Disney+ Hotstar subscriber base swells to 45.9 m with addition of 2.6 m subs in Q1

Walt Disney has revealed that its Indian streaming service Disney+ Hotstar has added 2.6 million paid subscribers in the first quarter ended 1st January 2022 to take its total base to 45.9 million. The streaming service had exited the fourth quarter ending 2nd October 2021 with 43.3 million subscribers.

The media and entertainment conglomerate also revealed that Disney+ Hotstar's Average Revenue Per User (ARPU) has jumped to $1.03 (Rs 77.07) for the quarter under review as against $0.64 (Rs 47.89) in the trailing quarter.

Overall, Disney+'s subscriber base has grown to 129.8 million from Rs 118.1 million in the trailing quarter while the ARPU has increased to $4.41 from $4.12 in the previous quarter.

"We were able to resume growth in Disney+ Hotstar markets with 2.6 million paid subscriber additions in the quarter. Overall, we are pleased with Disney+ subscriber growth in the quarter, and are looking forward to new market launches and a strong content slate later this year. As I’ve previously shared, we don’t anticipate that subscriber growth will necessarily be linear from quarter-to-quarter, and we continue to expect growth in the back half of the fiscal year to exceed growth in the first half," Walt Disney Senior Executive Vice President and Chief Financial Officer Christine McCarthy told analysts during the Q1 earnings call.

Disney's Direct-to-Consumer revenues for the quarter increased 34% to $4.7 billion and operating loss increased 27% to $0.6 billion. The increase in operating loss was due to higher losses at Disney+, and to a lesser extent, ESPN+, partially offset by improved results at Hulu.

Lower results at Disney+ reflected higher programming and production, marketing and technology costs, partially offset by an increase in subscription revenue. Higher subscription revenue was due to subscriber growth and increases in retail pricing. The increases in costs and subscribers reflected growth in existing markets and to a lesser extent, expansion to new markets.

Lower results at ESPN+ were driven by higher sports programming costs, partially offset by subscription revenue growth and higher income from Ultimate Fighting Championship (UFC) pay-per-view events. The increase in subscription revenue was due to subscriber growth and, to a lesser extent, an increase in retail pricing. The increase in income from UFC pay-per-view events was due to higher revenue per event, partially offset by the impact of one less event in the current quarter compared to the prior-year quarter.

The increase at Hulu was due to subscription revenue growth, partially offset by higher programming and production costs. Subscription revenue growth was due to an increase in subscribers and higher rates driven by increases in retail pricing for the Hulu Live TV + SVOD service. The increase in programming and production costs was primarily due to higher subscriber-based fees for programming the Live TV service due to rate increases and the carriage of more networks.

Disney's revenue from International Channels for the quarter decreased 4% to $1.6 billion and operating income decreased 2% to $369 million. The decrease at International Channels reflected the closure of channels, partially offset by higher operating income from channels that operated for the entire current and prior year quarters.

Growth in channels that operated for the entire current and prior-year quarters was due to an increase in advertising revenue driven by higher rates. Programming and production costs were comparable to the prior-year quarter, as an increase in sports programming costs was offset by lower costs for general entertainment programming driven by a lower cost mix of programming in the current year.

The increase in sports programming costs was due to higher costs for cricket programming, partially offset by lower costs for soccer programming reflecting fewer games in the current quarter. Higher costs for cricket programming were driven by the airing of International Cricket Council (ICC) T20 World Cup matches in the current quarter, partially offset by the impact of fewer Indian Premier League (IPL) cricket matches in the current quarter compared to the prior-year quarter.

The ICC T20 World Cup generally occurs every two years and was not held in the prior-year quarter due to COVID-19. IPL cricket matches typically occur in our second and third fiscal quarters. As a result of COVID-19-related timing shifts, we aired 13 matches in the current quarter and 44 matches in the prior-year quarter.