Disney+Hotstar loses 12.5 million paid subscribers in June quarter

Disney+ Hotstar lost 12.5 million paid subscribers in the quarter ending June 2023, which marks the third consecutive quarter of declining global subscribers.

Disney’s India-focused OTT platform saw its paid subscriber base plunge 24%, dropping to 40.4 million from the previous quarter's 52.9 million, as per Walt Disney's third quarter and nine months earnings for fiscal 2023.

The fall in subscribers comes at a time when Walt Disney is reportedly exploring strategic options for its Star India business, which includes the company’s open interest in both- a joint venture or sale.

Disney+ Hotstar reported 61.3 million subscribers in the quarter ending October 2022 (Q4FY22). It lost 4.6 million subscribers in the second quarter of FY23, leading to the subscriber base falling to 52.9 million on April 1, 2023, from 57.5 million on December 31, 2022.

Walt Disney's revenue for the quarter and nine months grew 4% and 8%, respectively. Disney Parks, Experiences and Products’ revenue for the quarter increased 13% to $8.3 billion, and segment operating income increased 11% to $2.4 billion.

Linear networks revenue for the quarter decreased 7% to $6.7 billion and operating income

decreased by  23% to $1.9 billion.

“Our results this quarter are reflective of what we have accomplished through the unprecedented

the transformation we are undertaking at Disney to restructure the company, improve efficiencies, and restore creativity to the centre of our business,” said Robert A. Iger, Chief Executive Officer, The Walt Disney Company.

“In the eight months since my return, these important changes are creating a more cost-effective, coordinated, and streamlined approach to our operations that have put us on track to exceed our

initial goal of $5.5 billion in savings as well as improved our direct-to-consumer operating income by roughly $1 billion in just three quarters. While there is still more to do, I am 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,” he added.

Meanwhile, Karan Taurani, SVP- Research Analyst (Media, Consumer Discretionary and Internet), Elara Capital, said that Disney+ Hotstar has lost 33% subscribers over the last three quarters since IPL digital media rights moved to the JioCinema post auction.

“The subscribers' loss is in line with our estimates as we had estimated a paid subscriber base loss of 35-40% of their total subscriber base. Multiple reasons like IPL moving away from Hotstar, JioCinema offering a wide variety of content free, Disney+ Hotstar offering ICC cricket World Cup free, HBO content too moving away, have been responsible for this decline. However, we believe the subscriber loss is now largely bottomed out and may see a stable subscriber base/marginal decline over the near term,” Taurani said.

In terms of revenue impact, the potential revenue loss will remain in the range of 50%-60%, as IPL was a large revenue contributor on AVOD. Losses for Disney+ Hotstar are expected to be much lower YoY, as it would have expanded sharply, had they acquired digital rights at that hefty premium (Rs 240 billion), he added.

“Pricing has remained stable YoY for Disney+ Hotstar and we don’t expect any respite in this too, as cricket (key World Cup property) is available free on Disney+ Hotstar and free content offering by JioCinema will keep OTT industry ARPU under check with little potential for growth over the medium term,” Taurani said.

“We maintain our view that the India OTT market will report lower growth rates due to arrest in SVOD revenue, on the back of premium content being offered free, which in turn will also delay their plans for the path towards profitability,” he added.

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