Disney needs more revenue from its streaming customers

Data: Company earnings reports; Graphic: Axios Visuals

As subscribers and financial losses continue to mount for Disney’s streaming business, the company is looking to extract more dollars from the customers it already has.

Why is this important: Disney promised investors that streaming losses would start to decline after this year and turn into profits by 2024. Time is running out.

To note : One area where customer dollars are growing is India. The average revenue per user (ARPU) of Disney+ subscribers decreased both domestically and internationally, with the exception of one area: Hotstar.

  • Compared to last quarter, ARPU for SVOD Hotstar customers fell 76 cents to $1.20, compared to $6.29 for all other Disney+ customers, down from $6.33. Part of the decline in ARPU for international customers was attributed to the decline in the value of the Euro.
  • Hotstar’s performance is important for Disney, given that it represents about a third of the Disney+ subscriber base, as Axios previously reported.
  • Without this increase in Hotstar, Disney+ would have seen its overall ARPU decrease this quarter. Instead, it stayed flat. Disney announced on Wednesday that it would lower its target for Hotstar subscribers.

What they say : “Gone are the days of sum-of-the-parts models using multiples of revenue or even measuring EV/content spend. Going forward, we expect streamers to focus on ROI and cash flow generation available,” said MoffettNathanson senior. research analyst Michael Nathanson wrote in an analyst note on Thursday.

And after: Disney will launch its ad-supported tier for Disney+ on December 8. It will come with a price increase.

What we are looking at: How many subscribers will choose to pay more to not have ads shown on the service?

Go further: Disney overtakes Netflix in the number of paid streaming subscribers worldwide

Sallie R. Loera