‘Disney+ Hotstar subscriber base to dip in Q1 due to absence of IPL’

The Walt Disney Company expects the Disney+ Hotstar subscriber base to decline in Q1 of fiscal 2023 due to the absence of the Indian Premier League (IPL) matches. However, the company expects the subscriber base to stabilise in Q2 of fiscal 2023. The company follows October to September fiscal year.

In Q4 of fiscal 2021, Walt Disney had 18 matches of the IPL as the tournament was split into two halves due to rising Covid-19 cases. IPL 2021 was split into two parts with the first part involving 29 matches taking place in the April-May window, while the remaining 31 matches were conducted in the second half during the September-October period. This year, there was no disruption in the IPL schedule with the tournament getting completed in its normal course. 

The Disney Star India-owned streaming platform's paid subscriber base grew 42% to 61.3 million in Q4 from a base of 43.3 million in the same period last year. 

"We expect Disney+ Core subscriber growth to then accelerate in the fiscal second quarter, largely driven by international markets. And at Disney+ Hotstar, we are currently expecting that subscribers will decline in Q1 due to the absence of the IPL, but we do expect to see some stabilization in Q2," The Walt Disney Company Senior Executive Vice President and Chief Financial Officer Christine McCarthy told analysts during the Q4 earnings call. 

It is pertinent to note that Disney Star had bagged only the TV rights to the IPL during the recent e-auction of the cash-rich property's media rights. Viacom18 had walked away with IPL digital rights. IPL will not be streamed on Disney+ Hotstar from 2023.

McCarthy also stated that Hulu and ESPN+ added approximately 1 million and 1.5 million subscribers, respectively, during the quarter, while Disney+ added over 12 million global subscribers, of which a little less than 3 million were at Disney+ Hotstar.

The Disney CFO noted that lower pay-per-view revenue at ESPN+ and slightly lower advertising revenue at Hulu and Disney+ Hotstar also impacted direct-to-consumer revenue in the fourth quarter relative to the third quarter.

"With our expectation that peak losses are now behind us, DTC operating results should improve going forward as we lay the foundation for a sustainably profitable business model. In the first quarter of fiscal 2023, we expect direct-to-consumer operating results to improve by at least $200 million versus the fourth quarter of fiscal 2022, with larger improvement expected in Q2, reflecting a couple of key factors. First, our recently announced price increases across our direct-to-consumer offerings in the US should begin to modestly benefit ARPU and subscription revenue in the first quarter," she said.

McCarthy noted that the cash content spend totalled $30 billion in fiscal 2022 and is expected to be in the low $30 billion range for fiscal 2023. "Capital expenditures totaled nearly $5 billion in fiscal 2022, in line with our expectations. And we currently expect that CAPEX will increase in fiscal 2023 to a total of $6.7 billion, driven by higher spend across the enterprise," she added.

Disney expects its fiscal 2023 revenue to grow in high single-digits provided the macroeconomic climate remains favourable. "Assuming we do not see a meaningful shift in the macroeconomic climate, we currently expect total company fiscal 2023 revenue and segment operating income to both grow at a high single-digit percentage rate versus fiscal 2022. We are confident about the opportunities we see to continue to transform our business for the next 100 years and look forward to sharing our progress with you all throughout 2023."