Walt Disney revises Hotstar subs guidance

Walt Disney Company CEO Bob Chapek has said the company will continue to invest in local programming across the globe, including India

e4m by exchange4media Staff
Published: Aug 11, 2022 9:52 AM  | 4 min read

Walt Disney has done a downward revision of paid subscriber base target from its Indian streaming service Disney+ Hotstar in the wake of the loss of Indian Premier League (IPL) digital rights and lack of colour on the International Cricket Council (ICC) and Board of Control for Cricket in India (BCCI) media rights renewal. The ICC has already floated the media rights tender and is expected to announce the winner in September at the ICC Board meeting.

In December 2020, Walt Disney had guided that Disney+ will hit 230-260 million paid subscribers by 2024. The company had also stated that Disney+ Hotstar is expected to contribute 30-40% (70 to 100 million) of Disney+'s projected paid subscriber base.

The company has lowered the paid subscriber guidance for Disney+ Hotstar from 70-100 million to 80 million subscribers by the end of fiscal 2024. The paid subscriber target will be further refined once the ICC and BCCI media rights sale process is concluded.

"We are, however, updating subscriber guidance for Disney+ Hotstar to up to 80 million subscribers by the end of fiscal 2024. We intend to refine this target over time as subscriber visibility in India will be clearer once the ICC and BCCI cricket rights sales processes are completed. As you may know, 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," The Walt Disney Company Senior EVP & CFO Christine McCarthy said during the company's Q3 earnings call.

The company has also lowered its guidance for Disney+ by 15 million in both the upper and lower range. As per the new guidance, Disney+ is projected to reach 215 million to 245 million paid subscribers down from the 230 million to 260 million that it had guided earlier.

"Excluding the impact of any significant future macro headwinds, our core Disney+ subscriber target range is 135 million to 165 million by the end of fiscal 2024, largely consistent with previously provided guidance that non-Hotstar Disney+ subscribers in 2024 would approximate 60% to 70% of the expected 230 million to 260 million total subscriber base," McCarthy declared.

She also exuded confidence that Disney+ will become profitable in 2024. "As we sit here today, we remain confident that Disney+ will achieve profitability in fiscal 2024 and look forward to several upcoming catalysts including reaching a steady state of tentpole original content releases, delivery of premium general entertainment and international local originals and the upcoming launch of our ad-supported tier alongside the new pricing structure announced earlier today."

Disney+ Hotstar added 8.3 million subscribers to take its total base to 58.4 million during the third quarter ended 2nd July 2022. "At Disney+ Hotstar subscribers increased by over eight million as the IPL concluded its 15th season in the quarter," she noted.

McCarthy said that International Channels' operating income was comparable to the prior year, reflecting increased sports programming costs, partially offset by advertising revenue growth. Both of these trends were driven by the airing of 35 additional IPL cricket matches in the third quarter versus the prior year, she added.

The Walt Disney Company CEO Bob Chapek said that the company will continue to invest in local programming across the globe including India. He also mentioned that the celebrity talk show 'Koffee With Karan' has become a digital exclusive show. "And we continue to step up our investment in international local originals, across formats including bringing the seventh season of Koffee With Karan, one of India's most popular talk shows exclusively to Disney+ Hotstar."

On the IPL TV rights renewal, Chapek pointed out that the linear television business continues to remain strong in India. He added that India is the only market where the company is launching new linear channels, unlike other markets.

"We are excited to continue offering IPL to our linear customers in India where growth potential exists for our portfolio of more than 70 channels that reach 90% of pay cable and satellite TV homes in the region. Pay TV distribution in India continues to be a robust business with projected GDP growth expected to drive advertising and consumer spending. In fact, India is one of the only markets in which we are launching new linear channels," he added.

McCarthy stated that the cash content spend across the company is expected to total approximately $30 billion for fiscal 2022. "This estimate is slightly lower than our previous guidance largely due to timing changes, and we expect annual cash content spend over the next couple of years to be roughly in the low $30 billion range as well," she stated.

The company has also revised its full-year forecast for capital expenditures to $5 billion compared to fiscal 2021 CapEx of $3.6 billion. "Our new expectation for 2022 is roughly $500 million lower than our previous guide, in part reflecting timing shifts of various projects across the company."

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