Disney+ Hotstar ad revenue plunges amid IPL suspension

Video streaming service Disney+ Hotstar’s average revenue per user (ARPU) fell for the second quarter ended April 3, 2021, on the back of lower advertising revenue from its flagship cricketing property—the Indian Premier League.

The streaming service clocked just $0.75 (about Rs 55) from each subscriber per month during the quarter compared to $0.91 per month in the previous quarter, according to ETtech’s calculations.

During the company’s earnings conference call on Thursday, Disney’s chief financial officer Christine McCarthy said that Disney+’s overall monthly ARPU for the quarter was $3.99. However, excluding Disney+ Hotstar, it was $5.61. She attributed the decline in Disney+ Hotstar ARPU to lower advertising revenue from the IPL tournament, which have for now been suspended amid a ravaging second wave of the Covid-19 pandemic.

“Majority of the prior IPL tournament took place in fiscal Q1 and there were no games in Q2. The current IPL tournament began on April 9, in fiscal Q3 and was suspended last week, given the Covid-19 situation in India,” McCarthy said. Walt Disney – which owns the streaming service – follows an October to September fiscal year.

The previous season of the IPL (2020) was played in the UAE between September and November – in Disney’s fiscal first quarter period. The current IPL tournament (2021) began in India on April 9 (in Disney’s fiscal third quarter) and was suspended last week after several players across franchises tested positive for the infection.

While Disney+ Hotstar continues to be the strongest contributor to Disney+’s paid membership growth for the quarter, subscriber additions slowed down after a pandemic-driven boost in the past few quarters, similar to rival Netflix.

Disney+ Hotstar added about 6 million subscribers during the quarter, taking its overall base to 34.5 million subscribers. The service accounted for nearly a third of Disney+’s total subscriber base that currently stands at 103.6 million at the end of the second quarter, McCarthy said. Overall, Disney+ saw 8.7 million paying subscribers during the quarter.

It’s worth noting that Disney+ Hotstar operates on a freemium model in India and Indonesia where it offers some content on a free ad-supported model, unlike Disney+ which only offers paid subscriptions. Disney+ Hotstar also offers its subscriptions at a significantly lower rate than Disney+ to subscribers.

In India, Disney+ Hotstar currently offers yearly plans ranging from Rs 399 (Disney+ Hotstar VIP) to Rs 1,499 (Disney+ Hotstar Premium). It also offers a monthly premium plan of Rs 299. In comparison, Disney+ offers a monthly plan of $7.99 (Rs 587 at current exchange rates) and yearly plan of $80 (around Rs 5,877 at current exchange rates).

Disney+ Hotstar competes with several global and domestic players such as Netflix, Amazon Prime Video, Essel Group’s Zee5, Times Internet’s MX Player, Sony Pictures Network’s SonyLIV, Viacom18’s Voot, and Reliance-backed ALT Balaji among others in the country.

MX Player is owned by the Times group, which also publishes this website.

In February, ET reported that Disney+ Hotstar parent Novi Digital Entertainment had narrowed its net loss to Rs 361.8 crore for the financial year ended March 31, 2020, from Rs 554.38 crore in the previous fiscal. This came on the back of a 45% jump in revenues to Rs 1,628 crore. The service saw a 56% increase in ad revenue to Rs 974.23 crore and 32.6% jump in subscription revenues to Rs 618.79 crore.

Global performance
Revenues from Disney’s direct-to-consumer (D2C) segment grew 59% year-on-year (YoY) to $4 billion for the quarter from $2.5 billion last year, while net losses reduced to $290 million for the quarter from $805 million a year ago. The company now has more than 159 million subscribers across its streaming services—Disney+, ESPN+, and Hulu—at the end of the quarter.

“We are on track to achieve our guidance of 230 million to 260 million subscribers by the end of fiscal 2024” Disney CEO Bob Chapek said during the call.

Overall, Disney posted total revenues of $15.6 billion for the quarter, a 13% decline from $18 billion in the same quarter last year. Net profit increased 95% year-on-year to $912 million for the quarter, from $468 million from a year-ago period. Newpaper24