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Disney+ in India: Understanding Those 8 Million Surprise Subscribers

Analysts note that some of the those users in the country aren't entirely "new," with most likely to be existing Hotstar subs.

When the Walt Disney Co. revealed Wednesday that streaming service Disney+ had already amassed 50 million subscribers, it said a large chunk of the new paying users — 8 million of them — came from India.

The revelation offered a valuable glimpse at the state of play for the streaming battle in the world's second most populous country. But while Disney's stock rose on the news, the numbers also raised a slew of questions about how Disney was counting subscribers there, and how valuable each user in the India market may be for the company.

After Disney completed its $71.3 billion acquisition of large parts of Rupert Murdoch's 21st Century Fox last year, it gained ownership of TV giant Star India, which controls 60 local TV channels and India's leading streaming platform Hotstar. Some analysts have referred to these India properties as one of the "crown jewels" of the whole Fox acquisition.

Since its launch in 2015, Hotstar has carved out a powerful position in India's VOD landscape. Much of the streamer's growth has come on the back of the various sports and cricket rights it controls, including the Indian Premier League, the country's most popular spectator event by far. During the peak of the cricket season, Hotstar is estimated to top out at around 300 million active users.

Hotstar offers various viewing options, including an advertising-supported free tier, and two paid offerings, each with different levels of content and access. Analysts have always believed the vast majority of Hotstar viewers were tapping the ad-supported option, but it's never been clear roughly how many were actually paying for subs. Past estimates had ranged from just 1 million to 3 million.

Disney's Wednesday disclosure opened the door to some answers — but also provoked a raft of new questions.

With the launch of Disney+ in India on April 3, Hotstar officially became Disney+ Hotstar, with varying levels of additional Disney content laid atop the former subscription offerings. A Disney+ Hotstar VIP subscription, which now costs 399 rupees ($5.20) per year, gives access to the entire Marvel Cinematic Universe, Bollywood films, Hotstar originals, unlimited live sports and Star TV series. The top-level Disney+ Hotstar Premium subscription costs $20 annually and includes all of programming available to VIP subscribers, plus access to 29 Disney+ originals (such as The Mandalorian) and new U.S. shows from HBO, Showtime and Fox.

The disclosure of 8 million Indian subs just days after the Disney+ launch in the country caused some head-scratching on Wall Street. "Disney+ reaches 50 million subs ... but did it really?," Barclays analyst Kannan Venkateshwar wrote in a report. "While the absolute numbers are impressive and make Disney+ the most successful streaming launch ever, we believe there are caveats to keep in mind, especially with respect to the international numbers. In India, Disney+ is bundled with Hotstar, which already has an existing subscriber base."

Noting Disney's lack of explanation about the India numbers, CFRA Research analyst Tuna Amobi tells The Hollywood Reporter: "Given that the service was just launched in India sometime last week, there may very well be some valid questions regarding the composition or magnitude of the reported 8 million paid subscribers in India in such a short period, absent further disclosures and/or clarification."

Others on Wall Street took a deep dive on the Indian figure. "Since Disney’s press release specifically referenced 50 million 'paid' subscribers, we believe only the Hotstar paying subscribers were included in that count, which apparently was 8 million,” said Bernstein analyst Todd Juenger in a report issued after the Disney announcement, addressing questions he said he had heard from investors. "The price for the Hotstar paid plans, which now include various amounts of Disney+ content, has been set higher. Our understanding is existing Hotstar paying subscribers will be transitioned to the new, higher rate when their contracts expire.”

That assessment means that an unknown number of the 8 million Disney+ users in India aren't entirely "new," with most likely to be existing Hotstar subs. While there are subscribers who weren't already Hotstar subscribers but signed up after Disney+'s April 3 launch, prior Hotstar subscribers that now get Disney+ would represent only incremental gains for the service from the added revenue that will come from the higher prices Disney now is charging its two sub-tiers. Those would amount to "only $53 million" a year if all 8 million Indian subs signed up for the most expensive plan, noted Juenger.

"We believe it is quite likely that a large part of the 8 million sub base in India were preexisting Hotstar subs," Venkateshwar suggested. "Even if this is indeed the case, however, we believe 8 million paying subs in India for a streaming service is likely much bigger than anyone’s expectation. This implies that for others like Netflix, India could indeed prove to be a significant market."

Indeed, 8 million subs represents a strong competitive foothold for Disney+ in India, a market with vast growth potential, where rivals like Netflix and Amazon Prime already have spent enormously to attract users.

Media Partners Asia, a leading regional research group, estimates that India currently has 27 million paying online video subscribers, with Hotstar Disney+ taking a healthy 30 percent share, versus 45 percent for Amazon (inflated by the bundled nature of the Prime service) and just 11 percent for Netflix. The rest of the pie is claimed by an array of local operators.

Breaking down the numbers further, MPA CEO Vivek Couto tells THR that "we estimate about 30 percent of the 8 million Disney+ Hotstar subscribers are taking the Premium subscription plan, while the rest are taking the [lower cost] VIP plan."

When Disney unveiled its 50 million subscriber milestone on Wednesday, it brought the Hollywood giant some much-needed positive momentum. The ongoing coronavirus pandemic has both blocked the global release of Disney's tentpole films and idled its theme parks in the U.S., Asia and Europe.

Last week's launch of Disney+ in India similarly has been a boon to the company's streaming business during the coronavirus downturn.

With all of India in lockdown, people there are not only craving distraction from home entertainment, they're also direly missing their usual cricket fix, since the Indian Premier League — Hotstar's top selling point in years past — remains on indefinite hiatus. “Disney+ has filled the big void in Hotstar’s offering left by the IPL vacuum," Mihir Shah, MPA's India vp, tells THR. "Disney+ brings in a lot of value and the launch is timely," he adds, noting the way TV and OTT consumption in all categories have spiked during the lockdown.

Adds Couto: "In the absence of the IPL, Hotstar has used Disney+ to drive an SVOD equation without just relying on sports."

via Hollywood Reporter

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