Disney + Hotstar’s revenues remain stable in fiscal year 21; advertising sucks Rs 480 Cr
Disney + Hotstar (D + H) has spearheaded the Walt Disney Company’s Indian portfolio, becoming one of the market leaders among OTT platforms operating in the country with a monthly active user base of 227 million at during the last financial year (FY21). The app also stood out with a clear lead over the competition, especially the other OTT apps from Zee, Sony et al.
The company enjoyed this audience mainly due to the live streaming of cricket matches on its platform facilitated by Star India’s $ 944 million deal signed with BCCI in 2018. While demand for streaming services was at an all time high during the pandemic hit last fiscal year, Disney + Hotstar’s growth was almost stable in fiscal 21.
According to its financial statements filed with RoC, Disney + Hotstar generated operating income of Rs 1,670.63 crore in FY21, registering a lukewarm 5% growth over FY20 collections of Rs 1,593 crore.Disney + Hotstar is available for free download from app stores and has 400 million downloads, but its exclusive content, including sports streaming, is only available to paid subscribers. Subscription revenue represented 50.04% of the company’s operating revenue, increasing 34.3% year-on-year to Rs 831 crore in FY21.
The 2020-21 fiscal year was the first fiscal year that Disney + Hotstar’s subscription revenue exceeded its advertising revenue. Advertising revenue actually contracted nearly 15% year-on-year to Rs 829.7 crore in FY21 as brands slashed their advertising budgets in the fiscal year affected by the pandemic of Covid-19.
Disney + Hotstar also earned Rs 9.93 crore from content rights licensing in FY21.
The OTT platform broadcasts a large number of sports tournaments in eight languages ââand, of course, the licensing fee was the biggest cost incurred by the company in fiscal year 21. These costs amounted to Rs 708.6 crore in the last fiscal year, or 30.74% of annual costs.
Disney + Hotstar also claims to have over 100,000 hours of content covering TV shows, shortened content through its “Quix” feature. The company spent Rs 397.6 crore on the production of content for its platform in FY21, which is 22% more than the Rs 326 crore in FY20. These charges accounted for 17.3% of the annual expenses incurred by the company.
Disney + Hotstar spent 9.3% of its annual costs on employee benefits expenses, which rose 29.1% to Rs 214.4 crore in FY21, from 166.1 crore in fiscal year 21. Rs paid in FY20. Technical costs incurred by the streaming platform fell 10%, falling to Rs 270.2 crore in FY21.
A rise in nominal subscription prices has also led to a huge push for subscriber acquisition through mergers with telecom operators and more to maintain the momentum of subscriber additions. Thus, advertising and promotion expenses represented nearly 21% of the company’s annual expenses and are the only cost that experienced a substantial increase in fiscal year 21. These costs increased by 68% to reach 479, Rs 6 crore in FY21, compared to Rs 286 crore in FY20.
Overall, the company’s aggregate annual costs swelled 15.8% to Rs 2,304.8 crore in FY21, from Rs 1,990.6 crore in FY21. FY20. At the unit level, Disney + Hotstar spent Rs 1.38 to earn a single rupee of income in FY21.
Due to the fall in growth, the annual losses of the OTT platform swelled 66% year-on-year to Rs 600.8 crore. A silver lining is that its operating cash outflow actually improved 41.1% to Rs 533.5 crore in FY21 compared to the cash outflow of Rs 905.7 crore in exercise 20.
Disney + Hotstar’s EBITDA margins deteriorated from 945 BPS to -29.47% in fiscal year 21 and the balance sheet showed exceptional losses of Rs 2,888.6 crore as of March 31, 2021. During fiscal year 22, the company will count on price-upgraded renewals, an advertising push from the CCI. T20 World Cup and global cost control to maintain overall improvement.