Disney+ Hotstar observes dip in average revenue per user after IPL 2021’s suspension

Streaming giant Disney+ Hotstar recently made some revelations about its average revenue per user (ARPU), its user base and more in the company's earnings conference call earlier this week. The call concluded with one significant observation - there was a decline in Disney+ Hotstar’s ARPU following the suspension of the IPL tournament amid the second wave of the COVID-19 pandemic.

The OTT platform follows an October to September fiscal year. Disney’s chief financial officer Christine McCarthy stated that the overall monthly ARPU for the quarter was $3.99. But excluding Disney+ Hotstar, it was $5.61. This reduction in the ARPU was then highlighted as a result of lowered advertising revenue from the IPL tournament

“Majority of the prior IPL tournaments 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,” McCarthy said.

The previous season of the cricket tournament was played in UAE from September to November, which was covered under Disney’s fiscal first quarter period. The latest season of IPL began on April 9, in Disney’s fiscal third quarter.

Disney+ Hotstar is a streaming service that is only available in India and Indonesia currently. The quarterly financial report of Walt Disney also stated that the Disney+ Hotstar average monthly revenue per paid subscriber is significantly lower than the average monthly revenue per paid subscriber for Disney+ streaming services in other nations. The 30 per cent decrease in the average monthly revenue per paid subscriber for Disney+ could be attributed to the launch of Disney+ Hotstar.

The Disney+ average revenue consists of subscription fees, advertising and premium and feature add-on revenue. This calculation excludes premier access, pay-per-view revenue and revenue from advertisements.

Disney had taken over Hotstar in 2019 and launched Disney+ Hotstar in India in April 2020. The same platform was launched in Indonesia in September 2020. Additionally, Disney+ Hotstar contributes to Disney+’s user base by making up for a third of it in the first quarter of 2021. Out of the total 103.6 million user base at the end of March quarter, 34 million subscribers are from India and Indonesia.

The model through which Disney+ Hotstar operates in India and Indonesia is different from Disney+ - the latter only offers paid subscriptions while the former also offers some content for free. Disney+ Hotstar also offers its subscriptions at a much lower rate than Disney+.