Hotstar is Star’s first business that is direct-to-consumer or B2C
Last week, Walt Disney Co. raised its offer for 21st Century Fox’s entertainment assets to $71.3 billion, outbidding Comcast Corp. in a battle for one of the media industry’s biggest prizes, according to a Bloomberg report.
The report added that both Disney and Comcast are looking to use the Fox assets to bolster their content and expand overseas. However, at the heart of the Comcast and Disney battle for Fox assets is also the coveted Star business in India.
It’s not difficult to see why Star is a sought-after business even though, of late, the network may not have the largest viewership share in the country.
Yet, its claims of being a network of 60 channels in eight different languages, reaching out to 9 out of 10 cable and satellite TV homes in India cannot be taken lightly. The company says that it reaches nearly 700 million viewers a month and produces 30,000 hours of programming every year.
To be sure, Comcast and Disney may not be fighting over the acquisition of Star India, but it is indeed one of the most desirable assets.
Star is the crown jewel both in its reach and trajectory. Since China has locked out foreign media, India becomes the last big potential market that media companies covet.
The importance of Star India in the Fox portfolio also stems from the fact that TV is still a growth story in India. In the short term, India is not a cord-cutting market. India will remain a growth market both for linear TV and over-the-top (OTT) video streaming services. In fact, TV still does not have 100% penetration.
According to unreleased data from the latest survey of Broadcast Audience Research Council (Barc) India, there are 197 million TV homes in the country, reflecting a 7.5% growth (over the last survey in 2016) and a 66% penetration, with huge headroom for growth in TV viewership.
Besides, according to a Ficci-EY report—Re-imagining India’s M&E Sector—published earlier this year, television advertising is growing at 10%.
Star India scores high in sports as well. At the moment, it has television broadcast rights to several premier cricket and non-cricket sports properties.
The broadcaster has 13 sports channels, including one in Tamil. It has rights to all BCCI cricket as well as the Indian Premier League (IPL).
Besides tennis in its portfolio, it has managed to build a significant viewership for its home-grown Pro Kabaddi League. Its investments in cricket may run into thousands of crores of rupees but the broadcaster is confident of recovery.
Media analysts say that sports also helps the broadcaster retain market share. “They have gone into it (sports) with their eyes open. It also gets eyeballs to their streaming service (Hotstar). They expect a good payoff from sports,” says a Mumbai-based media analyst.
Clearly, the biggest attraction of Star lies in Hotstar, which is currently the number one OTT brand in India on the basis of monthly active users. This is Star’s first business that is direct-to-consumer or B2C.
“Such B2C companies (like Netflix and Amazon) receive high valuations as they have a direct subscription model and ad sales. The magic lies there,” says the analyst. A total of 10.3 million people concurrently saw the IPL final and Star India said that a total of 202 million viewers logged onto Hotstar to watch IPL, up 55.2% from last year.
According to Vivek Couto, executive director at research firm Media Partner Asia, Hotstar as a digital video destination is now at an interesting point in its journey after a successful IPL.
“It owes much of its success to investment in distribution and tech but also most significantly to the content breadth from Star—catch-up local content, leadership in Hollywood and, of course, most critically, sports led by cricket,” the analyst says. “This has helped Hotstar compete for digital ad dollars with dominant platforms such as YouTube and start to tap into real consumer subscription dollars. It’s the start of a very long journey, cash-intensive and highly competitive but Hotstar is clearly amongst the leaders.”
Couto believes that India is a key part of 21st Century Fox’s valuation for potential acquirers because Star has scale across a number of key segments in a large, high-growth video market. “Star has local and regional scale—eyeballs across TV and digital and IP ownership. It is one of the leading consumer brands in India and a decent proxy for the growth of the economy in the years to come,” he says.
Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.