Sounak Mitra
Call it the Netflix effect. Hotstar, the over-the-top (OTT) video streaming platform owned by television company Star India, now wants to produce and stream its own original content with an initial investment of Rs 120 crore. Originals – exclusive shows made of fresh content -- is a concept that Netflix introduced in 2011 that became the key to success in the online video streaming industry.
Hotstar was among the first to start online streaming of video content in India and currently enjoys around 69.4 percent share in India’s OTT market. But the company has been making losses since inception in February 2015. In FY17, its loss mounted to Rs 489 crore, according to a report in The Economic Times. The reason is simple. It has so far managed to convert only 3-5 percent of subscribers into paid users, shows data from Counterpoint Research. And, that specifically why Hotstar is getting into original shows that it would title Hotstar Specials.
At present, Hotstar gets around 80 percent of its viewership from drama and movies that it sources from Star India properties such as Star Plus, Star Jalsa, Asianet, Life OK and those produced by Fox Star Studios. The remaining 20 percent viewership comes from sports events such as Indian Premier League (IPL), BCCI cricket matches, Pro Kabaddi and India Super League.
The reason why Hotstar’s conversion (paid users) is low is because all these content are available on television channels that can be subscribed through cable or direct-to-home subscriptions at cheaper rates with more content options.
The plan to have original content shows will help Hotstar in converting its subscribers into paid users. According to its plans, it has tied up with 15 film-makers, including Shekhar Kapur, Salman Khan, Neeraj Pandey, Timanshu Dhulia, Kabir Khan and Nikhil Advani among others. Most of Hotstar Specials will be in Hindi, and there’s where the viewership lies. According to a study paper by BCG, around 63 percent of content consumed online is in Hindi language.
The market for OTT is projected to grow. The number of paid subscribers will be around 4 million by 2022 from 1 million in 2017, and OTTs will generate revenue of Rs 2,000 crore by 2020 from around Rs 390 crore in 2017, according to the BCG study. Hotstar, thus is on the right track.
Besides, Hotstar is planning to introduce new subscription plans of Rs 999 a year, which is similar to Amazon’s Prime Videos. However, Amazon’s Prime membership offers other things such as music, e-commerce deals, besides videos and movies.
Hotstar will also have to compete with likes of Netflix that has redefined the rule of the OTT game with 137 million users across 190 countries.
Besides Netflix and Amazon that has allocated $300 million for content in India, Hotstar will have to fight with home-grown OTTs such as AltBalaji, SonyLIV and HoiChoi, AltBalaji and Hoi Choi have already made huge inroads with their own original content in local languages which received good traction.
Plus, there’s Subhash Chandra’s Zee that has recently upped the OTT game with Zee5 which is available in 190 countries, disseminates content in 12 languages, and already has digital rights for 3,000 movies. And, Chandra wants to make Zee5 an immersive OTT experience through fresh investments.
Thus, the game is unlikely to be easy for Hotstar.
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