MUMBAI: With almost 29 million subscribers, Disney+ Hotstar makes up 30 percent of the Disney+ subscriber base, but the inclusion of the former has brought down the average monthly revenue per paid subscriber down to $4.03 from an ARPU of $5.56 for Disney+.
Disney+ Hotstar launched on April 3, 2020 and September 5, 2020 in India and Indonesia, respectively, (as a conversion of the pre-existing Hotstar service) and is included in the number of paid subscribers and ARPU. The average monthly revenue per paid subscriber for Disney+ Hotstar is significantly lower than that for Disney+ in other markets, said The Walt Disney Company when it recently reported earnings for its first fiscal quarter ended January 2, 2021.
“Disney+ Hotstar subscriber additions continued their strong growth trend, with Disney+ Hotstar subscribers making up approximately 30% of our global subscriber base of 94.9 million. We also saw strong additions to our subscriber base from our November launch in Latin America,” said Christine McCarthy, senior executive vice president and chief financial officer, during an earnings call with analysts.
Revenue for The Walt Disney Company dropped 22% to $16.25 billion compared to $20.88 billion for the corresponding quarter ended December 28, 2019. The company said that results in the quarter were adversely impacted by the novel coronavirus (COVID-19), which was reflected much more in the net income which dropped 99% to $2.9 billion from $2.13 billion in the corresponding period.
In sports, the company said it has experienced disruptions in the production and availability of content, including the cancellation or shift of key live sports programming from fiscal 2020 into fiscal 2021. Higher sports programming costs reflecting the shift of key sporting events from prior quarters to the current quarter were largely offset by higher advertising revenue related to broadcast of the events, a company release said.
With reference to the Indian Premier League (IPL), the company said that higher programming and production costs and advertising revenue reflected a shift in the timing of IPL cricket matches from the third quarter of fiscal 2020 to the first quarter of fiscal 2021 as a result of COVID-19. IPL cricket matches generally occur during the company’s third fiscal quarter.
“Cricket is a very important part of a diversified programming strategy at Disney+ Hotstar. It also has a lot of other local content that consumers like to view. So we did see a bump up when the IPL season started. But we’ve also made it economical for a consumer to sign up for a one-year subscription versus going month-to-month. So those are some of the things that we’re looking at and utilizing to mitigate the churn that one could expect from IPL, but it’s a more diversified offering in terms of programming than just cricket,” McCarthy said.
In the Direct-to-Consumer segment, higher results at ESPN+ were driven by subscriber growth, partially offset by higher sports programming costs. The subscribers for ESPN+ grew 83% to 12.1 million in the reported quarter from 6.6 million in the corresponding quarter ended December 28, 2019.
The ARPU for ESPN+ increased from $4.44 to $4.48 due to an increase in retail pricing, partially offset by a higher mix of subscribers to the bundled offering available in the U.S. “When we look at our ESPN+ rights costs, those are up also because we acquired some additional rights, most significantly in soccer that we announced earlier last year,” McCarthy said.
“Because of what happened with not only cancellations but delays of some of the sporting events you will see some doubling up of some sports rights in this fiscal year. Things like you’ll have two NBA finals, assuming the season for ’21 continues as we expect. You’ll also have things like two Masters, two seasons of IPL games. And this all assumes that in fiscal ’21, nothing is drastically shifted out. But you can expect the sports rights overall to be up because of the doubling and the shifting into fiscal ’21,” she added.
Bob Chapek, CEO, said that the company will on February 23 launch their new international general entertainment offering, Star, across Europe, Canada, Australia, New Zealand and Singapore. “Star will offer thousands of hours of movies and television from the company’s multiple studios, including content from our acquisition of 21st Century Fox along with Star-branded exclusive originals and local programming tailored to specific markets. Star will be integrated into Disney+ as a distinct sixth brand tile, and will offer easy to use parental controls to manage access to the content available on Star. We’re less than two weeks away from launch, and we’re seeing tremendous excitement among consumers.”
