Disney+ Could Hit 100 Million Subscribers in India by 2025, Analyst Says

Courtesy of Disney+
'The Mandalorian'

The world's second-most populous nation, where Disney, Netflix and Amazon are spending heavily to gain market share, has seen a significant uptick in video consumption amid the novel coronavirus pandemic.

Disney+ could reach as many as 100 million subscribers in India by 2025, according to a report released Monday by research consultancy Media Partners Asia.

Its analysts were careful to point out, however, that a lot will have to go right for the House of Mouse to hit that high number.

At the start of April, the Walt Disney Co. revealed that Disney+ had amassed 50 million paying subscribers worldwide, with 8 million of them coming from India. The milestones were reached faster than Disney had previously projected. The novel coronavirus pandemic and the protective social distancing policies put in place by governments around the world have only boosted analysts' bullishness for subscription video services as the content consumption model of the future.

"The COVID-19 pandemic is creating deep disruption and uncertainty for investors and stakeholders in India’s media industry — probably more so than at any other time in the media sector’s modern history," MPA said. Building upon recent disruptions like the growth of low-cost mobile broadband, India, the world's second-most populous nation, is now following the coronavirus crisis into a period of ever more rapid change. As a result, MPA has revised upwards its projections for the country's online video sector — a growth market that was already considered one of the most important battlegrounds in the emerging struggle for global streaming dominance. 

"It's happening everywhere — the consumption of all streaming video is up," explains MPA executive director Vivek Couto. "But secondly, the premium segment is scaling in a way that we hadn't seen before in places like India and Southeast Asia."

"In this context, Disney+ Hotstar is a major agent of positive change with potential for significant future growth," the report's authors said. The researchers believe India's total online video revenues will grow from $1.4 billion today to $4 billion by 2025, with Disney+ Hotstar taking 25 percent of the pie, second only to Google’s YouTube. "Such growth will be dependent on a number of key factors and growth levers," MPA added. 

Disney acquired TV giant Star India when it completed the acquisition of 21st Century Fox last year. Star controls 60 local TV channels and India's leading streaming platform Hotstar. Since its launch in 2015, Hotstar has carved out a powerful position in India's streaming landscape, thanks to its steady pipeline of local content from Star's TV channels and the various sports rights it controls, including Indian Premier League cricket, the country's most popular spectator event by far. With the launch of Disney+ in India on April 3, Hotstar officially became Disney+ Hotstar, with varying levels of additional Disney content laid atop Hotstar's former subscription offerings. Hotstar also offers an ad-supported free tier.

At the entry level, a Disney+ Hotstar VIP subscription costs $5.20 per year and gives access to unlimited live cricket, Star TV series and Bollywood films, Hotstar originals and all of Disney's Marvel films and series. The top-level Disney+ Hotstar Premium subscription costs $20 annually and includes all of the programming available to VIP subscribers, plus access to Disney+ originals (such as The Mandalorian), the Fox and Disney library, plus new U.S. shows from HBO and Showtime. 

The launch of Disney+ on Hostar in April has been instrumental in helping the streaming service maintain momentum through the COVID-19 pandemic in the face of the indefinite postponement of the Indian Premier League cricket tournament in March. "Despite the absence of the popular IPL cricket tournament, Disney+ has contributed meaningfully to premium tier subscriber growth," MPA said. "As a result, the Disney+ Hotstar platform has remained churn positive through the 1H 2020 period." Couto estimates that Disney+ Hotstar will reach 18 million paying subscribers by the end of 2020 — but only if the IPL tournament is able to return to air before year's end.

"They need to maintain their momentum between now and the IPL restart, and Star and the other local broadcasters aren't really shooting anything right now," Couto notes. "That's something they'll need to address over the next few months — we expect they'll have to push some more original content out there."

MPA offered three scenarios for how Disney's streaming ambitions in India could hash out over the next few years — a base, bull and bear case. The base case has Disney+ Hotstar reaching 93 million paying subs by 2025, generating $902 million in revenue — compared with $216 million in 2019 — with $587 million coming from subscription revenue and $314 million from advertising sales. Average revenue per user would be just under $1. Approximately 17.5 million subs would be paying for the top-tier Disney+ Hotstar Premium option under this estimate.

MPA's "bull case" scenario calls for 102 million paying subs in 2025 at marginally higher ARPUs. This would equate to more than $1.2 billion in revenue.

But both of these scenarios are predicated upon some important assumptions: Disney is able to maintain its rate of online product innovation and content creation; the company retains its cricket rights when current deals begin to expire in 2023; telco bundling deals become a less significant driver of subscriptions; and that Disney+ Hotstar builds on its lead as the premium sports and entertainment destination online, becoming something like a high-end "super-aggregator app" in India.

As in the U.S., Amazon Prime and Netflix also have seen a sizable jump in subscribers in India amid the COVID-19 outbreak, Couto says. "We've witnessed significant adoption of Netflix's [lower-cost] mobile plan," he explains. But unlike in North America, Disney+ Hotstar is looking like India's incumbent streamer to beat.