Disney must calculate its cricket loss

Disney cited “the price needed to secure that package” as its reason for not bringing home the streaming rights to what is now one of the world’s top sports leagues by viewers – the NFL and the English Premiere. Rivaling League Soccer. But the loss brings up questions about whether the company can still meet the ambitious subscriber target set for its flagship Disney+ streaming service in late 2020.

The high end of that goal — 260 million paying customers by the end of fiscal year 2024 — exceeds where Wall Street currently expects the streaming leader’s customer base to be.

Netflix

to be around that time. When it gave this forecast, Disney noted that Hotstar service subscribers in India were expected to make up between 30% and 40% of the Disney+ subscriber base by the end of fiscal year 2024.

But Hotstar’s audience is far less attractive, with average revenue per subscriber accounting for about 12% of the revenue paid by Disney+ customers in the US and Canada. And many people seem to be mainly attracted to IPL sports; Last year coincided with the late start of the league’s games. Fewest Disney+ subscribers added On record for the September quarter. Disney chief executive Bob Chapek said at an investment conference last year that India’s membership has no auto-renewal, “so every time you lose a cohort, you get that cohort back.”

Mr Chapeco maintained since That Disney may still hit its streaming target even without an IPL deal. But the streaming market—and investor sentiment about it—has changed substantially since the company first set that goal. Most notably, Netflix’s disastrous first quarter report in mid-April showed the streaming giant losing subscribers for the first time in more than a decade. This raised the question whether streaming services face a natural terrace According to market research firm Aluma Insights, the most lucrative markets like the US, where 85% of the population now have broadband access. Analysts have cut their 2024 year-end subscriber target for Netflix by an average of 9% since the company’s report, according to FactSet.

Disney could use India’s loss to reset its own streaming target to a more reasonable level. This can save the company some embarrassment later—especially if its Ambitious Content Pipeline Expensive Star Wars and Marvel shows start to thin. Walking away from the IPL deal shows that Disney is not willing to pay any price just to maintain its membership numbers. With investors now more keen on streaming profitability rather than growth at any cost, Mouse House can at least read room.

write to Dan Gallagher et dan.gallagher@wsj.com