“We’d like to stay in that market [India]. But we’re also looking to see whether we can strengthen our hand obviously, improve the bottom line,” Walt Disney CEO Robert Iger said when asked about Disney’s plans for its ventures in India during the company’s earnings call for the fourth quarter of the financial year 2023 (Q4FY23) on November 8, 2023.
Iger pointed out that the company’s linear business (its cable television channels such as ESPN and Disney Channel) is doing well but that other parts of the Indian business have posed Disney some challenges. “We’re considering our options there,” Iger said speaking about these challenging segments of the Indian business.
Which parts of the Indian business could be posing a challenge to Disney?
Disney+ Hotstar: Even though Iger didn’t specify what the challenging parts of the business were, it wouldn’t be a stretch to assume that one of them is the company’s Indian streaming service, Disney+Hostar. The platform has been seeing a decline in its subscriber base. This quarter its subscriber count dropped by 7% going from 40.4 million in Q3FY23 to 37.6 million this quarter. The service also saw a similar, albeit worse decline of 23.6% in its subscriber base in the previous quarter.
While Disney+ Hostar’s subscriber counts may have dropped, the company saw a 19% rise in the average revenue per subscriber in India, going from $0.59 in the last quarter to $0.70 in the current one. Disney attributed this rise in average revenue per subscriber to “a lower mix of wholesale subscribers and higher advertising revenue.”
Star (India): Iger could also be referring to Star India, given that the company has reported a 21% decline in Star India’s sports revenue going from $116 million in the same quarter last year to $92 million this quarter.
Reliance acquisition rumours
Recently there have been reports suggesting that Reliance Industries might be acquiring Disney India’s television and digital businesses. According to a report by Inc42, post the acquisition, Disney would continue to hold a minority stake in its Indian business. If this acquisition does indeed take place, Reliance’s streaming service could potentially end up with a combined monthly active user (MAU) base of 300-350 million.
How are Disney’s streaming platforms performing in other countries?
Disney’s combined revenue from its streaming platforms (Disney+, Disney+ Hotstar, and Hulu) as of this quarter was $5036 million, this is a 12% increase from its revenues in the same quarter last year. Its operating losses have also narrowed going from $1406 million in the same quarter last year to $420 million. The company attributed these changes to an increase in retail pricing and subscribers at Disney+ core (Disney+ offerings internationally and domestically excluding Disney+ Hostar) and Hulu, and lower marketing, technology, and distribution costs.
As of this quarter, Disney+ core has 112.6 million paid subscribers, and Hulu has 48.5 million paid subscribers. The majority of the increase in subscriptions has come from the international segment of Disney+ (excluding Disney+Hotstar) which saw a 7% increase in subscribers going from 59.7 million in Q3FY23 to 66.1 million in Q4FY23.
The average revenue per user (ARPU) for Disney+’s domestic market went from $7.31 to $7.50 due to higher advertising revenue. International Disney+ (excluding Disney+Hotstar) average monthly revenue per paid subscriber increased from $6.01 to $6.10, due to “an increase in average retail pricing, partially offset by a higher mix of subscribers to promotional offerings.” Hulu on the other hand, saw a fall in average revenue per subscriber due to lower advertising revenue.
Disney’s plans to merge with Hulu
During the company’s earnings call Iger mentioned that the company had acquired Comcast’s one-third stake in Hulu and that the company is “on track to roll out a more unified one-app experience domestically, making extensive general entertainment content available to bundle subscribers via Disney+” He said that this would lead to increased engagement, greater advertising opportunities, lower churn (for context, churn is the rate at the which customers stop doing business with a company), and reduced customer acquisition costs thereby increasing Disney’s margins.
“We will launch a beta version for bundled subscribers [those who have a bundled subscription of Hulu and Disney+] in December, giving parents time to set up profiles and parental controls that work best for their families ahead of the official launch in early spring 2024,” he added.
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