Disney+ Hotstar lost 4.6 million paid subscribers for the second quarter that ended April 1, 2023, marking the second consecutive quarterly subscriber decline at the Disney-owned video streaming service.
This is Disney+ Hotstar’s biggest-ever quarterly subscriber dip since the media and entertainment conglomerate started disclosing the service’s paid member base in April 2020, surpassing the prior quarter’s 3.8 million paid member drop.
Disney+ Hotstar’s paid member base reduced to 52.9 million for the quarter, registering a 8 percent decline from 57.5 million paid members in the previous quarter.
The decline in the subscriber base comes at a time when the country’s leading 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.
Last month, Warner Bros. Discovery signed an exclusive content partnership with Viacom18 to make JioCinema the new home for HBO, Max Original and Warner Bros. content in the country.
These television series are set to premiere on JioCinema on the same day as the United States. Warner Bros. movie catalog including the Harry Potter, Lord of the Rings and DC Universe movies and its forthcoming movies as well as kids’ animation titles like Dexter’s Laboratory and Tom and Jerry Kids will also be available on JioCinema.
Last year, Disney also lost the streaming rights for the IPL tournament for the 2023-2027 period to Viacom18, a move that led to the company lowering the subscriber target for Disney+ Hotstar in August 2022.
Disney+ Hotstar’s paid member decline also dragged down the total paid subscriber base of Disney+ by 4 million subscribers for the quarter, marking the second straight subscriber decline at Disney’s flagship streaming service.
Disney+ Hotstar accounted for about 33.5 percent of the total paid subscriber base of Disney+ which stood at 157.8 million for the quarter, down 2 percent from 161.8 million subscribers in the previous quarter.
Disney+ Hotstar is currently available in India and certain Southeast Asia markets such as Indonesia, Malaysia and Thailand, although a majority of the subscribers are from India.
Declining ARPU
Disney+ Hotstar also saw a decline in the average monthly revenue it makes from each paid subscriber to $0.59 for the quarter, down 20 percent from $0.74 in the previous quarter, due to lower advertising revenue it made per subscriber.
In comparison, Disney+ earned an average of $7.14 per month in the United States and Canada, up to 20 percent from the prior quarter due to a recent price hike. An average International customer (excluding Disney+Hotstar) generated average revenue of $5.93 per month for the quarter, up 6 percent from the previous quarter.
Disney+ earned an overall average of $4.44 per month from each customer this quarter, however, if Disney+ Hotstar is excluded, the ARPU rises to $6.47 per month.
Lower streaming losses
Losses at Disney’s direct-to-consumer (DTC) segment, which comprises all its streaming services, narrowed to $659 million for the quarter from $887 million in the same quarter last year. This was due to improved results at Disney+ and ESPN+, partially offset by lower operating income at Hulu.
Meanwhile, revenue increased 12 percent to $5.5 billion for the quarter, from $4.9 billion in the same quarter last year.
The media conglomerate aims to make Disney+ profitable by the fiscal year 2024. As part of this, CEO Bob Iger announced in February that they plan to cut $5.5 billion in costs, which includes about $3 billion in non-sports related content and $2.5 billion in non-content related costs. Disney also laid off around 7,000 employees or about 3.6 percent of its global workforce.
During the company’s earnings call on May 10, Iger said that they intend to reduce the volume of content they are making and what they are spending to produce the content as well as continue calibrating its investments in specific markets.
Disney also plans to offer Hulu content via Disney+ in a “one-app experience” to subscribers in the United States by the end of this year, a move that Iger termed as a “logical progression” for its DTC offerings thereby providing “greater opportunities for advertisers”.
It also plans to hike the prices of its advertising tier on Disney+ and aims to expand it to Europe by the end of this year.
The entertainment conglomerate had around 231.3 million subscribers across its streaming services— Disney+, ESPN+, and Hulu—at the end of the quarter.