Disney's video streaming service Disney+ Hotstar has crossed the 50 million paid subscriber mark, the media and entertainment conglomerate disclosed as part of its earnings results on May 11.
Disney+ Hotstar added 4.2 million paid subscribers for the quarter ended April 2, 2022, taking its total base to 50.1 million subscribers. The growth likely benefited from the beginning of a new season of the ongoing Indian Premier League (IPL) cricket tournament that started on March 26.
Disney+ Hotstar accounted for about 36.4 percent of the total paid subscriber base of Disney+ for the quarter that stood at 137.7 million. Note that 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. Overall, Disney+ added 7.9 million subscribers across the world during the quarter.
Interestingly, this growth comes at a time when rival Netflix lost 200,000 subscribers during the first quarter of 2022, the first time it has witnessed a subscriber drop since 2011.
"Our strong results in the second quarter, including fantastic performance at our domestic parks and continued growth of our streaming services once again proved that we are in a league of our own," Disney CEO Bob Chapek said in prepared remarks on May 11.
Disney had launched Disney+ in India on top of Hotstar in April 2020 and rebranded the service as Disney+ Hotstar. The service however operates on a freemium model wherein it offers some content on a free ad-supported model, unlike Disney+ which only offers paid subscriptions at present.
Rise in monthly ARPU
Disney+ Hotstar's monthly average revenue per user (ARPU) rose to $0.76 for the quarter, a 55% increase from $0.49 in the same quarter last year. The company attributed this increase to foray into new markets with higher average prices and higher per-subscriber advertising revenue, partially offset by a higher mix of wholesale customers.
Last year, Disney+ Hotstar had reported lower advertising revenue from IPL for the quarter ended April 3, 2021, as the tournament was suspended amid the second wave of the Covid-19 pandemic which led to no matches being played during the quarter.
Despite the monthly ARPU growth of Disney+ Hotstar, it is significantly lower than other markets. For instance, an average Disney+ customer in the United States pays $6.32 per month while an average International customer (excluding Disney+Hotstar) pays $6.35 per month.
Disney+ said it earned an overall average of $4.35 per month from each customer this quarter, however if Disney+ Hotstar is excluded, the ARPU rises to $6.33 per month.
Disney+ Hotstar is set to face a key challenge ahead with an anticipated bidding war for the media rights of the IPL tournament that is expected to go on auction in the coming weeks. The tournament has been one of the major subscriber growth drivers for Disney+ Hotstar and retaining these rights will likely be key to its future growth.
Disney CEO Bob Chapek, however, mentioned in February 2022 that the local content they were developing, including the library content from its own brands Disney, Pixar, Marvel, Star Wars and Nat Geo, would mitigate the impact if they don't win the auction.
"Our Disney+ Hotstar offering does have a massive collection of local content, and we add over 18,000 hours of original programming every year" he said.
Globally, revenues from Disney's direct-to-consumer (D2C) segment, which comprises all its streaming services, grew 23 percent year-on-year to $4.9 billion for the quarter while operating loss shot up to $0.88 billion from $0.29 billion in the year-ago period, due to higher losses at Disney+ and ESPN+ and lower operating income at Hulu, the company said.
Disney said it took a $1 billion hit for the early termination of content licensing agreements for film and television content that it could use for its own direct-to-consumer services.
While the company didn't disclose any further details on this agreement, it is likely a reference to the company's previous licensing deal with Netflix for its Marvel television shows. These shows were made available on Disney+ across various markets in March 2022 and are set to be available on Disney+ Hotstar from May 21.
The entertainment conglomerate now has around 205.6 million subscribers across its streaming services— Disney+, ESPN+, and Hulu—at the end of the quarter.Overall, Disney posted total revenues of $19.25 billion for the quarter, a 23 percent increase from $15.6 billion in the same quarter last year. Net profit was at $470 billion for the quarter, down from $901 million profit from a year-ago period.