Hotstar's potential Disney+ partnership raises brand challenges

Yesterday Indian streaming service Hotstar published its 2019 India Watch Report. Hotstar (a fully-owned Disney subsidiary since the 21CF acquisition by Disney back in March of this year) now boldly states that its streaming app has reached 400 million app installs, making it one of the most downloaded apps in India of 2019 alongside WhatsApp and TikTok. India has now surpassed the US with app installs, underlining India’s high smartphone and internet penetration rate.

The report by Hotstar details the online video consumption behaviour and trends of Hotstar users, in which Hotstar registered 555 app installs per minute in 2019 and a 3X growth in consumption in 2019 from 2018. MIDiA Research consumer survey data has previously identified Hotstar as the most-used video app in India, above both Amazon Prime Video and Netflix. Hotstar launched as an ad-supported video on demand (AVOD) service and later transitioned into a hybrid model, offering a subscription (ad-free) tier.

Hotstar’s main point of differentiation from other streaming rivals lies in its sports broadcasting rights, coupled with local and international content. Star Sports owns the media rights for the Indian Premier League (IPL) 2018-2022 and Hotstar owned the digital rights for the 2019 ICC Cricket World Cup in India and several other markets. During the semi-final broadcast of the India versus New Zealand match, Hotstar created a new concurrent streaming record with a 25.3 million concurrent audience (five times bigger than New Zealand’s entire population). This sizable audience was a far cry from its live audience for the VIVO IPL 2017 finals, clocking in at 4.7 million viewers.

Earlier this year, the Hotstar VIP plan was introduced to replace the existing All Annual Sports plan. Users can opt to subscribe to premium sports events at Rs365 ($5.32) annually. Hotstar combined India’s love for cricket with local consumption behaviour by offering users to ditch the card and pay in cash.  The cash option was introduced in March 2019 – allowing users immediate access to limited plans on Hotstar. Upon selecting the “pay by cash” option, users are asked for a registered address, after which a PIN code is provided to them to access the service. Hotstar will then proceed to reach users via registered address within three to four days to collect payment. Netflix has yet to attempt such an unconventional payment method in India, but it has introduced a mobile-only plan for Indian consumers at a cheaper rate than its basic plan. 

Apart from spending habits, Hotstar reported more than 40% of video consumption came from viewing regional content, and 63% of the total online entertainment consumption came from rural areas. To try to close the gap with Hotstar in 2019 and 2020, Netflix is spending $400 million on Indian content, both original and licensed. Hotstar currently offers over 100,000 hours of TV shows and movies in nine languages, including its top regional languages. Hotstar has successfully combined sports, local and international content and packaged it for a rapidly growing local audience. Hotstar could well be Disney’s secret weapon in this streaming war – TechCrunch reported the possible release of Disney+ catalogue on Hotstar in India, with further plans for partnership in Malaysia and Indonesia. Regardless of its rollout strategy, Hotstar can continue to grow as long as it has the financial backing of Disney and the appeal of premium sports rights. However, Disney needs to carefully consider the implications of having its own clearly branded video service as opposed to positioning it together with a strongly established existing service like Hotstar. Despite being the top downloaded app in India, Hotstar is unlikely to get the same reception (due to cultural differences in video consumption) if launched in Malaysia or Indonesia as a stand-in for Disney+. As such, Disney will have to think very carefully about any potential future Hotstar co-launch.