With the Indian Premier League (IPL) 2021 suspended mid-season owing to the growing COVID scare in the country, Disney+ Hotstar, the online streaming service (OTT) platform owned by entertainment giant Walt Disney Inc., witnessed a major dip in terms of the Average Revenue Per User (ARPU) for the second quarter which closed on April 3, 2021.
For the unversed, ARPU refers to the amount of revenue generated per viewer or user. The sources of this revenue may vary from subscription fees to revenue generated from advertising. However, due to the IPL being suspended for now, advertisement revenues have become stagnant. .
During the quarter, the average revenue obtained from each subscriber has just come in at $0.42 (or some ₹ 14.7) per month. Compare this to the previous quarter, when the revenue was at $0.91 per month, and it’s clear that impact IPL’s closure has had on Hotstar’s earnings.
Christine McCarthy, the Chief Financial Officer at Disney Inc., observed that the overall average monthly revenue through ARPU at Disney+ for the past quarter came to rest at $3.99, which was quite low compared to the $5.61 ARPU revenue when the earnings from the Disney+ Hotstar service was excluded from the average.
And to no one’s surprise, the reason for this dip was attributed to be no IPL matches being held during the 2nd quarter. In her statement, McCarthy said, “Majority of the prior IPL tournament took place in fiscal Q1 and there were no games in Q2. The current IPL tournament began on April 9, in fiscal Q3 and was suspended last week, given the Covid-19 situation in India.”
Nevertheless, paid membership at Disney+ Hotstar has seen quite a boost during the past few months, owing to the pandemic, before coming to somewhat of a stagnation these days. Still, the platform remains the stronghold of the Disney+ services suite when it comes to the number of paid members, which increased by around 2.5 million in this quarter alone. Over one third of the company’s subscriber strength (which stands at a total of 103.6 million) comes from the Indian version of the app, as of now.
One of the major reasons for the popularity of Disney+ Hotstar in the Indian subcontinent is the freemium (free+premium) format of its services. This means that some of the features on the platform are provided for free, while the rest are available on payment of a nominal subscription fees.
The scenario at Disney+Hotstar is quite similar, yet quite different, when one compares it to the situation at rival platform Netflix. While subscription rate at Netflix too, has gone for a plunge recently, the difference from past years has been more severe than at Disney+. Moreover, while Disney+Hotstar had lower revenues during the quarter mainly due to decreased advertisements during the IPL, Netflix currently has suspended content creation in the country. Nevertheless, the company is keen on expanding its foothold in India, and is willing to invest millions in order to create content specifically tailored for the Indian population.