Hotstar India
Contributed by Ritika Pant.
March 2018
Key Takeaways
The Indian digital market is governed by price; therefore, a freemium (free+premium) model is the best suited payment model for this market.
Mobile phones are the preferred viewing device for many Indians mainly due to reasonably priced smart phones, better internet penetration and low mobile data charges.
As localized content is most watched in India, video-on-demand platforms like Hotstar are primarily used for catch-up TV and Bollywood films.
Strict censorship on Indian television makes internet distributed services more suitable to watch foreign language content that is regarded as sexually explicit and morally dubious.
A key differentiator in the mobile app Hotstar’s success is its keen interest in live streaming news and key sports events including ICC Cricket World Cup, Indian Premier League and Pro-Kabaddi League that receive major traction.
Market
An article published in a leading daily mentions that there were approximately 30 online video streaming platforms and 90 million active viewers in the Indian digital mediascape in June 2017. Original content producers, content rights holders, broadcasters, cable TV operators, DTH service providers, international content aggregators and distributors, and telecom operators comprise the digital market for online streaming. Hotstar, Amazon Prime, Netflix, HOOQ, ALTBalaji, Ozee, Voot, Ditto TV and SonyLiv are some prominent players in the Indian market. From a mere $64 million in 2017, the Indian video-on-demand market is expected to reach $168 million by 2021.
Hotstar, launched in February 2015, is an online video streaming platform owned by Novi Digital Entertainment, a subsidiary of India’s leading private broadcaster Star TV. Several online streaming services such as Reliance’s BigFlix ( founded in 2012), Zee TV’s Ditto TV (founded in 2012) and Times Group’s BoxTV ( founded in 2013) already existed in the Indian digital landscape, but due to weak internet penetration and low smartphone usage, they were unable to establish a robust user base. However, technological conditions have changed so that by 2016, India had the second largest internet user-base in the world after China (462 million). India also became the second largest smartphone market in the world, selling over 40 million smartphones in the third quarter of 2017.
But what made Hotstar’s entry significant in the Indian market was not only increased data usage among users, but also its strategy to directly target the cricket-loving nation by live-streaming the ICC Cricket World Cup that began two weeks after its launch. Another factor in its success was its promise to provide access to HBO’s premium content simultaneously with the US telecast.
The service launched its promotional campaign with a message “Go Solo” that featured young Indians who “prized individuality and non-conformity” over family-viewing of television programmes. Its target audience, as its CEO Ajit Mohan states, is the “affluent metro youth” who “weren’t satisfied with the traditional viewing in India, sitting around a living room TV set, watching a channel that someone else had chosen.”
Regulation
Keeping in accordance with the guidelines laid down by the Broadcasting Content Complaints Council (BCCC) – a self-regulatory body set up by the Indian Broadcasting Foundation in consultation with the Ministry of Information and Broadcasting in 2011 -Indian broadcasters internally monitor and self-regulate content for television. While Hindi and regional language television programmes get away with censorship issues by pre-censoring content at the production stage, the arbitrary practice of censorship on finished and imported English language programming to meet Indian moral standards can result in ambiguities in the narrative. In such a scenario as HBO’s globally popular Game of Thrones is broadcast on Indian television, the episode is full of major story-plots offensive to Indian morality edited out, (but inadvertently referred to in later scenes), objectionable visual details blurred out within scenes, and profane words/dialogues bleeped in the audio track and left blank in the subtitles. Internet distributed services are free of government regulation (at least as of March 2018) and thus are attractive for offering uncensored English language programmes.
However, despite any regulations from the government, the online streaming services have begun to self-censor content to “keep Indian cultural sensitivities in mind” while offering global content to their customers. Online-streaming service Amazon Prime, for instance, released two versions of the TV series American Gods – censored and uncensored. The censored version refrained from female frontal nudity while blurring out male genitalia and also avoided references to the ‘holy’ cow for the animal’s religious significance amongst the Hindus. Netflix, which initially provided uncensored content, also streamed a censored version of the Indian film Angry Indian Goddesses in 2017. However, there hasn’t been any other incident of content regulation by Netflix, probably due to its niche user-base.
Hotstar’s stand on content regulation is ambiguous. On one hand, it streamed uncensored episodes of Game of Thrones and other international TV shows for its users, but on the other, it re-censored an Indian film Masaan that was already censored by the Central Board of Film Certification – a regulatory body that censors films for their theatrical release. The dual nature of censorship on Hotstar rests on the freemium model (providing part-subscription/part-free content) that the service practices. As a result, the premium content (that has a paywall) is streamed uncensored and the content available for free is streamed censored. While both Netflix and Hotstar largely provide their subscription-based content uncensored, Amazon Prime’s stringent move in censoring content to match Indian cultural sensitivities could also be driven by its monetary interests that lie in the retail sector.
Viewing Habits
Hotstar released its first consumer survey India Watch Report 2018, which it claims is the first ever consumer insight conducted for any streaming platform in the world. The report shares interesting insights on the transformation of the digital landscape in India since the launch of Hotstar. It states that nearly 96 per cent of its users prefer the long form video format as opposed to 62 per cent of Indian YouTube users who preferred less than twenty minutes snackable content in the initial years. Smartphone screens are becoming the primary screens as almost 90 per cent of its users prefer mobile phones over other devices. Moreover, the consumption habits of the viewers are diverse as there is a mixed response to content from varied genres in both Hindi and English. As the report mentions, “26% of Game of Thrones viewers also watched Hindi TV shows; 24% of Modern Family viewers also watched cricket..”. While cricket still remains the most favourite sport to be watched on Hotstar, other sports like VIVO Pro Kabbadi League are also gaining prominence.
Internet Pricing and Availability
Since cable TV subscription rates in India are very low (approximately $3 to $12 per month), Indian users’ expenditure towards entertainment remains minimal. The comparatively high subscription charge is a major reason why a globally successful service like Netflix (approximately $8/month) failed to lure the Indian audiences whereas its counterpart Amazon Prime, that is already established as a giant retail firm in the Indian market, managed to overtake the former (approximately $8/year until 2017, now $16/year). Moreover, many Indians depend on free online streaming services like YouTube or illegal torrents to access cost-free online entertainment. In this context, a freemium pay model is best suited to Indians’ expectations of online streaming services. While both Netflix and Amazon Prime follow the subscription model of revenue, Hotstar based on the freemium model offers some content free of charge while other content (premium content) remains behind a paywall. The main source of revenue generation for free content are commercial advertisements inserted in between the content while the premium members are able to watch ad-free content with few banner advertisements that don’t obstruct the programming flow. Initially, the service had set a standard subscription fee of $3.5/Rs.199 a month. Since only a meagre 3-5% of its users pay the subscription fee to watch premium content; from January 2018, the service has further slashed down its subscription fee and is now priced at Rs. 498, Rs. 894 and Rs. 1200 for three, six and twelve months respectively. Another competitor, Voot (owned by Viacom 18), that was free until now plans to implement the freemium model by mid-2018.
Internet bandwidth also remains a key issue. In October 2016, Reliance Jio mobile network’s launch in the Indian market not only provided free and unlimited internet to its users in the initial phase but also forced the competitors to reduce mobile data plans to a phenomenally low price, thus expanding the digital networks. Added to this, was a speedy transition from 2G and 3G to 4G networks that encouraged mobile users to access the internet, specifically video content, via their handsets. Keeping in consideration the relatively low internet bandwidth; Hotstar, which is primarily developed for mobile users, promised to stream quality entertainment to its users at an internet bandwidth of as low as 50kbps. According to the Internet and Mobile Association of India (IAMAI) report 2016, mobile internet users grew at a rate of 22 per cent between October 2015-2016, to reach an estimated 157 million. Furthermore, while the urban India primarily accesses online communication and social networking sites via the internet, entertainment services remain the most accessed services via internet for rural India.
Content
Hotstar boasts of streaming over 50,000 hours of television content in the form of drama, movies and sports from all of Star network’s popular channels like Star Plus, Life OK, Star World etc. It also streams syndicated content across eight languages (Malayalam, Telugu, Kannada, Bengali, Gujarati, Marathi, Hindi and English) made available to online users twenty-four hours after the original broadcast. Owing to its origins in the broadcast industry, a major share of Hotstar’s content includes Star network’s Hindi and regional language fiction and non-fiction television programmes. The network’s content tie-ups with international content producers like 21st Century FOX, Disney and HBO has also added a list of high-profile English language import programmes like Modern Family, This is Us and Masterchef Australia in its catalogue. Although internet distributed services in India are primarily used for catch up TV and movies; Hotstar, is investing in creating exclusive digital content in the form of a sit-com Sarabhai Vs. Sarabhai, a news comedy show On Air with AIB and a romantic drama Tanhaaiyan amongst others.
Due to its collaboration with a Hindi and an English language news channel, the service also provides daily news in the form of short clips. Its key differentiator and the major source of getting eyeballs, however remains sports related content. In India, cricket and Bollywood films receive major traction from the audiences. By acquiring digital rights for streaming the ICC Cricket World Cup (until 2022), Indian Premier League (an annual twenty-twenty cricket league), Hockey India League and Pro Kabaddi League Hotstar has ensured a strong line-up of diverse content.
In terms of consumption, therefore, Hotstar attracts a more varied mass audience compared to the niche audience of Netflix or Amazon Prime. While Netflix is a go-to destination for viewers searching for premier English language content (primarily Netflix originals), Hotstar mainly functions as a catch-up TV service providing anywhere, anytime TV programmes 24 hours after their original broadcast. In that sense, the target audience for the two platforms is distinctly different.
Consumer and Press Reaction
As per a research conducted by Counterpoint Research in December 2017, a majority of Indian audiences still prefer a free or ad-supported model which is one of the reasons why Hotstar leads the way. Another article states that 93 per cent of the total time that Indians spend on watching online content is utilized in watching Hindi and regional language content. Since Hotstar has the maximum library for such programming, it stands as a clear winner amongst its peers. The CEO and co-founder of Toronto-based QYOU Media, Curt Marvis mentions, “The one mistake many OTT service providers make when entering India is only hosting western content, or only extending their regional offering to Bollywood movies.” To tap the Indian market, both Netflix and Amazon Prime are producing original digital content. Amazon Prime’s Inside Edge and Breathe and Netflix’s Sacred Games are initial experiments to woo the consumers.
While Hotstar has a promising array of content for the Indian users, the app’s user interface has been sluggish. An online report mentions the many problems that users face while using the app. “For one, support across multiple devices is a joke. Your user account is only used as a simple toggle to determine whether or not you can access Premium content. Beyond that, everything is stored locally – videos you’re watching can only be resumed on the same device; shows you watch are only listed on the same device; recommendations are based on your viewing history on – you guessed it – that device only.” Besides, the app does not allow its users to make a watch list of their favourite shows. Moreover, with its limited 720p resolution, the bigger the display screen, the fuzzier the image quality.
Subscriber Estimates
Hotstar has emerged as a clear winner amongst its competitors Netflix, Amazon Prime, Voot etc. According to an online report the user-base of Hotstar has witnessed a 100 per cent jump from 33 million in August 2016 to 67.5 million after a year. The user base for Netflix and Amazon Prime also witnessed a 100 per scent growth reaching a 5.37 million and 12.64 million respectively.
Broader Reach
Hotstar has recently begun operations in the United States and Canada giving the Indian diaspora access to Indian channels and cinema. Due to copyright restrictions, however, it cannot offer any content originating from the US and Canada (like HBO, CBS Showtime, Disney, and FOX) to its US and Canadian subscribers.
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