Disney's video streaming service Disney+ Hotstar has seen a decline in its subscriber base for the quarter ended October 2, 2021, making it the first-ever decrease since the company started reporting subscriber numbers last year.
Disney's fiscal quarters/year ends on a Saturday closest to the end of the quarter/year.
Disney+ Hotstar saw its subscriber base reduce to an estimated 43.7 million for the quarter, down 2.7 million subscribers from an estimated 46.4 million subscribers in the previous quarter. The service is currently available in India, Indonesia, Malaysia and Thailand, although a majority of the subscribers are from India.
Disney chief financial officer Christine McCarthy said during the company's earnings call on November 10 that the service accounted for about 37% of Disney+'s total paid subscriber base at the end of the fourth quarter that stood at 118.1 million. In the prior quarter, the service had accounted for nearly 40% of Disney+ paid subscriber base.
While McCarthy didn't disclose any specific reason for this decline, Disney CEO Bob Chapek had noted at an industry event in September that there was an annual expiration of a large cohort of subscribers during the quarter with no auto renewal.
"So every time you lose a cohort, you've got to get that cohort back. But we've got IPL coming, so there's going to be plenty of incentives to get some of those folks back, but you have to take a step back before you take a step forward in terms of those renewals. So it takes a little bit of time for people to resubscribe" Chapek said at the event in September.
The IPL tournament, which is one of the major subscriber growth drivers for Disney+ Hotstar, resumed on September 19 this year after it was suspended in May and concluded on October 15. The service would have also likely benefited from the ongoing T20 World Cup tournament which started on October 17.
Decline in ARPU due to lower ad revenues
Disney+ Hotstar's average revenue per user also declined to $0.51 from $1.22 in the prior quarter. McCarthy attributed this reduction to the lower subscriber advertising revenue due to fewer IPL matches.
"When we think about overall ARPU, there's several levers here. There is a price value relationship over time, and high-quality content. It's not only the IPL, but other key sports like the English Premier League and Pro Kabaddi as well as a big general entertainment component. I think the upside potential is when all things are working and we'll be able to take prices up as the market allows" McCarthy said.
Walt Disney had launched Disney+ in India on top of Hotstar in April last year. The service however operates on a freemium model where it offers some content on a free ad-supported model, unlike Disney+ which only offers paid subscriptions. Disney+ Hotstar also offers its subscriptions at a significantly lower rate than Disney+ to subscribers.
The service had rejigged its pricing strategy in September this year, offering its entire content library to consumers through three different plans starting at Rs 499 for a mobile-only plan, Rs 899 (HD quality and support for two devices) and Rs 1,499 (4K quality and support for four devices).
Prior to this, Disney+ Hotstar had two annual tiers - Rs 399 VIP plan that offered access to India originals and live sports and Rs 1,499 Premium plan that also offered premium English movies and shows.
The service had posted a net loss of Rs 600.8 crore for the financial year ended March 31, 2021, up from Rs 361.8 crore loss in the previous fiscal. Total revenues also saw a modest 5% increase to Rs 1,670.6 crore in FY21, from Rs 1,593.02 crore in the previous year.
Subscription revenues grew by 34% to Rs 830.96 crore during the financial year, while advertising revenue was down 15% to Rs 829.7 crore.
Global performance
Globally, revenues from Disney's direct-to-consumer (D2C) segment, which comprises all its streaming services, increased 38% year-on-year to $4.6 billion for the quarter while operating loss increased to $0.63 billion from $0.37 billion in the year-ago period.
The entertainment conglomerate now has around 179 million subscribers across its streaming services— Disney+, ESPN+, and Hulu—at the end of the quarter.
Overall, Disney posted total revenues of $18.5 billion for the quarter, a 26% increase from $14.7 billion in the same quarter last year. Net profit was at $160 million for the quarter, as compared to a net loss of $710 million from a year-ago period.Bagikan Berita Ini
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