Report: Local Content Key to Disney+’s AsiaPac Growth

Creating and acquiring recurring local and exclusive entertainment franchises in the Asia Pacific will be key to the growth of Disney+ and Disney+ Hotstar in the region, according to a new report produced by Media Partners Asia (MPA).

Per MPA, Disney+ has had a strong start in the region since its arrival in Australia and New Zealand in November 2019. Direct, organic growth has been led by Australia—thanks to the Star content offering—and India, where Hotstar has a long history and a strong cricket slate. Elsewhere, Disney+ and Disney+ Hotstar have been driving takeup through telco and pay-TV partnerships. By the end of this year, MPA expects the two services to grow to 56.5 million subs, generating $800 million in revenues, from 36.9 million subs in Q1. The bulk of those 56.5 million subscribers—87 percent—will be in India (73 percent) and Southeast Asia (14 percent). Revenues will be driven by India (41 percent) and Australia and New Zealand (37 percent). The service is not expected to arrive in Korea, Hong Kong and Taiwan till Q4.

The MPA report notes that Disney+ and Disney+ Hotstar have significant ARPU differences. Disney+ is expected to hit 7.7 million subs in Australia, New Zealand, Japan, Korea, Taiwan, Singapore and Hong Kong, generating revenues of $418 million. Meanwhile, Disney+ Hotstar in India, Indonesia, Malaysia, the Philippines and Thailand is projected to end the year with 48.8 million subs, generating $382 million in revenues.

The report goes on to look at the services’ challenges and opportunities in India. MPA has scaled back its projections for Disney+ Hotstar in India to 41 million SVOD subs by year-end, down from 51 million. The platform had 28 million paying SVOD customers in Q1. The latest wave of Covid-19 in India resulted in the suspension of IPL. “Q2 2021 remains a mixed bag,” the report notes. “The majority of subscriber gains from IPL in April will be offset by churn in May and June. A large portion of customers who onboarded in Q2 2020 with the launch of Disney+ in Hotstar have limited incentives to renew subscriptions.” Meanwhile, AVOD monetization remains challenging. “AVOD revenue is expected to pick up towards Q3 as vaccine deployment accelerates ahead of the festive season with upside in Q4, which will remain cricket heavy.”

In Australia and New Zealand, the launch of Star and the popularity of Marvel franchises such as WandaVision and The Falcon and the Winter Soldier have driven subscriber gains, MPA says. Star content is also resonating in Singapore, where consumption is well-balanced across U.S. series, kids’ movies and series and Star Wars and Marvel content. Marvel films and series have struck a chord in Indonesia but, MPA reports, “Disney+ Hotstar requires a stronger local content offering in Indonesia, where it risks becoming a franchise super-fan platform otherwise.” It’s still early days in Malaysia, where MPA reports binge-viewing of Marvel films and series, with users also sampling local movies. Disney+ Hotstar arrives in Thailand at the end of this month.

Looking ahead, “Much of Disney’s future ex-India will be anchored to growing direct customer relationships in key markets while also maintaining third-party partnerships and limiting subscriber churn,” the report continues. “At the same time, Disney will need to continue to scale investment in local content in key markets ex-India with a focus on acquiring and producing content that resonates on its platform across the region and potentially even in the U.S. (i.e. Korean and Japanese content). The biggest challenge will be to create and acquire recurring local and exclusive entertainment franchises (including anime) similar to Disney’s U.S. tentpoles that sustain customer acquisition lifecycles. Disney is in its first year of local content investments in Korea and Japan with its first bets on series and originals.”