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 after the first phase of India’s economic liberalisation in 1991.
Content creation & 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 India’s $1.4 billion online video market will develop in the future.
Media Partners Asia (MPA) projections for India’s online video sector have been revised upwards and it now sees the market scaling to $4 billion in revenue by 2025 with SVoD contributing a greater share as it reaches more than $1.5 billion while advertising grows to $2.5 billion. In this context, Disney+ Hotstar is a major agent of positive change with potential for significant future growth. MPA projections indicate Disney+ Hotstar could have ~25 per cent of the total online video revenue pie by 2025, second only to Google’s YouTube.
Such growth will be dependent on a number of key factors and growth levers, including:
1. The platform must sustain and accelerate the pace of its investment in product innovation, content creation & acquisition as well as retain its key sports rights in order to grow subscribers, drive viewership and stay ahead of aggressive global and local competition.
2. Develop new features & services including gaming & the aggregation of more local live and on demand content as Disney+ Hotstar consolidates its position in the industry as the leading video platform for premium entertainment & sports.
3. Expand its technology and potentially brand to Southeast Asia, including large scale emerging markets such as Indonesia and Thailand.
Future prosperity, 2020 challenge
Under MPA’s base case analysis, Disney+ Hotstar could reach 93 million paying subscribers by 2025 at monthly ARPUs under $1. This equates to $587 million in subscription revenue by 2025 while advertising sales could reach $314 million. MPA’s advertising sales assumptions are volatile due to a challenging 2020 and the uncertainty on the sports calendar in the outer years over 2024-25. MPA analysis also excludes any impact from new services such as gaming or expansion to Southeast Asia.
MPA’s base case implies a scenario where total sales reach $902 million versus $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. Disney+ Hotstar’s advertisement packages are typically bundled with TV and this year is no exception.
Meanwhile, subscription through H2 2020 has benefited 1from the launch of Disney+ in April. Despite the absence of the popular IPL cricket tournament, Disney+ has contributed meaningfully to premium tier subscriber growth. As a result, the Disney+ Hotstar platform has remained churn positive through the H1 2020 period, according to MPA analysis.