Streaming service Disney+ Hotstar saw a decline in average revenue per user (ARPU) in the quarter ended October 1, 2022, despite subscriber addition.

“The average monthly revenue per paid subscriber for Disney+ Hotstar decreased from $0.64 to $0.58 due to lower per-subscriber advertising revenue and a higher mix of wholesale subscribers, partially offset by an increase in retail pricing,” the company said in its earnings release.

The Disney-owned over-the-top (OTT) platform saw nearly 5% quarter-on-quarter increase to its subscriber base with the addition of 2.9 Mn paid subscribers for the quarter ended October 1, 2022, reaching a total subscriber base of 61.3 Mn. 

Moreover, chief financial officer Christine McCarthy also said that there might be a decline in the subscriber base of Disney+ Hotstar as well in the ongoing quarter due to the absence of the Indian Premier League (IPL). The company expects the subscriber base to stabilise in the next quarter.

A Grim Quarter For IPL Loss?

It is to be noted that Disney lost the digital streaming rights of IPL to Viacom18’s Voot earlier this year after its five-year monopoly of IPL rights. The auction was for the 2023-27 period where Voot emerged as the winner. 

At that time, analysts told Inc42 that Disney+ Hotstar would lose out on anywhere between 15 and 25 Mn subscribers.

In the crowded OTT market, the digital rights for the marquee cricket tournament helped Disney+ Hotstar grow and reach a leadership position. It had a 50% market share in Subscription Video on Demand (SVoD) OTT as of April 2022, according to an OMDIA report.

Earlier this year, Disney reduced the subscriber target for Disney+ Hotstar to 80 Mn by the end of FY24 from 100 Mn earlier. The overall subscriptions of Disney+ will come down to around 215-245 Mn by FY24 from the initial guidance of 230-260 Mn.

However, McCarthy said that the company would refine this target further after the ICC and BCCI cricket rights sales processes are completed.

“We recently made the disciplined decision to not proceed with the Indian Premier League digital rights and we’ll evaluate these rights with that same discipline,” she said.

In India, Disney+ Hotstar competes against the likes of Amazon Prime Video, Netflix, zee5, Voot, SonyLIV, MX Player, among others.

According to a Deloitte report, the overall OTT space in India is expected to grow at a CAGR of more than 20% to reach $13 Bn−$15 Bn over the next decade. Whereas the SVoD market is expected to grow to $2.1 Bn from the current $0.8 Bn over the same period.