India is already one of the most competitive markets in the world for over the top (OTT) video streaming services, with up to 30 different suppliers delivering content to a broad range of fixed and wireless digital devices, including smartphones, at last count.
So the imminent launch of Disney’s rival OTT platform is likely to cause a degree of market disruption for incumbents that already include Netflix, Amazon Prime, Jio and ALTBalaji.
Available in the US, Canada, New Zealand and the Netherlands since November last year, Disney+ (or Disney Plus) is set to debut in India on 29th March. It will be delivered in partnership with Star India-owned streaming platform Hotstar, a relationship forged after Disney acquired Star India as part of its US$71bn acquisition of the remaining 21st Century Fox assets a year ago.
Details are still to be confirmed and pricing yet to be announced, but early reports suggest the new service will be dubbed Disney+Hotstar and will offer two primary products: a premium service which will include the entire library of original Disney programming, and another more basic package, priced for the market and launched at a peak period in time designed to coincide with the start of the most popular cricketing league globally – the Indian Premier League (IPL).
Getting the pricing right will be crucial to any success given the high proportion of OTT viewers in India that currently access content through advertising video on demand (AVOD) services rather than pay for subscription video on demand (SVOD) alternatives.
Estimates from Boston Consulting Group (BCG) for example suggest India’s total video-on-demand (VoD) market could grow tenfold to be worth US$5bn by 2023, up from US$500m in 2018. In its report Entertainment Goes Online: A $5bn Opportunity, BCG concludes that while paying subscribers are unlikely to exceed more than around 40-50m in 2023, they will contribute around US$1.5bn of SVOD revenue. In contrast, whereas users of low-cost or free AVOD services could reach 600m out of a population of around 1.3bn, they will contribute around US$2.2bn.
Some of that growth will be enabled by the fast, reliable mobile connectivity brought by fifth-generation (5G) cellular networks due to be rolled out by India’s mobile network operators (MNOs), although the Cellular Operators Association of India (COAI) does not now expect mainstream 5G services to become available before 2022, due to concerns around high implementation costs and lack of available wireless spectrum.
In the meantime, however, a doubling in the number of smartphone users between 2019 and 2022 to 859m should continue to drive OTT adoption, with expected smartphone penetration in the country predicted to hit 63% by 2025 according to GSMA Intelligence.
Subscribers in India also pay some of the lowest rates for mobile data in the world, which also makes video consumption on smartphones a more attractive option. However more rapid growth could well materialise if Disney+Hotstar launches major introductory promotions (as Jio did in 2016) to acquire new customers and market share in 2020.
The prime advantage of the Disney+ Hotstar partnership is the sheer size of its existing subscriber base. Whereas Disney+ has signed up around 26m paying subscribers in the two months since its launch across North America, New Zealand and the Netherlands, Hotstar is estimated to already have 400m monthly subscribers in India alone. As such, it is India’s largest premium streaming platform offering 61 channels of TV and movies in 9 languages as well as live sports events (notably cricket and the Indian Premier League) which are calculated to reach nine out of every ten households in the country. Its app is available on Google Play and Apple App Store for mobile and tablet applications while viewers can also access content via the web.
The vast majority of Hotstar’s subscribers view the free, ad-supported content but the platform also has two subscriptions tiers – Hotstar VIP which offers original programming and some sports events for around US$5 a month, and Premium which adds English-language content and live sports for roughly US$14. Though Hotstar itself doesn’t publicise the numbers, analysts estimate that around 4-5m people subscribe to the VIP service and 2m the Premium tier.
Disney+ pricing in the US is relatively simple – $7 per month (or $70 per year) gives subscribers access to all the content the service has to offer. Interestingly, the company doesn’t just stream content – it makes it available for download onto Android and iOS smartphones in three different levels of quality to suit subscribers in areas of slow or limited mobile network coverage. As of January this year, app downloads had hit almost 41m across both Apple and Google stores according to mobile analytics firm Sensor Tower, with approximately 84% of the estimated US$97m of Disney Plus mobile revenue coming from the US in the service’s first 60 days of operation.
But for Disney+ to reach a wider audience – particularly with younger segments of the Indian population – more flexible billing options are likely to be needed, including allowing buyers to easily purchase content on a limited basis through their mobile phone bills or prepaid top-ups. Hotstar already has a partnership agreement that sees its services bundled with subscriptions to Airtel’s mobile phone services with Airtel allowing customers to make Hotstar purchases via their postpaid bills (as well as prepaid talk-time).
Membership is also available by entering credit/debit card details on Hotstar’s websites, and through monthly billing to Apple’s iTunes service through the iOS App. With the high number of Indian subscribers accessing Hotstar (and soon Disney+Hotstar) content through their mobile phones however, the company may need to expand its relationship with more local MNOs and digital wallets to allow subscriptions to be collected through mobile phone bills and improve the customer experience with a proven billing platform that delivers more efficient onboarding, refunds and customer support processes.