In Q1 2021, Disney said it earned an average of $ 4.04 per paying subscribers, down 38% from the corresponding quarter last year
The OTT giant attributed this drop in ARPU to the price points in India, which are significantly low compared to Disney + in other markets, mainly Western countries.
In FY20, the company earned approximately INR 974.23 Cr from advertising
Disney has announced its financial numbers for Disney + Hotstar in the first quarter of 2021, with average revenue per user dropping to $ 4.04 (INR 293), down 28% from $ 5.56 (INR 403) in the corresponding quarter last year. Disney claims this is largely due to the cheap Hotstar plans in India and Indonesia, where affordability has boosted user adoption.
Disney CFO Christine McCarthy said on the earnings call that had Hotstar markets been excluded, total ARPU for Disney + for the quarter would have risen to $ 5.37.
While ARPU has declined, Hotstar accounted for 30% of Disney’s 94.9 million global subscribers, which equates to about 28.5 million combined users in India and Indonesia. The company has not revealed specific details about subscribers in India, but it should be noted that Hotstar only launched in Indonesia in September 2020, so the market has yet to scale up for Disney +.
In December alone, Disney claimed to have added 2.5 million subscribers through DIsney + Hotstar and a total of 10 million for the quarter. Company attributed the growth and decline in average revenue per user (ARPU) to the Disney + Hotstar subscription pricing in India and Indonesia, which is significantly low compared to Disney + in other markets, mainly Western countries.
Hotstar plans in India range from INR 399 to INR 1,499, while Disney + plans in the UK start from $ 70 (INR 5K). This is expected to increase by $ 80 next month.
In India, Disney + Hotstar follows a freemium model, generating revenue from both advertising and a paid subscription. According to the latest documents, in FY20, the company earned approximately INR 974.23 Cr through advertising and INR 618.70 Cr through subscriptions, a 50% increase in advertising revenue compared to FY19.
Hotstar registered turnover of INR 1628 Cr in FY20, increased from INR 1123 Cr in FY19. In terms of losses, the company witnessed INR 361.8 Cr in FY20, reducing losses by 35% compared to FY19.
While Disney + is generating less revenue from its subscribers in India, the company appears to be betting heavily on ad revenue, where it recently together with startups such as Dream 11, Unacademy, Zomato, 1mg and others as sponsors for the ongoing cricket series between India and England,
Accordingly, the company claimed to provide a host of innovative advertising and branded content solutions for companies joining the OTT platform for the series. The latest financial numbers clearly indicate that ad revenue is a critical component for Hotstar.