Disney+ has officially broken through the 100 million subscriber mark but the service’s average revenue per user has been dragged down by aggressive pricing in international markets.
Disney+ ended the first quarter of 2021 with 103.6 million total subscribers, hugely ahead of the 33.5 million it had at the end of the same quarter in 2020. But ARPU for the service plunged from $5.63 to $3.99, which the company attributed largely to Hotstar+ growth in India and other markets. The 29% year over year decrease largely held steady with the rate of decline during the previous quarter.
During Disney’s investor day in December, CFO Christine McCarthy said the company expects between 230 million and 260 million Disney+ subscribers by 2024 and that 30% to 40% of those subscribers will come from Disney+ Hotstar.
Disney+ recently increased its monthly price from $6.99 to $7.99 per month near the end of the first quarter.
Despite the drag on Disney+ ARPU, the company’s direct-to-consumer business segment saw positive financial growth. Streaming revenues for the quarter increased 59% to $4 billion and operating loss decreased from $0.8 billion to $0.3 billion, which the Disney attributed to improved results at Hulu and ESPN+.
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ESPN+ ended the quarter with 13.8 million subscribers and an ARPU of $4.55, up 7% year over year, which Disney attributed to a price increase.
Hulu ended the quarter with 41.6 million total subscribers—37.8 million SVOD only and 3.8 million SVOD + Live TV, which means Hulu’s virtual MVPD dropped another 200,000 subscribers. However, while Hulu’s SVOD only ARPU held largely steady at around $12, Hulu + Live TV saw its ARPU spike 21% to $81.83. The company attributed the growth to higher prices, more per-subscriber advertising revenue, and more per-subscriber premium and feature add-on revenues, partially offset by a higher mix of Disney bundle subscribers.
Disney reported 1% growth in media and entertainment distribution revenues but continued to feel the pandemic in its parks business, which saw its revenues drop 44% during the quarter.
“We’re pleased to see more encouraging signs of recovery across our businesses, and we remain focused on ramping up our operations while also fueling long-term growth for the Company,” said Disney CEO Bob Chapek in a statement. “This is clearly reflected in the reopening of our theme parks and resorts, increased production at our studios, the continued success of our streaming services, and the expansion of our unrivaled portfolio of multiyear sports rights deals for ESPN and ESPN+.”