The Walt Disney Company (NYSE: DIS) has just revealed its financial results for the third fiscal quarter ending July 1, 2023. Unfortunately, the quarter saw unfavourable developments for the company with respect to revenue, profits, and subscriber expansion. Disney’s global revenue in FY Q3 2023 increased a mere 3.84% YoY and 2.36% QoQ to $22.33 billion. The company also reported a net loss of $153 million during the third quarter, a significant plunge from the previous year’s net profit of $1.50 billion and the preceding quarter’s net profit of $1.27 billion.
However, the biggest setback for Disney was the notable decline in the number of paid subscribers, particularly from India’s Disney+Hotstar, a platform meant for OTT users in India. Disney+Hotstar paid subscribers count reached 40.4 million in FY Q3 2023, after losing a notable 12.5 million during the three-month period.
The gravity of the situation deepens when we look back at the subscriber count from a year ago. Over the past 12 months, the streaming powerhouse witnessed a substantial loss of 18 million paid subscribers in India. This decline in Disney+ Hotstar subscribers in FY Q3 2023 marks the most significant drop ever recorded since the company began sharing its number of paid members back in April 2020.
In terms of percentages, the numbers paint an even more vivid picture. India’s streaming marvel, Disney+ Hotstar, experienced a remarkable double-digit decline of 23.6% QoQ and an even more pronounced 30.8% YoY during the third quarter of fiscal 2023.
Taking a broader perspective, considering the entirety of the fiscal year 2023, spanning Q1, Q2, and Q3, the Disney+ Hotstar platform lost a whopping 20.9 million paying users in India. This showcases the remarkable shift in the OTT subscriber landscape and underscores the challenges faced by the platform in retaining its audience amidst evolving preferences and market dynamics.
The revenue contribution of Disney+ Hotstar to the parent company’s total revenue is relatively modest due to its low-price subscription model. Strikingly, in FY Q3 2023, the Walt Disney Company garnered an average monthly revenue of $0.59 from each paid subscriber on the Disney+ Hotstar platform in India. In sharp contrast, the Disney+ platform in the United States and Canada generated a significantly higher average revenue of $7.31 per paid subscriber. This glaring difference underscores the contrasting revenue dynamics between these two platforms in distinct markets.
Let’s take a closer look to unravel the factors behind the decline of the Disney+ Hotstar platform in India. It’s intriguing to consider how, within a brief timeframe, the platform witnessed a notable drop in its paid subscriber count, even amidst its impressive lineup of captivating movies and successful web series.
Disney+ Hotstar Subscribers: JioCinema Hurts the Most
The primary factor contributing to the significant drop in Disney+ Hotstar’s subscriber count in FY Q3 2023 is the loss of digital rights for the Indian Premier League (IPL) and the decision not to renew the HBO contract. The streaming rights for the IPL tournament, covering the period from 2023 to 2027, were acquired by Viacom18, who made the strategic choice to stream the entire tournament for free on JioCinema.
The turning point came with the announcement in August 2022 that Disney had lost the IPL rights to Viacom18. This marked the beginning of a trend, as an increasing number of Disney+ Hotstar subscribers began to leave the platform. The platform had scaled to an all-time high of 61.3 million subscribers in FY Q4 2022, ending October 1, 2022. However, the addition of new subscribers drastically slowed down, from 8.3 million in FY Q3 2022 to just 2.9 million in FY Q4 2022. Since then, the platform has been losing paid subscribers, 3.8 million in FY Q1 2023, 4.6 million in FY Q2 2023, and 12.5 million in FY Q3 2023.
Another factor that could have contributed to this decline is increasing competition within India’s OTT video streaming industry, with several players vying for consumers’ attention.
Among the emerging players, Reliance-owned JioCinema stands out as a rapidly growing contender. This platform’s popularity is fueled by a host of factors, including all-free OTT movies and web series, only Rs 999 yearly plan for Hollywood content, free T20I (Twenty20 International) for Indian cricket fans, and other sports such as Football, Badminton, etc., and an added bonus of free live news coverage from News18 India, among other enticing offerings. Interestingly, Jiocinema added a whopping 10 million subscribers in the first three months of 2023, and continues adding more to its platform. Experts believe that a majority of these subscribers are the ones who jumped off the ship of Disney+ Hotstar.
On the other hand, Disney+ Hotstar currently offers three paid subscription plans in India. Two of these plans are ad-free, priced at Rs 1499 per year and Rs 299 per month, while the third is ad-supported and comes at Rs 899 per year. Interestingly, Disney+ Hotstar also offers a free signup option, allowing users to access certain content without any subscription but with ads, making it more accessible to a broader audience.
Furthermore, the end of the Covid-19 pandemic – the 2-year period when everyone was forced to stay confined at home and eventually turned to OTT platforms as the sole means of entertainment. This has also taken people away from OTT platforms. As most Indian companies bid adieu to remote work arrangements, summoning their workforce back to physical offices, restaurants resume operations and travel restrictions ease, a noticeable shift has emerged. An increasing number of people are choosing to detach from OTT content and engage in outdoor activities with their friends and family, redefining how they invest their precious time.
Besides, the ascent of local OTT contenders has introduced a significant hurdle for global OTT giants in their quest for subscriber acquisition. India, with its diverse linguistic landscape of over 21 modern regional languages, has witnessed the rise of new players such as Hoichoi, SunNxt, Aha, Koode, Stage and City Shor TV, among many others. Over the past year, these regional platforms have skillfully captivated the attention of audiences who prefer consuming content in their native tongue. As investor interest in these ventures surges, these platforms are empowered to craft even more captivating content, thereby drawing a substantial subscriber base from platforms like Disney+ Hotstar that offer limited options for culturally relevant and regional content.
OTT Players Making Efforts To Entice Indians
However, considering India is the biggest market in terms of population and second biggest in terms of Internet users, there is a big window of opportunity for all OTT players. Capitalizing on this potential, companies are leaving no stone unturned to attract more and more people to their platforms, with amazing lineups of the latest movies and web series, all while keeping subscription prices remarkably affordable for Indians.
It is interesting to note that even with a decline of 12.5 million paying users, Disney+ Hotstar continues to hold the top spot in terms of the number of paid subscribers among other Indian OTT players, including Jiocinema, SonyLIV, Zee5, and Netflix, among others.
In order to get rid of freeloaders, Disney is set to follow a path similar to that of Netflix by implementing measures to curb password sharing. In FY Q3 2023 earnings call, CEO Bob Iger revealed that the company is actively exploring measures to address account sharing for streaming purposes. Considering these developments, it’s thought-provoking to consider whether this decline in subscribers in India might be part of a calculated move by Disney, akin to the strategic decision previously adopted by Netflix.
Netflix’s decision to curb password sharing initially resulted in a notable drop in global paid memberships, but was eventually followed by a subsequent resurgence in subscribers.
Amidst the evolving landscape of India’s OTT industry, the journey of Disney+ Hotstar continues to be a captivating narrative. As the competition intensifies and consumer preferences evolve, the question is, will implementing the password-sharing curb strategy mark a turning point for Disney+ Hotstar, rekindling its growth trajectory and reclaiming its throne as the preeminent choice for Indian viewers? Let us know in the comment section!
