Disney’s India streaming platform, Disney+ Hotstar, has the potential to scale up to 100 million paying subs and US$1 billion in revenue over the next five years, according to a newly released report by Media Partners Asia (MPA).
Growth of the country’s largest premium digital video platform will be driven by sports, Disney+, Indian originals, Hollywood entertainment and a super aggregator strategy, the report, Disney+ Hotstar: The Future of India’s Largest Premium Digital Video Platform, says.
The direct-to-consumer and subscription strategy is “emerging as a key driver of value creation”, the report says, noting less reliance on telco deals.
Future value creation may come from gaming and expansion into Southeast Asia.
The report also highlights key risks, including macro disruption and the ability to retain marquee sports rights as well as to accelerate the pace of investment in originals and content acquisitions against well-positioned competitors.
MPA says the Covid-19 pandemic has created 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 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 India’s US$1.4 billion online video market will develop,” MPA continued.
MPA has revised its projections for India’s online video sector upwards as it sees the market scaling to US$4 billion in revenue by 2025.
SVOD will contribute a greater share as it reaches more than US$1.5 billion, while advertising grows to US$2.5 billion.
“In this context, Disney+ Hotstar is a major agent of positive change with potential for significant future growth,” MPA says.
MPA’s projections indicate Disney+ Hotstar could have 25% of the total online video revenue pie in India by 2025, second only to YouTube.
Growth levers include accelerated investment in product innovation, content creation and acquisitions as well as retaining key sports rights; developing new features and services, including gaming and aggregating more local live and on-demand content; and expanding its tech and potentially the brand to Southeast Asia, including large-scale emerging markets such as Indonesia and Thailand.
MPA’s base case analysis indicates that Disney+ Hotstar could reach 93 million paying subs by 2025 at monthly ARPUs under US$1. This equates to US$587 million in subscription revenue by 2025 while advertising sales could reach US$314 million.
The bull case scenario calls for 102 million paying subs in 2025 at marginally higher ARPUs, equating to more than US$1.2 billion in revenue with US$778 million in subscription revenue and US$429 million in advertising.
MPA’s bear case scenario calls for 74 million paying subs in 2025 at marginally lower ARPUs. This equates to US$675 million in revenue with US$418 million in subscription revenue and US$257 million in advertising.