The Walt Disney Company on Tuesday said in its third quarter earnings call that the Disney+ service has crossed over 60.5 million subscribers. The Disney+ service was introduced in November, 2019 initially in the US market before the company expanded the service to international markets like Western Europe, India and Japan in 2020. In India, the company launched its Disney+ service on April 3 by enhancing its existing Hotstar service. The Disney+ Hotstar is said to offer over 100,000 hours of TV shows and movies in eight languages along with rights for major sporting events including the Indian Premier League.
Disney+ Hotstar Accounts for 15% of Overall Disney+ Subscriber Base
Christine McCarthy, senior executive VP and CFO of the Walt Disney Company said that the Disney+ Hotstar comprised about 15% of the company’s quarter-end subscriber base. McCarthy earlier said that the Disney+ had a paid subscriber base of 57.3 million at the end of its third quarter which indicates that Disney+ Hotstar has around 8.6 million subscribers. “Disney+’s overall ARPU this quarter was $4.62,” McCarthy said. “However, excluding Disney+ Hotstar, it was $5.31.” It was also announced that the Disney+ Hotstar would be rolled out to the Indonesia market on September 5, 2020. “By year-end, Disney+ will be available in nine of the top 10 economies in the world,” Bob Chapek, CEO of the Walt Disney Company, said in the earnings call. Chapek also said that the three streaming services of the Walt Disney Company including Disney+, Hulu and ESPN+ has a combined subscriber base of over 100 million paid subscribers. Despite the increase in its subscriber base, the company said that the operating losses in its direct-to-consumer and International segment were approximately US$140 million higher as compared to previous year quarter. McCarthy said that the operating losses in the direct-consumer and International segment were driven by the expansion of the Disney+ service during the third quarter, partially offset by improved results at Star. “At Star, higher results reflect lower programming costs, partially offset by lower advertising revenue,” McCarthy said. “Both of these drivers reflect the absence of cricket in the third quarter including a shift in rights costs for the Indian Premier League which we expect to be recognized in future quarters and the absence of costs for the quadrennial ICC World Cup which aired in the prior-year quarter.”
Disney Set to Announce New Streaming Platform Under Star Brand
Crucially, it was announced in the earnings call that the company would introduce a new streaming service under the Star brand in the calendar year 2021. Chapek shared the development in the earnings call while also highlighting that the platform would include titles from ABC Studios, Fox Television, FX, Freeform, Searchlight and 20th Century Studios. “In many markets, the offering will be fully integrated into our established Disney+ platform from both a marketing and a technology perspective, and it will be distributed under the Star brand which has been successfully utilized by the company for other general entertainment platform launches, particularly with Disney+ Hotstar in India,” Chapek said. However, Chapek did not share the pricing details nor the countries where the company would launch the Star streaming service. Chapek said that the Walt Disney Company would host another Investor Day conference “in the coming months” where the company would share additional details about the Star streaming service. Unlike Hulu, it was said that the Star streaming service will not aggregate third-party content. Further, Chapek highlighted that the company did not plan on expanding its Hulu service due to the lack of its brand awareness outside the US market. “I think it’s important to look at the differences in how we have plan on going into the market,” Chapek said. “So this gives us the ability to market this under the Disney umbrella and have synergies with our existing platform. So that’s our basic rationale there.” Chapek also said that the company has not planned the hybrid model of the advertising video on demand (AVOD) and subscription video on demand (SVOD) for the Star service as with Hulu. “But we’ve got obviously similar capabilities as we’ve got to Disney+ if we ever so chose to do that, but we’ve got no plans to do that now,” Chapek said.
