India’s online video market to touch $4 billion by 2025

NEW DELHI: India’s online video market will touch $4 billion by 2025, with subscription services contributing more than $1.5 billion while advertising accounting for $2.5 billion.

Disney+ Hotstar, the streaming service owned by Disney India, will contribute significantly to this growth, acquiring a potential 25% of the total online video revenue pie by 2025, second only to Google’s YouTube.

These projections are part of a report titled India Intelligence and Insights: Disney+ Hotstar: The Future of India’s Largest Premium Digital Video Platform brought out by independent research and consultancy services firm Media Partners Asia (MPA).

“In the current covid situation, audiences are spending more time online and OTT platforms have almost doubled their viewership. This viewership trend is likely to continue at least for a few years. Hence, advertising on the services is likely to surge in the coming years as they increasingly become the choice for content consumption,” said Anita Nayyar, head, customer strategy and relationships, ZEE5.

According to the Ficci-EY media and entertainment industry report 2020, television advertising in India, on the other hand, is estimated to reach ₹388 billion ($5.1 billion) by 2022.

“The pay economy for online content will be successful if we work with quality content, and price it in the right manner,” said Vishnu Mohta, co-founder of Bengali video streaming platform Hoichoi. “It would happen because the covid pandemic has catapulted OTT growth by some five years. Things that people would have expected to see in 2025, might happen now.”

D Girish, vice-president, strategy at documentary streaming service DocuBay added that the current crisis has expedited the adoption of digital platforms by a large percentage of content consumers.

“SVoD is not dependent on advertising spends by brands that are among the first to be impacted whenever there is a certain corporate or economic downturn; however, greater digital adoption also opens the door for a larger turf for AVoD monetization than in the past,” he said.

Further, MPA says Disney+ Hotstar could reach 93 million paying subscribers by 2025 at monthly ARPUs (average revenue per user) under $1. This equates to $587 million in subscription revenue by 2025 while advertising sales could reach $314 million.

The analysis excludes any impact from new services such as gaming or expansion to south east Asia.

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.

Disney did not respond to Mint’s queries.

Meanwhile, subscription through the first half of 2020 has benefited from the launch of Disney+ in April. Despite the absence of the popular IPL cricket tournament, Disney+ contributed meaningfully to premium tier subscriber growth and remained churn positive through the period, according to MPA analysis.

Calling sports, local originals, Hollywood entertainment and super aggregator strategy its strengths, the report says the platform must sustain and accelerate the pace of its investment in product innovation, content creation and 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. It must also develop new features and services including gaming and the aggregation of more local live and on-demand content.

Rebranded as Disney+ Hotstar earlier this year, pricing, content mix and tech are key pillars of the Disney+ Hotstar strategy, the MPA report said. Pricing has been important given that India’s large pay-TV universe only pays $4 per month for a wide range of live TV channels, including sports and entertainment. The key to creating an online subscription business at scale was always anchored towards annual offers at attractive rates. Disney has three distinct offerings – Disney+ Hotstar VIP, Disney+ Hotstar Premium and an ad-supported basic tier. The VIP plan is available for ₹399 a year while the premium subscription comes for ₹1,499.

Disney+ Hotstar’s major differentiation has been its vast aggregation of premium local and international entertainment and sports, driving its present-day addressable market to 100 million plus subscribers.

Disney+ comes with content bundled from Disney, Pixar, Marvel, Star Wars and National Geographic.