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- ESPN+ now has 25.2m subscribers
- Hotstar user base contracted by 24% after IPL streaming rights loss
Disney lost more streaming customers during the second quarter of 2023, fuelled by the loss of key cricket rights in India, but there are signs that its restructuring and cost-cutting programmes are having a positive effect.
The media giant now has 146.1 million Disney+ users globally – a decrease of 7.4 per cent – with subscriber numbers in India falling by 24 per cent over the past three months. The drop had been expected after Hotstar missed out on the Indian Premier League’s (IPL) streaming rights to Viacom18.
Meanwhile, ESPN+ now has 25.2 million users, up from 22.8 million this time last year, but down from 25.3 million in Q1. The decline comes at a time when Disney is plotting a full direct-to-consumer (DTC) version of ESPN, launching possibly as early as 2025.
Nonetheless, DTC losses have narrowed by almost half to US$512 million over the past 12 months.
The company has embarked on widespread cost-cutting measures that have seen thousands of layoffs, while Disney is also preparing price increases, a clampdown on password sharing, and the expansion of ad-supported tiers to drive revenues.
Disney chief executive Bob Iger, who confirmed last month that the firm is looking for strategic partners for ESPN, said that the company is on track to exceed its initial goal of US$5.5 billion in cost savings.
“I’ve said before, our progress will not always be linear,” he said. “But despite near-term headwinds, I’m incredibly confident in Disney’s long-term trajectory because of the work we’ve done, the team we have in place, and because of Disney’s core intellectual property foundation.
Iger continued: “We’re prioritising the strength of our brands and franchises, we’re rationalising the volume of content we make, what we spend, and what markets we invest in.
“We are deploying the technology necessary to both improve the user experience as well as the economics of this business. We’re harnessing windowing opportunities, perfecting our pricing and marketing strategies, maximising our enormous advertising potential, and we’re making extensive Hulu content available to bundle subscribers via Disney+.”
SportsPro says…
Disney’s results are a mixed bag but Iger will be pleased at the improved figures given he was reappointed to stem the firm’s streaming losses. Like other major media firms entering the streaming space, Disney has spent aggressively on content and customer acquisition but has struggled to make its ventures profitable.
The company has adopted a more cautious approach with sport, choosing to keep its flagship ESPN network on cable while offering a sports-specific service in the form of ESPN+. However, Disney is preparing to merge its services into a single ESPN DTC service, possibly as early as 2025.
ESPN’s flagship network is currently available in 74 million homes, down from 100 million ten years ago, but Disney still receives around US$10 a month for every cable customer that receives its channels – even if they don’t want it. Meanwhile, an ESPN+ subscription costs US$9.99 a month and incurs additional costs in technology, marketing and customer service. However, Disney knows the shift towards cord cutting means it needs to futureproof the business.
The challenge for Disney is to create a DTC version of ESPN at a price point attractive to secure enough customers whilst generating sufficient revenue to at least compare with the economics of cable television. Iger’s cost cutting, rights strategy and search for a potential partner are all part of this mission.
“Taking our ESPN flagship channels direct to consumer is not a matter of if, but when,” Iger said. “And the team is hard at work looking at all components of this decision, including pricing and timing.”
