Free! Free! Free! - the new strategy to winning eyeballs and revenue for cricket streaming?

Cricket lovers are in for a streak of luck. After JioCinema streaming the Indian Premier League (IPL) for free, Disney+ Hotstar is set for a replay. The streaming platform announced, on Friday, that the Asia Cup and ICC Men’s Cricket World Cup tournaments will be made available as free-to-view to all mobile phone users.

For a country that consumes much of its content on its mobile phones, this is a great opportunity for Disney+ Hotstar to reach a much wider audience. According to the recent FICCI-EY report, there are 538 million smartphone users in the country currently.

The move, it said, "is aimed at further democratising the game of cricket and making it accessible to as many mobile users in India as possible."

However, the announcement comes soon after JioCinema streamed the IPL for free. It claims to have attracted 449 million viewers during this season. Moreover, industry sources peg its advertising revenue at about Rs 2,300- 2,500 crore. As the free streaming widened the platform's reach, it ensured a windfall earning.

Viacom18 won the digital streaming rights of IPL from 2023 to 2027, which was earlier held by Disney Star. In 2022, Disney+ Hotstar earned about Rs 1,100 crore in ad revenue, according to a report by Kotak Institutional Equities. The free-to-view experience of the upcoming tournaments, will not also boost its ad revenue, but is also expected to help in building a larger customer base. As the viewers log in to watch their favourite teams play, they are likely to be drawn to other content on the app as well.

Uday Sodhi, senior partner, Kurate Digital Consulting, says it is a great way of acquiring users and to build a strong premium business model. "The platform has struggled after the loss of IPL and their customers have migrated to other OTT apps including JioCinema. This is a good move to acquire back the users and based on this they can now build a larger customer base who will hopefully start paying for premium content over time," he says.

Divya Dixit, business strategy and growth advisor, and former SVP - marketing, partnerships & revenue, ALTBalaji, says the present loss in subscription revenue will eventually lead to building a robust future pipeline of subscriptions and the present AVOD revenue.

"It will lead to a rise in its viewership and then the platform will follow up with retention strategy for the footfall. So more or less this will work as a bait for subscription revenue enhancement and AVOD revenue to be generated via sponsorships," she says.

However, Karan Taurani, VP, Elara Capital, believes that offering cricket free may lead to a bigger fall in Disney+ Hotstar's paid subscriber base (already down 14% over the last 6 months due to IPL moving away), if continued over the medium term.

"It may lead to a sharp fall in high growth SVOD revenue, which may be partially offset by increased revenue in the low growth TV segment," he states in a report.

Taurani cautions that offering premium content for free does not augur well.

"If continued over the medium term, it may result in higher losses for over-the-top (OTT) platforms and lead to consolidation, as many may be unable to survive with low ARPU and free offerings. This move will negatively impact subscription revenue growth for global/broadcaster-led OTT platforms which are SVOD/freemium based respectively," he states in a report.

But what will this move mean for the larger OTT ecosystem?

Sodhi is of the view that 'freemium', whereby some content is offered free, while some others is paid, is the way forward in most markets. Netflix and Amazon Prime are also attempting to create free tiers in their services.

Taurani believes that this will be a big disruption and will change audience habits to pay for premium content.

"A section of the audience will watch premium cricket content free, and it may take time for other OTT platforms to undertake price hikes and start charging customers," he says.

However, Dixit says the model can either work very well or can have adverse effects too.

"Though this model is a good way to generate initial viewership and to get people to talk about a particular platform, it is a model that works dominantly on the possibility of conversion. Since a rise in viewership might not necessarily increase subscribers, the OTT spaces need to come up with newer, more compatible models that promise a higher rate of conversion and revenue generation," she suggests.

Disney+ Hotstar's move may give rise to platform's attempting experimental techniques to generate initial viewership and to push the subscription wheel on the platform. "If it works well for it, in terms of revenue and conversion rates, then it is very likely that other platforms might use this technique to generate better revenue models. However, key is to offer the content that the viewers prefer," Dixit adds.