As JioCinema Goes Premium With HBO Content, What is Disney+ Hotstar's Future?

Jio Premium users will now have access to HBO's beloved shows like Succession and The Last of Us.

Disney+ Hotstar has lost 4 million subscribers within three months since it stopped streaming HBO Max content in India.

(Photo Courtesy: Twitter/Altered by The Quint)

Disney+ Hotstar has lost 4 million subscribers within three months since it stopped streaming HBO Max content in India, according to reports. On the other hand, Viacom 18's JioCinema, which recently became the new home for HBO and Warner Bros' beloved shows like Succession and Gotham Knights, has now gone premium.

What is JioCinema's new subscription model? What shows will be available for free on the platform? And what does Disney+ Hotstar's future look like? Here's all you need to know.

Why Did HBO Content Shift From Disney+ Hotstar to JioCinema?

HBO Max and Warner Bros Discovery content was initially licensed by Disney's Star TV in India. However, the deal expired towards the end of March 2023, after Disney+ Hotstar decided to no longer carry any HBO and WBD content owing to their cost-cutting measures.

• Disney+ Hotstar was previously the market leader in the AVOD (advertising-based video on demand) space, primarily because of the Indian Premier League (IPL).

• With the IPL going away, the platform saw a significant decline in its revenue and subscriber base in India.

• In 2022, Viacom 18 acquired all the digital rights to IPL for the next five years, which helped in drawing a large viewership base to JioCinema, which earlier subscribed to Disney+ Hotstar.

• The Reliance subsidiary was operating as an ad-supported streaming service in India even after clinching the most popular and expensive sports content like the IPL.

• With the announcement of a big slate of over 100 original films and web shows this year, among other factors, JioCinema appeared to be the emerging potential market leader in the Indian OTT space.

Finally, on 27 April, Viacom 18 and Warner Bros Discovery signed a multi-layer agreement in a surprise move, which made JioCinema the new home for HBO, Max Original, and WBD content in the country.

What Does JioCinema's New Subscription Model Offer?

Earlier this week, JioCinema announced its premium annual subscription pack of Rs 999 for its Indian users.

• With JioCinema Premium, users will get access to all the HBO and WBD content on the streaming platform, while IPL and other content will continue to remain free.

• The Premium subscription offers an ad-free experience to its users, which will give them access to live sports, series, and movies streaming up to 4K resolution.

• However, 4K streaming is only available on select titles and will require users to have a high-speed internet connection.

• A single Premium subscription will allow users to simultaneously stream on four different devices with the same account.

Premium users will have access to the following list of HBO and WBD shows on JioCinema:

• Succession

• The Last of Us

• House of The Dragon

• The White Lotus

• True Detective: Night Country

• Euphoria

• Winning Time: The Rise of the Lakers Dynasty

• Perry Mason

• HBO Original Series:

• The Idol

• White House Plumbers

• The Sympathizer

• The Regime

• Sex & The City

• Game of Thrones

• Big Little Lies

• Chernobyl

• Veep

• And Just Like That…

• Peacemaker

• The Flight Attendant

• Dune: The Sisterhood

• The Batman

• The Penguin

• Duster

• East New York

• Gotham Knights

• Lord of the Rings

• Dexter’s Laboratory

• Tom & Jerry Kids

How Will This Move Impact JioCinema's Revenue & Subscriber Base in India?

Karan Taurani, Senior Vice President and Research Analyst, Elara Capital, believes that JioCinema is trying to cross two hurdles in one leap—premium users who want an ad-free experience and pure-play AVOD, which doesn't seem sustainable for the long run. He explained to The Quint:

• JioCinema's annual pricing model falls at the lower end of other premium OTT services like Disney+ Hotstar, Netflix, and Amazon Prime Video, which charge Rs 1,000 to Rs 2,000 from their subscribers.

• However, the move doesn't seem to draw a large subscriber base to JioCinema since the Indian audience is value-driven and may not want to pay Rs 999 annually for just HBO and Warner Bros content.

• Hence, JioCinema is expected to expand its content offerings, mainly new films, direct OTT, or any other global content, to gain subscribers.

• The IPL being offered for free will significantly help Viacom 18's streaming platform gain traction with the masses.

• An ad-free SVOD (subscription video on demand) model with HBO and WBD content will also help the streaming service target premium households.

Taurani further stated that JioCinema may bundle HBO and WBD content for free for its Jio Fibre or postpaid mobile subscribers, who have a higher ARPU (average revenue per user), owing to Jio's large 4G subscriber base in India.

"We continue to believe that Jio Cinema will need to invest aggressively on the user experience front too, as all other major SVOD platforms are very seamless in their user experience, which is also a factor for customer retention apart from pure content."

Karan Taurani, Elara Capital

What Does the Future Hold For Disney+ Hotstar?

As JioCinema goes premium, Disney+ Hotstar continues to lose its subscriber base in India. According to Taurani, Disney+ Hotstar has lost 15-16 percent of India's paid subscribers over the last two quarters (Q4CY22 and Q1CY23).

• As the IPL season ends, the subscription loss is expected to bottom out in the next quarter (Q2CY23) as well, with another 10-20 percent (a base of 61 million to 90 percent) of Indian subscriptions.

• This means Disney+ Hostar will suffer a total paid subscriber loss of 25-30 percent, which falls largely in line with Taurani's estimates of 30-35 percent of subscription loss.

• A potential negative impact of 50 percent on the overall revenue in CY23 is also expected for Disney+ Hotstar since IPL had sizable shares in its AVOD (around 60-65 percent) and SVOD revenues (around 40 percent).

Taurani added that the streaming service may be able to make up for the above loss of subscribers over the medium to long term by investing heavily in original content (films and series across languages). Besides, Disney+ Hotstar already has a very strong base in the TV content catalogue, as they are leaders on the linear TV front in key markets in urban and regional GEC (general entertainment channel) genres.

However, investment in original content is a long-term strategy for Disney+ Hotstar because:

• The audience has to accept the new content that will be offered.

• The streaming platform will have to invest in content creation.

Disney+ Hotstar is likely to lose substantial market share in India’s OTT market—down from 17 percent earlier to 8-9 percent in CY23 after IPL's removal.

Its Impact on Other OTT Platforms in India

As Disney+ Hotstar loses a big market share in the Indian OTT space, it may pave the way for other streaming platforms like Sony LIV and Zee5 to gain traction if Sony and Zee are merged together. 

Taurani suggests that digital businesses are all about distribution, technology, and the user experience. Hence, the other potential factor is the issue of SVOD growth in India, which is addressed by the creation of bundled SVOD offerings based on factors like:

• The issue of password sharing

• The restriction on the number of users per subscription

• Some part of ad-free content like the IPL or any other such offerings

• Value-added offerings like gaming and mobile-only plans

• TVOD (transactional video on demand) models, like YouTube, which offers user-created content for free to its viewers (AVOD) while offering premium content to rent or purchase (TVOD).

Nevertheless, the adoption of the mentioned SVOD bundles and raising blanket ARPUs has a negative impact on subscription growth in the India market, where:

• Television offers a huge variety of content at affordable prices,

• Piracy through social media is a big challenge.