With 150 Mn MAU, Hotstar challenges Google-FB duopoly in advertising

Three-year-old online video streaming platform Hotstar after grabbing top position in OTT segment in India is now aiming to boost its advertising sales on its premium content.

While its subscription model targets the offerings of rivals such as Amazon and Netflix, Hotstar sees its free ad-driven offering as an alternative to Google and Facebook, who are said to have eaten a major chunk of digital advertisement.

“We have an opportunity to build a marketing proposition for advertisers in the digital world, that can be an alternative to the Google-Facebook duopoly,” Hotstar's CEO Ajit Mohan told Reuters in an interview.

With the kind of scale Hotstar has and the kind of value we can give advertisers, we’re providing an alternative to the world, he said adding that he wants to create a product that is valued and embraced by tens of millions of users. Currently, it has 500 advertisers on its platform. And now eyes small-medium businesses to increase its revenue.

KPMG estimates that India’s digital video advertising market is about Rs 1,400 crore (about $200 million) and will be closer to Rs 7,400 crore by 2021.

In 2018, Hotstar hits the top line of Rs 571 crore.

Now, it has been aggressively aiming to push original and premium contents. This month it raised around Rs 516 crore from Star US for the same purpose. Star India’s owned OTT platform has been valued at about Rs 1,850 crore, according to latest regulatory filings.

At present, Hotstar claims to have 150 million monthly active users on its platform. On Google Play Store it shows about 100 million app downloads. It supports 18 languages on its platform.

Hotstar’s India Watch Report 2018 revealed that consumption of online videos has registered five-fold growth over the past one year. It claimed to be the most downloaded video app with 170 million installs. In 2018, total IPL viewership crossed 202 million.

Fighting Amazon and Netflix 

In paid video streaming segment, Hotstar face competition with Amazon Prime and Netflix. All of them are claiming to invest heavily in offering exclusive and regional contents.

Netflix has original offerings in Stranger Things, Love Per Square Foot, The Crown and Narcos, which claimed to have brought most number of subscribers. It also launched India focused series called Sacred Games directed by Anurag Kashyap.

Netflix reportedly has 500K paid subscribers in India. Its monthly subscription starts from Rs 500 and has 5 million app downloads.

In contrast, Amazon Prime offers originals including Inside Edge, Chacha Vidhayak Hain Humare, Die Trying, Lakhon Mein Ek and a few others. Priced at an annual subscription of Rs 999 (Rs 129 monthly), Amazon Prime has about 13 million subscribers in India and 50 million app downloads.

Whereas Hotstar charges Rs 999 for an annual subscription and offers originals including ‘Suffering from Pyaar’. Its subscription plan starts from Rs 83. It claims to have 100 million app downloads. Hotstar has not revealed its paid subscriber number.

According to corporate finance advisory Duff & Phelps, Hotstar is said to have around 7 lakh paid subscription till mid-July. It aims to clock over 18 million subscribers by 2021.

All these platforms earn handsome amount of money through paid subscription. Amazon and Netflix make Rs 1,300 crore and Rs 300 crore from subscription respectively.

This is not all, now Google through YouTube, which claims to have 225 Mn monthly active users, is also creating scripted series and another original programming for the Indian market. It plans to start a paid subscription (YouTube Premium) and generate content in genres including music documentaries, talk shows, and reality series.

Among other players in the segment are Airtel TV, Sony Liv, Zee 5 and Voot TV.

India has about 310 million viewers for online videos and it is expected to touch about 380 million at the of March 2019. The online video industry is expected to touch $1.6 billion in revenue by 2022.

According to KPMG, the launch of Jio streaming apps has added to the growth, rising to a staggering 336 per cent in usage.