Disney+ Hotstar potential sees projections for India’s online video revised upwards | Media Analysis | Business
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Even though the Covid-19 pandemic is creating deep disruption and uncertainty for investors and stakeholders in India’s media industry, probably more so than at any other time in the media sector’s modern history, analyst Media Partners Asia (MPA) is now looking more favourably at earlier its projections for India’s online video sector.
MPA Asia 18May2020
The analyst says that content creation and distribution, already disrupted and democratised by the growth of mobile broadband connectivity, is now entering into a period of rapid change with all eyes on how online video market will develop in the future. As a result it sees the market scaling to US$4 billion in revenue by 2025 with SVOD contributing a greater share as it reaches more than US$1.5 billion while advertising grows to US$2.5 billion.

The engine for this growth in MPA’s opinion will be Disney+ Hotstar, what it calls a major agent of positive change with potential for significant future growth. Sports, Disney+ Hotstar, local originals, Hollywood entertainment & super aggregator strategy will help drive the growth of India’s largest premium digital video platform.

Disney+ arrived in India in March 2020 at a huge discount to its global price. Since launch, MPA observed that the service has seen traction across Disney+ Hotstar’s premium segment where Disney brand awareness from the likes of Marvel shows and movies is high. In the larger, more mass VIP segment, there are caches of the Disney content which have found traction.

MPA projections indicate Disney+ Hotstar could have around 25% of the total online video revenue sector by 2025, second only to Google’s YouTube. Indeed MPA calculates that Disney+ Hotstar has the potential to scale up to 100 million paying subs and around US$1 billion in revenue over the next five years, according to MPA base case analysis.

The base case implies a scenario where total sales reach US$902 million compared with $216 million in 2019. Revenues will contract in 2020 because of the impact of Covid-19 on the advertising market with TV bearing the brunt while digital video will also come under pressure. The analysis notes that Disney+ Hotstar’s advertisement packages are typically bundled with TV and this year is no exception and that subscription through 1H 2020 has benefited from the launch of Disney+ in April. Despite the absence of the hugely popular IPL cricket tournament, MPA notes that Disney+ has contributed meaningfully to premium tier subscriber growth and that as a result, the Disney+ Hotstar platform has remained churn positive through the first half of 2020 period.

Yet in its analysis, MPA pointed to key risks include macro disruption and ability to retain marquee sports rights as well as accelerate the pace of investment in originals and content acquisitions with competition well positioned to strike.

In its analysis, MPA insists that market growth will be dependent on a number of key factors and growth levers, such as: the platform must sustain and accelerate the pace of its investment; it needs to develop new features and services including gaming and the aggregation of more local live and on demand content; it has to expand its technology and potentially brand to Southeast Asia.