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Walt Disney plans aggressive subscription revenue push for Hotstar

IBEF:  September 13, 2019

Just a few months after acquiring live-streaming platform Hotstar from Rupert Murdoch in India, Walt Disney Company has charted out an aggressive plan to push for greater subscription revenues for the over-the-top (OTT) player. Disney is targeting 50 per cent of Hotstar’s total revenues from subscriptions in the next three to four years - a huge increase from the current 7-8 per cent.
For Disney, which bought the OTT business as well as the Star TV channels as part of a global deal, the shift from a largely advertising-led OTT model to one that is subscription-led, is among the first key decisions it took after it picked up Hotstar.
The move is significant as it flies in the face of the modest projections made by Ficci-EY in its Media and Entertainment Report, 2019. The report predicts that OTT channels' share of subscription revenues in the industry's total revenues will go up slowly. The share, which grew from 3.3 per cent in 2017 to 8. 4 per cent in 2018, is expected to grow to 17. 5 per cent by 2021, says the report.
Disney's move comes at a time when the market has become more competitive. The number of OTT players in India has gone up to 33-35 - from just nine in 2012. The new big boy on the block is Apple, which announced the launch of its own OTT platform. This, analysts say, could spark a pricing war amongst the big players to woo subscribers.

According to the Boston Consulting Group, Hotstar - by far India’s largest OTT channel - spent over Rs 4,000 crore (US$ 512.33 million) for content (including sport) in 2017, against Rs 500- 600 crore spent by Netflix and Rs 500 crore (US$ 71.54)  by Amazon the same year. Hotstar, which has the broadcasting and digital rights to properties like the Indian Premier League and the ICC World Cricket Cup, has put together a strategy to reduce its over-dependence on sport, especially cricket. "Currently, one-third of our user revenues come from sport, which is mainly cricket. Another one-third comes from simple TV programming, and the rest is from our Hotstar specials," says a source.

Setting speculation to rest, sources say the new owners will not launch their global OTT platforms Disney+ or Hulu in India. Instead, they will integrate the relevant content into Hotstar. Hence, in India, Disney will have one OTT platform to take on Netflix, Amazon, and probably, Apple.

All the relevant content from Disney + and Hulu will be available on Hotstar through its premium programming.
Hotstar has been able to garner over 300 million active monthly subscribers. Sources say it plans to invest in original Hindi and regional content in a big way to become a mass OTT player in the country.

To woo more subscribers, 'Hotstar VIP', which includes sport, television programmes and specials (original content), has been priced at Rs 365 annually. This means that the subscriber pays only Rs 1 a day, which is much cheaper than a newspaper subscription. Unlike some of its competitors, Hotstar has gone for an annual, rather than a monthly subscription model. However, Hotstar Premium, which also offers the latest American TV shows and Hollywood movies, is available for Rs 999 a year or Rs 299 a month.

 

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.