Walt Disney's streaming service Disney+ Hotstar lost 0.5 million paid subscribers for the third quarter ended June 29, 2024.
Disney+ Hotstar's paid member base dropped to 35.5 million for the quarter, down 1.4 percent from 36 million paid members in the previous quarter. Walt Disney which follows an October to September financial year announced its third-quarter results on Wednesday.
The streaming service has witnessed a decline in its paid members in six of the last seven quarters, with the exception of Q1-FY24 when it added 0.7 million paid subscribers. At its peak, Disney+ Hotstar had reported 61.3 million subscribers in the quarter ending October 2022 (Q4FY22).
This subscriber drop comes despite the T20 Cricket World Cup being held during the quarter, where India clinched an ICC trophy after 11 years. Cricket tournaments have traditionally been a key subscriber driver for the streaming service.
In July, Disney+ Hotstar had claimed that the final match between India and South Africa had attracted a peak concurrent viewership of 53 million, shy of the 59 million global record set in November 2023.
During the quarter, the average monthly revenue that Disney+ Hotstar makes from each paid subscriber rose to $1.05 from $0.7 in the previous quarter due to higher 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) to drive growth. 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.
Read: Disney CEO Bob Iger says India merger deal with Reliance is ‘best of both worlds’
Disney's first streaming profit
These developments came amid the Disney chief's push to make the firm's combined streaming businesses profitable by the end of the financial year 2024.
The entertainment conglomerate said today it has achieved this goal one quarter early, with the direct-to-consumer (DTC) business reporting a profit of $47 million for the quarter. This is the first profitable quarter for the service which debuted in 2019. These results include Hulu and ESPN+ streaming services.
Revenue from the segment increased 15 percent year-on-year to $6.4 billion for the quarter from $5.5 billion in the year-ago quarter.
Disney+ (excluding Disney+ Hotstar) added 0.7 million subscribers during the quarter. The service's subscriber base grew to 118.3 million from 117.6 million in the previous quarter.
The United States and Canada region saw its subscriber base rise to 54.8 million from 54 million in the previous quarter while international markets (excluding those where Disney+ Hotstar is available) had 63.5 million subscribers for the quarter, down from 63.6 million subscribers in the previous quarter.
"Our performance in Q3 demonstrates the progress we’ve made against our four strategic priorities across our creative studios, streaming, sports, and Experiences businesses," Disney CEO Bob Iger said in a statement.
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.
"Despite softer third quarter performance in our Experiences segment, adjusted EPS for the company was up 35%, and with our complementary and balanced portfolio of businesses, we are confident in our ability to continue driving earnings growth through our collection of unique and powerful assets" Iger said.
In Q4, Disney expects the flagship streaming service to modestly grow its paid member base.
"We remain on track for the profitability of our combined streaming businesses to improve in Q4, with both Entertainment DTC and ESPN+ expected to be profitable in the quarter. We continue to feel optimistic about our trajectory, with multiple building blocks for improving margins over the coming years" the company stated.
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