Disney+ Hotstar paid user base up 42% in July-Sept; firm says it may shrink

This is the second time the company has pointed to a likely drop in subscribers in the future due to the absence of IPL

Disney+ Hotstar, the streaming service owned and operated by The Walt Disney Company in India, reported a 42 per cent year-on-year jump in its paid subscriber base for the July-September period, taking it to 61.3 million users, it said on Wednesday.

But the company warned of a future drop in subscriber numbers during its earnings call – the second time it has expressed concerns on the subscriber front owing to the absence of the Indian Premier League (IPL).

In August, the company had revised its subscriber guidance down to 80 million for Disney+ Hotstar by the end of fiscal 2024 from 100 million forecast earlier for the period. This was after the company lost the digital streaming rights of the IPL for the 2023-27 period in June. Disney follows an October-September accounting year. The company continues to have the television broadcast rights of the IPL for the 2023-27 cycle.

Disney's Chief Financial Officer Christine McCarthy said on Wednesday that Hotstar accounted for over a third of the total paid subscriber base of Disney+ for the July-September period. This number could fall in the future as subscriber numbers decline for the service, sector analysts said.

While Hotstar is available in select Southeast Asian markets such as Indonesia, Malaysia and Thailand, India remains its primary market, accounting for most of its subscribers.

It is also the leading video streaming platform in India, ahead of players such as Amazon Prime Video and Netflix. Though Disney retained the television and digital rights of all International Cricket Council (ICC) events including men and women’s cricket tournaments till the end of 2027 for $3 billion in August 2022, it subsequently sublicensed the television rights to Zee Entertainment Enterprises.

However, the IPL digital streaming loss will be a void difficult to fill till the next bidding cycle, said Karan Taurani, senior vice president, research at Mumbai-based brokerage Elara Capital, since the digital medium had emerged as a key channel for most media companies over the last few years.

Disney, for instance, had pushed Hotstar as a preferred destination for sports content, led by the IPL. And many subscribers would likely migrate to the next platform, namely, Viacom18, that has the digital rights of the IPL for the 2023-27 period, he said.

Disney also said that its average monthly revenue per paid user (ARPU) for Disney+ Hotstar had decreased from $0.64 to $0.58 in July-September amid a competitive pricing strategy adopted by the company.

To put things in perspective, an average Disney+ customer in the United States pays $6.10 per month, while an average international customer (excluding Disney+ Hotstar in India) pays $5.83 per month.

The company said that it had earned an overall average of $3.91 per month from each customer in the September quarter. And if Disney+ Hotstar were excluded, this number would increase to $5.96 per month for the quarter.