Disney+ Hotstar's paid subscriber base grows to 38.3 million after four consecutive quarterly losses

This performance was a bright spot for the Disney-owned streaming platform that has struggled to retain paid subscribers after losing 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 JioCinema now holds the rights to.

In August 2023, Kevin Lansberry, who was serving as Disney's interim CFO at the time, attributed the subscriber decline to a product adjustment from one that was centred around the IPL to a more balanced one with other sports and entertainment offerings.

During the quarter, the average monthly revenue that Disney+ Hotstar makes from each paid subscriber increased to $1.28 from $0.70 in the previous quarter, due to higher advertising revenue and pricing hikes, partially offset by a higher mix of subscribers from lower-priced markets.

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.

Disney's India business deal talks

This growth comes as Disney considers its options for the India business, which it inherited as part of its $71.3 billion acquisition of 21st Century Fox in 2019.

According to media reports, Reliance and Bodhi Tree, a joint venture between James Murdoch and a former Disney executive, Uday Shankar, are in discussions to pick up a 60 percent stake in Disney Star (previously Star India) business.

In November 2023, Disney CEO Bob Iger said they would like to "stay in that market but are also looking to see whether we can strengthen our hand and improve the bottom line"

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

These comments come as the Disney chief pushes to make the firm's combined streaming businesses profitable by the end of the financial year 2024.

Disney's direct-to-consumer (DTC) segment, which comprises all its streaming services, narrowed its operating losses to $216 million for the quarter, from $1.05 billion in the same quarter last year. Revenue from the segment increased 14 percent year-on-year to $6.07 billion for the quarter from $5.3 billion in the year-ago quarter.

Disney+ (excluding Disney+ Hotstar) lost 1.3 million subscribers during the quarter, due to a significant price hike in October 2023. The service's subscriber base dropped to 111.3 million from 112.6 million in the previous quarter.

The United States and Canada region saw its subscriber base decline to 46.1 million from 46.5 million in the previous quarter while international markets (excluding those where Disney+ Hotstar is available) had 65.2 million subscribers for the quarter, down from 66.1 million subscribers in the previous quarter.

Will hit $7.5 billion savings target

Disney reported $500 million in cost savings across selling, general, administrative and other operating expenses and said it is on track to "meet or exceed our $7.5 billion annualized savings target by the end of fiscal 2024"

“Just one year ago, we outlined an ambitious plan to return The Walt Disney Company to a period of sustained growth and shareholder value creation," Iger said in a statement "Our strong performance this past quarter demonstrates we have turned the corner and entered a new era for our company, focused on fortifying ESPN for the future, building streaming into a profitable growth business, reinvigorating our film studios, and turbocharging growth in our parks and experiences"

“As we build for the future, the steps we are taking today lend themselves to solidifying Disney’s place as the preeminent creator of global content," he said.

Iger added "Looking at the renewed strength of all of our businesses this quarter – from Sports to Entertainment, to Experiences – we believe the stage is now set for significant growth and success, including ample opportunity to increase shareholder returns as our earnings and free cash flow continue to grow"

In addition to the results, Disney announced plans to invest $1.5 billion in Fortnite maker Epic Games to build a new games and entertainment universe. It will also offer ESPN as a standalone streaming option in late 2025, to create a one-stop sports destination.

“This is all part of the ambitious streaming strategy we’ve been building. From our acquisition of 21st Century Fox which expanded our vast content library and strong pool of creative talent, to the launch of Disney+ as the home to a century of content, to securing full control of Hulu and expanding our streaming offerings to reach greater audiences, to our significant investments in technology, and now taking significant steps toward ESPN’s streaming future" Iger said.

Disney+ will also become the exclusive streaming home of Taylor Swift's concert film "Taylor Swift | The Eras Tour (Taylor’s Version)". The box office hit will include five additional songs and make its streaming debut on March 15, 2024, the same day Swift is kicking off the 2024 leg of her Eras Tour.

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