTT platforms were performing badly, unable to grow their subscriber base outside of English-speaking urban hubs, who do not have the propensity to pay for content. Growth in subscriber numbers came at the cost of ARPUs as is seen in the case of Netflix, which finally gave in and added advertisements to its lower tier paid plans in India. 

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