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Disney+Hotstar, the Indian arm of entertainment giant Walt Disney Co., lost 12.5 million subscribers in the third quarter that ended July 1, 2023. This is the thrid consecutive quarter in which Disney has lost subscribers.

The platform witnessed a drop in paid subscribers from 52.9 million in April 2023 to 40.4 million in June 2023.

The international channels segment also faced significant challenges, with a 20% decline in revenue, totalling $1.2 billion. Operating results also took a hit, shifting from $166 million income in July 2022 to $87 million loss. Disney has attributed the loss to reduced advertising revenue, primarily influenced by lower rates related to Indian Premier League (IPL) cricket programming, along with a negative foreign exchange impact.

This comes a year after Viacom18 secured the digital rights for the Indian Premier League (IPL), taking it away from Disney+ Hotstar. Viacom18 paid Rs 20,500 crore for the rights, while Disney Star obtained the television rights for the Indian subcontinent for approximately Rs 23,600 crore according to multiple reports.

“There are some markets we’ll invest less in local programming but still maintain the service. There are some markets that we may not have a service at all. And others are considered high potential markets where we’ll invest nicely for local programming marketing and basically full service content in those markets,” Interim CFO Kevin Lansberry said, talking about the subscriber losses at Hotstar during a call with analysts.

“Basically, what I’m saying is not all markets are created equal. And in terms of our March profitability, one way we’re going to do that is by creating priorities internationally,” he added.

Disney posted $460 million loss, equivalent to a loss of $0.25 per share, compared to the same period last year, the company had achieved a net income of $1.41 billion, translating to $0.77 per share.

On the positive side, it witnessed a 4% growth in revenue, reaching a total of $22.33 billion.

Disney’s direct-to-consumer (DTC) segment revenue reached $5.5 billion in the quarter, marking a 9% increase from the previous year. The operating loss for the DTC segment narrowed by 52% to $512 million.

To improve profitability, Disney said it will focus on making more existing subscribers and cut down on marketing cost for these services while increasing subscription fees.

The company also revealed its plans to emulate the success of Netflix in the sucscriber growth front as it is “actively considering” options and strategies to tackle password sharing and improving content recommendation engines.

Disney said that it believes there are “significant” number of users who share passwords, but whether a crackdown will successfully translate into subscriber growth is still not clear. However, Lansberry said the company will tackle the problem in the 2024 calendar year.

Disney is looking for strategic partners who can provide “content, distribution, or marketing support” in a bit to transform its sports arm ESPN into a streaming service as leniar TV business dwindles. Reports suggest that ESPN has signed a $2 billion contract with PENN entertainment to spinoff a sports betting website.

The streaming platform also expects to exceed the $5.5 billion in savings it had estimated after returning CEO Bob Iger cut almost 7,000 jobs earlier this year.