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Disney+ Hotstar loses 2.8 million subscribers

Disney CEO Bob Iger says they would like to stay in the India market and are considering their options, amidst deal talks over its Disney Star business.

Disney+ Hotstar has been setting back-to-back live streaming viewership records, driven by free streaming of the ongoing ICC Men’s Cricket World Cup 2023.

Disney’s video streaming service, Disney+ Hotstar, reported a loss of 2.8 million paid subscribers for the fourth quarter, which concluded on September 30, 2023, marking the fourth consecutive quarter of subscriber decline for the platform, indicating ongoing challenges in retaining paid subscribers.

Disney+ Hotstar’s paid member base dropped to 37.6 million for the quarter, down 7 percent from 40.4 million paid members in the previous quarter. Disney follows an October to September financial year.

At its peak, Disney+ Hotstar had reported 61.3 million subscribers in the quarter ending October 2022.

The decline in the subscriber base comes at a time when the streaming service no longer has access to key content offerings that were instrumental in driving its initial growth in India: IPL streaming rights and premium HBO content, which Viacom18’s Jio Cinema now holds the rights to.

The average monthly revenue that Disney+ Hotstar makes from each paid subscriber increased to $0.70 for the quarter from $0.59 in the previous quarter, due to a lower mix of wholesale subscribers and higher advertising revenue.

The loss of 2.8 million paid subscribers for Disney+ Hotstar in the fourth quarter is noteworthy. However, it’s important to highlight that the revenue generated in this market is considerably lower than what the media and entertainment conglomerate achieves in other regions. Disney+ in the United States and Canada, for instance, generated an average of $7.5 per month, representing a 3 percent increase from the previous quarter, partly attributable to higher advertising revenue.

An average International customer (excluding Disney+Hotstar) generated average revenue of $6.1 per month for the quarter, up 1 percent from the previous quarter, due to a price hike, partially offset by a higher mix of subscribers to promotional offerings.

Overall, Disney+’s average monthly revenue (excluding Disney+Hotstar) rose by 2 percent to $6.70 from $6.58. The streaming service’s subscriber base also rose by 7 percent sequentially to 112.6 million for the quarter. This includes 46.5 million subscribers from the United States and Canada and 66.1 million subscribers from international markets, excluding those where Disney+ Hotstar is available.

Disney+ Hotstar is currently present in India and certain Southeast Asia markets such as Indonesia, Malaysia and Thailand, although a majority of the subscribers are from India.

Over the past month, the service has been setting back-to-back live streaming viewership records, driven by free streaming of the ongoing ICC Men’s Cricket World Cup 2023.

On November 5, Disney+ Hotstar clocked a record peak concurrency of 44 million viewers during the India vs South Africa match, surpassing the previous record of 43 million viewers set during the India vs New Zealand cricket match a fortnight ago on October 22.

Disney weighs options for India business
During the company’s earnings call on November 8, Disney CEO Bob Iger said they are considering their options for the India business.

“It is one of the most populous countries in the world, second to China. We would like to stay in that market but we are also looking to see whether we can strengthen our hand and improve the bottomline” Iger said.

In recent months, media reports have suggested that Disney is exploring a sale or a joint venture for its Star India (now Disney Star) business, which the company inherited as part of its $71.3 billion acquisition of 21st Century Fox in 2019.

During the call, Iger mentioned that their linear television business was doing quite well in India, other parts of their business (which likely includes Disney+ Hotstar) has been a challenge.

These comments come as the Disney chief pushes to make the firm’s combined streaming businesses a profitable one by the end of 2024.

Disney’s direct-to-consumer (DTC) segment, which comprises all its streaming services, narrowed its losses to $420 million for the quarter, from $1.4 billion in the same quarter last year. Revenue from the segment increased 12 percent year-on-year to $5.04 billion for the quarter from $4.49 billion in the year-ago quarter.

“As we look forward, there are four key building opportunities that will be central to our success: achieving significant and sustained profitability in our streaming business, building ESPN into the preeminent digital sports platform, improving the output and economics of our film studios, and turbocharging growth in our parks and experiences business” Iger said in a statement.

He noted that the company has already made considerable advancements in these four areas and are also on track to achieve roughly $7.5 billion in cost reductions, a significant jump from their earlier stated goal of $5.5 billion in savings. This includes a $4.5 billion reduction in content spends, up from previously stated $3 billion.

Disney now expects total content spend in fiscal 2024 to be approximately $25 billion, a $2 billion decline from its content spend in fiscal 2023. Sports rights now account for 40 percent of the entertainment giant’s overall content spend.

“We have additional opportunities for improvement in our streaming business that will come from implementing stronger standards around account sharing, although given the timing of our planned rollout, we don’t expect a meaningful impact until 2025” Iger said on the call. Money Control

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