Hotstar – the Next Netflix of India?

HOTSTAR – THE NEXT NETFLIX OF INDIA?

Trying to tap into the burgeoning potential of the digital consumption scenario in India, many companies are trying to gain a competitive edge in order to get a larger share of the market. Hotstar, which has already gained popularity, can leverage its position to emerge as the market leader and hold that spot. However, in an ever-changing competitive world, their marketing strategy is of paramount importance. Hence, through this report, we attempt to understand and analyze the market for Hotstar. In order to explore the value exchange opportunities Hotstar can offer to the consumers, we have tried to put forward a simple 5C analysis followed by STP analysis to choose the appropriate value exchange opportunities.

The 5 Cs

1.Consumer:

Consumers, the quintessential of the 5Cs, have been evolving with the advent of new technologies and with the change in the socio-economic and political backdrop. The content which could have been easily marketed to them needs major remodeling. On top of that, the traditional sources of entertainment and the modes of consumption have changed as well.  Through the pilot interviews conducted to understand the type of consumers Hotstar can target, there seems to be a pattern emerging in terms of the needs which can be met. Combining the result of 5 pilot interviews (attached in Annexure) and a survey which was floated and received more than 100 responses, a majority 70 percent of the people who use digital video platform to watch content online did so because they faced situations, where they could not watch their favourite shows/movies on TV as someone else in their family, was using the TV.

 Every era has its own set of innovations and for this era, it is the easy availability of smartphones and mobile internet. It has changed how consumers think and behave to a great extent. It was unthinkable at one point to have the freedom to choose the content one likes at any time the individual wants. But with the advent of online streaming, it is not only a possibility but rather a basic requirement that the consumer demands of. At the same time, the consumers have little brand loyalty and are heavily affected by price. But they are willing to shell out money if they perceive a service to be adding to their comfort or social quotient.

A typical consumer who prefers watching content on digital platforms like Hotstar or Netflix does so probably because he/she finds himself in a situation where there is no immediate access to TV but at the same time he/she does not want to miss his favourite show/ live telecast. Such a consumer benefits from the services of video on demand (VOD) platforms as he/she can access the content anytime and anywhere. There seemed to be a divide in terms of how advertisements during streaming affect the psychology of the consumers. While some consumers hate getting interrupted by advertisements in the middle of a video and hence are ready to pay a premium to avoid ads, some consumers do not mind watching ads because of the benefit of free service being offered to them. A better understanding of how a consumer perceives advertisements in the middle of a video will help the video-on-demand digital platforms to frame their pricing strategy.

2.Context/ Climate

a) Whole package: Entertainment and Media Industry is now trending to the 'The entire package experience' - there is a demand for brands and platforms that are differentiated not only by the quality of their content but also the quality of customization, curation, and convenience.

b) Fan theory: There has been a radical shift in the formula for success from just eyeball-seeking subscription revenues to the creation of fan base - who will return every day to your brands and properties. This fan-centric business ensures that thanks to the loyalty of passionate users, you will command substantial strategic advantages. In every E&M sector, disruptive companies are racing against incumbents to drive fan value and the pace is bound to accelerate. Any company hoping to join the fray will need to be better than the competition to gain loyalty, fan engagement and spending, and at investing in efforts that drive fan value.

c) Direct-to-consumer model: The Digital entertainment industry is rapidly transitioning to a direct-to-consumer world where most of the content remains the same but the packaging, distribution and final delivery to customers has changed significantly.

 d)Social and cultural setting - society's trends and fashion: In India, television time was once upon a time believed to be 'family bonding' time- everyone watching the same shows together. But today as the variety of shows has increased each family member wants to watch a show of his choice. Hotstar saw the potential in this and their tagline “go solo” defines their strategy. The web portal Hotstar.com was released for people living in cities having access to laptops and high-speed internet and also targeted the daily travelling public (an expanding customer base, thanks to increased travel time and traffic).  Indian Hindi serials tend to be longer, going on for hundreds of episodes and finding one particular episode among so many becomes cumbersome for the users. Hotstar came to the rescue here by sorting out episodes into seasons so users can find episodes easily and quickly. Fans are increasingly seeing digital devices as a means to feel more personally connected to their favorite stars, artists, athletes and fellow fans and this has been grabbed as an opportunity by Hotstar - Live coverage of popular events and sports leagues -Pro-Kabbadi League,IPL  to name a few.

e) Economic conditions: With the rising upper-middle class and improving economic conditions of Indian people, Smartphones and 4G internet connections have ceased to be luxuries and have now become affordable necessities. With this change, digital media entertainment is shifting from homes to on-the-go tabs, smartphones, etc. The Android app of Hotstar was launched and targeted cities and towns in India where a mobile phone is a hub to access the internet. Also, with increasing spending capabilities of users, pay model for online content consumption has become more and more acceptable. Sports aficionados do not mind paying for content as long they are guaranteed uninterrupted live coverage of their favourite sport. There was, however, visible resistance to the use of credit card for payment. Taking this in consideration, Hotstar launched free service as well as a Premium Hotstar, accessible by payment of a small amount.

f) Technological environment: Specifically, the expansion of digital technology, manifested in the form of growing wireless network connectivity, popularity of connected devices and new routes to the user, is altering the industry’s structure, driving new ways to produce, distribute, and monetize content across its landscape via many more delivery options and devices - one of the examples being OTT  targeting especially those who have never connected to a pay-TV service.Many E&M companies have been selling their content — their libraries of movies and television shows as well as new originals — that’s where streaming services like Hotstar, Netflix, Amazon, and Hulu have found their entry.