IPL suspension may impact Disney’s subscriber growth

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Updated: May 15, 2021 1:28 PM

Disney+, which had 103.6 million paid global subscribers at the end of the second quarter, said Disney+ Hotstar was the “strongest contributor to net subscriber additions between Q1 and Q2

Disney+ is on track to reach the target 230-260 million global subscribers by 2024Disney+ is on track to reach the target 230-260 million global subscribers by 2024

Disney expects the pace of addition to the total subscriber base of its direct-to-consumer business to decelerate in the second half of FY 2021, partly due to the abrupt suspension of the Indian Premier League (IPL) in India. Disney+ contributes significantly to the firm’s direct-to-consumer segment.

“I’m going to talk about the direct-to-consumer and the slower net (subscriber) adds expected for the second half of the year. That is … largely due to the Covid-related suspension of the IPL and also that decision that we made to move the Star+ Latin America launch into the fourth quarter,” Christine M McCarthy, senior executive vice-president and chief financial officer at The Walt Disney Company, said on Thursday.

“… the other thing that’s going to happen here is with the absence of the IPL games in India, that will also have an impact on advertising revenue. So, you could see a decrease in the average realisation per user (Arpu) in the subs in India…,” McCarthy said. The company was announcing results for its second fiscal quarter ended April 3, 2021.

Disney+, which had 103.6 million paid global subscribers at the end of the second quarter, said Disney+ Hotstar was the “strongest contributor to net subscriber additions between Q1 and Q2, making up approximately a third of the total Disney+ subscriber base as of the end of the second quarter”. However, Arpu at Disney+Hotstar was “down significantly” against the first quarter due to lower advertising revenue led by the “timing of IPL matches and the impact of Covid in India”, the company said. The overall Arpu for Disney+ in the quarter was $3.99, although excluding Disney+Hotstar it stood at $5.61. The IPL 2021 season had started on April 9, which falls under Q3 as per Disney’s fiscal calendar.

The company, however, maintained that Disney+ is on track to reach the target 230-260 million global subscribers by 2024.

Responding to a question on the possibility of the IPL being held in some other country, McCarthy said the business would benefit in case the tournament is successfully relocated. “The big issue is going to be when in the quarter and if it overlaps into Q4 or if it goes into the fiscal first quarter, which starts for us in the beginning of October,” McCarthy said.

IPL’s official broadcaster Star India shelled out a staggering `16,347 crore to acquire the event’s media rights for a five-year period ending 2022. It had initially aimed to garner about `3,200 crore in advertising revenues this season with Disney+Hotstar projected to bring in about `400-`500 crore of the total revenues.

On May 4, the Board of Control for Cricket in India announced the suspension of the IPL with immediate effect after some players contracted Covid-19.

According to Barc India, the first 17 matches of IPL 2021 registered 6.62 billion viewing minutes per match. In comparison, the first 14 matches last year had garnered 8.34 billion viewing minutes per match. Cumulative reach has declined by about 9.5% from 116 million per match in 2020 to 105 million per match this year.

Disney’s total revenue during Q2FY21 stood at $15.6 billion, lower than the $18 billion posted in the year-ago quarter.

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