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Disney needs more revenue from its streaming customers

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Aug 11, 2022
Average revenue per user of Disney streaming services
Data: Company earnings reports; Chart: Axios Visuals

As both subscribers and financial losses continue to increase for Disney's streaming business, the company is looking to wring more dollars out of the customers it already has.

Why it matters: Disney has promised investors that streaming losses will begin to decline after this year and turn to profits by 2024. The clock is ticking.

Of note: One area where customer dollars is growing is India. The average revenue per user (ARPU) for Disney+ subscribers declined both domestically and internationally except for one area: Hotstar.

  • Compared to last quarter, ARPU for SVOD Hotstar's customers increased from 76 cents to $1.20, compared to $6.29 for all other Disney+ customers, which was down from $6.33. Some of the ARPU decrease for international customers was blamed on the lowered value of the Euro.
  • Hotstar's performance is important for Disney, given that it comprises around one-third of the Disney+ subscriber base, as Axios has previously reported.
  • Without that Hotstar increase, Disney+ would have seen its overall ARPU shrink this quarter. Instead, it remained flat. Disney said Wednesday it would lower its target for Hotstar subscribers.

What they're saying: "Gone are the sum-of-the-parts models using revenue multiples or even the metric of EV/content spending. From here on out, we hope the focus for streamers is return on invested capital and free cash flow generation," MoffettNathanson senior research analyst Michael Nathanson wrote in an analyst note Thursday.

What's next: Disney will launch its ad-supported tier for Disney+ on Dec. 8. That will come with a price increase.

What we're watching: How many subscribers will opt to pay more to keep ads off the service?

Go deeper: Disney surpasses Netflix in global paid streaming subscribers

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