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Disney+ Hotstar loses 12.5 million paid subscribers, biggest drop ever

Disney’s video streaming service Disney+ Hotstar lost 12.5 million paid subscribers for the third quarter that ended July 1, 2023, marking the biggest-ever subscriber drop since the media and entertainment conglomerate started disclosing the service’s paid member base in April 2020.

Disney+ Hotstar’s paid member base plunged to 40.4 million for the quarter, down 24 percent from 52.9 million paid members in the previous quarter. This is the third consecutive quarterly subscriber decline at the Disney-owned video streaming service. At its peak, Disney+ Hotstar had reported 61.3 million subscribers in the quarter ending October 2022 (Q4FY22).

Disney had previously warned of a subscriber drop at the video streaming service after losing the streaming rights to the crucial IPL cricket tournament last year. The tournament was instrumental in driving subscriber growth for Disney+ Hotstar.

Viacom18 had bagged the streaming rights for the IPL tournament for the 2023-2027 period and recently streamed the entire tournament for free on JioCinema.

Subsequently, Viacom18 also struck a deal with Warner Bros. Discovery to make JioCinema the new home for HBO, Max Original and Warner Bros. content in the country, the rights for which were earlier with Disney.

During the company’s earnings conference call, Disney’s interim CFO Kevin Lansberry attributed the subscriber decline to a product adjustment from one centred around the IPL to a more balanced one with other sports and entertainment offerings.

Disney+ Hotstar’s paid member drop also pulled down the subscriber base of Disney’s flagship streaming service Disney+ by nearly 7.5 percent to 146.1 million subscribers for the quarter, down from 157.8 million subscribers in the previous quarter.

Disney+ also lost 300,000 subscribers in the United States and Canada while it gained 800,000 subscribers in its international markets, excluding Disney+ Hotstar.

The average monthly revenue that Disney+ Hotstar makes from each paid subscriber remained flat at $0.59 for the quarter. This is significantly lower than what the company makes in other markets.

For instance, Disney+ earned an average of $7.31 per month in the United States and Canada, up 2 percent from the prior quarter due to a higher per-subscriber advertising revenue.

An average International customer (excluding Disney+Hotstar) generated average revenue of $6.01 per month for the quarter, up 1 percent from the previous quarter, due to a price hike and a favourable foreign exchange impact, partially offset by a higher mix of wholesale subscribers.

Overall, Disney+’s average monthly revenue (excluding Disney+Hotstar) rose by 2 percent to $6.58 from $6.47.

These developments come amid reports 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 earnings call on August 9, Disney CEO Bob Iger declined to provide any specific details about how Disney+ Hotstar has influenced the company’s long-term international streaming strategy but he mentioned that they will be prioritising those markets that are going to help them turn the business into a profitable one.

“What that basically means is there are some markets that we will invest less in local programming but still maintain the service. There are some markets that we may not have a service at all. And there are others that we’ll consider, high-potential markets where we’ll invest nicely for local programming, marketing and basically full-service content in those markets” Iger said.

Lower streaming losses
The Disney chief’s cost-cutting measures also appear to be paying off as the losses at Disney’s direct-to-consumer (DTC) segment, which comprises all its streaming services, narrowed to $512 million for the quarter, from $1.06 billion in the same quarter last year. This was due to a lower loss at Disney+, higher operating income at Hulu and a lower loss at ESPN+.

Revenue increased 9 percent to $5.52 billion for the quarter, from $5.06 billion in the same quarter last year.

Earlier this year, Disney had laid off around 7,000 employees or about 3.6 percent of its global workforce and cut back on non-sports related content costs and non-content related costs.

In a statement, Iger mentioned that their cost-cutting measures have put the company on track to exceed its initial goal of $5.5 billion in savings as well as improved its direct-to-consumer operating income by roughly $1 billion in just three quarters.

“While there is still more to do, I’m incredibly confident in Disney’s long-term trajectory because of the work we’ve done, the team we now have in place, and because of Disney’s core foundation of creative excellence and popular brands and franchises,” Iger said.

The entertainment conglomerate now has around 219.6 million subscribers across its streaming services— Disney+, ESPN+, and Hulu—at the end of the quarter, down from 231.3 million subscribers in the previous quarter. Moneycontrol

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