Walt Disney's streaming service Disney+ Hotstar lost 2.3 million paid subscribers for the second quarter ended March 30, 2024. This marks the service's return to subscriber losses after witnessing a quarter of paid member growth.
Disney+ Hotstar's paid member base dropped to 36 million for the quarter, down 6 percent from 38.3 million paid members in the previous quarter. Walt Disney follows an October to September financial year.
The streaming service had added 0.7 million paid subscribers in the first quarter ended December 30, 2023, after clocking four straight quarters of subscriber decline. At its peak, Disney+ Hotstar had reported 61.3 million subscribers in the quarter ending October 2022 (Q4FY22).
During the quarter, the average monthly revenue that Disney+ Hotstar makes from each paid subscriber dropped to $0.7 from $1.28 in the previous quarter due to lower advertising revenues.
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-Reliance India merger deal
These figures come as Walt Disney gears up to merge its India unit with Reliance Industries as part of a joint venture announced on February 28. The transaction combines the businesses of Viacom18 and Star India to create one of India's largest TV and digital streaming platforms.
Reliance Industries stated that it plans to merge the digital streaming and television assets of both companies in India to form a “world-class” leader across entertainment and sports.
RIL and its group companies will own a controlling stake in the entity and invest Rs 11,500 crore ($1.4 billion) for its growth strategy. The merged entity will have a valuation of Rs 70,352 crore ($8.5 billion) on a post-money basis.
Once the deal is completed, two of India’s largest streaming platforms - Disney+ Hotstar, which currently leads the country’s subscription-based video streaming market, and JioCinema, a prominent player in the ad-supported video streaming market - will have a single owner.
The combined entity will capture about 85 percent of India’s video-streaming audience, according to analysts at brokerage firm Bernstein.
In March, Disney CEO Bob Iger said that the merger deal is the “best of both worlds” for the US media conglomerate since it would boost the company’s profits and reduce its risk in the region.
Iger said the transaction would allow the entertainment giant to own a part of a bigger media company in India, one of the world’s fastest-growing media and entertainment markets.
“It’s kind of the best of both worlds. We stay in the market at a significant level. We have a very good partner in Reliance, and we get to have a chance of growing a business and lowering the risk of doing so,” he said at an investor conference in March.
Disney's entertainment streaming business reports profit
These comments came amid the Disney chief's push to make the firm's combined streaming businesses profitable by the end of the financial year 2024.
Last year, Walt Disney restructured its business to put creativity at the centre of the company and announced a range of cost-cutting measures to achieve roughly $7.5 billion in cost reductions by the end of fiscal 2024.
Disney's direct-to-consumer (DTC) segment, which comprises all its streaming services - Disney+, Hulu, and ESPN+ - narrowed its operating losses to $18 million for the quarter, from $659 million in the same quarter last year.
Revenue from the segment increased 12 percent year-on-year to $6.2 billion for the quarter from $5.5 billion in the year-ago quarter.
Excluding ESPN+, Disney said that its entertainment direct-to-consumer businesses were profitable in the second quarter. It posted a net profit of $47 million on revenues of $5.6 billion. The company however noted that Q3 results will be softer driven by Disney+ Hotstar.
Disney+ (excluding Disney+ Hotstar) added 6.3 million subscribers during the quarter. The service's subscriber base grew to 117.6 million from 111.3 million in the previous quarter.
The United States and Canada region saw its subscriber base rise to 54 million from 46.1 million in the previous quarter while international markets (excluding those where Disney+ Hotstar is available) had 63.6 million subscribers for the quarter, down from 65.2 million subscribers in the previous quarter.
"Looking at our company as a whole, it’s clear that the turnaround and growth initiatives we set in motion last year have continued to yield positive results. We remain on track to achieve profitability in our combined streaming businesses in Q4," Iger said in a statement.
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