One of the early movers in the Indian over the top (OTT) space, Hotstar – - part of the Twenty First Century Fox-owned Star India – has been setting a scorching pace for itself. In a nation where high data costs made customers wary of consuming content when on the move, it displayed a voracious appetite for acquiring them. Today, its massive subscriber base equals or surpasses the total subs of all the VOD services in Asia and rivals that of the big boys in the US.
It has also been aggressive in its content strategy – paying top dollar for movies and TV series from top notch Hollywood studios as well as for sports telecast rights.
21st Century’s Fox’s leaders – the Murdoch brothers Lachlan and James – along with the Star India management led by Uday Shankar and Sanjay Gupta - are quite bullish that the investments being poured into Hotstar are well worth it and should bear fruit, sooner than later. Estimates are that around $500 million has so far been pumped into the VOD service.
The man in the hotseat at Hotstar has been the US returned executive Ajit Mohan who has been steering it right from day one three years ago. With single minded focus, he has been at his task of building a robust product and a team that helps it remain so.
The publicity shy Mohan was one of the Indian VOD leaders who had a one on one with Indiantelevision.com founder, CEO and editor in chief Anil Wanvari at the highly successful second VIDNET OTT conference in Mumbai two weeks ago. Excerpts from the conversation:
First of all, I would like to start by congratulating you on your CBS Showtime deal. Tell me little more about it?
If you look at what we have built on Hotstar premium we feel pretty proud. I think we have built a fairly distinctive subscription service which in many ways I think compares to the best in the world. I am not sure that there is any platform worldwide that brings together the best studios for American TV shows and movies. With Hotstar Premium we have HBO, Fox and Disney movies exclusively. And we thought that the only missing piece was Showtime. So we have done an exclusive partnership with Showtime to both bring the Showtime brand and also the best of their marquee shows to India on Hotstar.
I think it really completes our offering. We have built a free service that has scaled up dramatically in the past two and half years or so. Now we are kind of applying some of the same rigor and aggression on P remium as well. From the content proposition point of view I feel pretty good about how it looks like.
What will we get to watch? What kind of shows and will it be on same day and date?
It is. One of the promises we have as pat of the English part of Premium is that all the TV shows will be aired at the same time as the US. That’s true for HBO, Fox and it will be true for Showtime as well. Billions, one of their best shows will be on Hotstar and Twin Peaks too. Overall, I think it's a pretty exciting roster.
I think more than any individual shows what I am excited about is that both HBO and Showtime in the US have created these fabulous premium pay TV propositions on the back of really redefining what a high quality American show looks like. I think by bringing them together on the same platform, what we are essentially saying when it comes to English content there really is no need to look beyond Hotstar Premium. Not in terms of other services. Or not in terms of torrents, which is still a meaningful source of competition for us.
We will now start investing in educating the market where there is a substantial number of users who have an affinity to English who are spending a lot of time – especially the younger demographic – digging up for content on torrents. And very often they don’t get good quality versions. They don’t get it on time.Or they get It dubbed or subtitled in a language that is not familiar.
Now the reality is that as a consumer in India you don’t need to have to go through the pain. It may be difficult for them to understand the richness of the proposition that is on offer today. Now when you compare it to consumers in any other part of the world today; the Indian consumer has probably the best deal. Rs 199 per month only…I don’t think price is a challenge anymore. So I think it's more about creating awareness. And I think there is still a segment – especially in the younger demographic – who believes it’s cool to pirate. And I am sure that philosophy will be carried by a lot of people. For most people, it is just creating awareness that there is a serious ease of getting almost every show that you want on Hotstar Premium at a price that is quite affordable. And that is what we are going to invest in on the back of the Showtime deal and what we already have on Premium. And taking it to a mass market in a way that’s not been done in this country before.
So will you have Hindi sub titles? Or in any other languages?
Currently, it's English subtitles. I think the fundamental point you are making is improving accessibility, can dramatically expand the audience for English TV shows or movies in India. Hollywood has shown that with dubbing. The direction we are moving is to make it accessible by subtitling in multiple languages which you will see over the next few months.
How are you doing on the app download front?
We have crossed 300 millions downloads and we are seeing downloads across all operators. Wifi. Jio obviously has had a tremendous impact on the ecosystem in terms of expanding access to mobile broadband and increasing affordability. Two things stand out over the last nine months when Jio has had this massive disruption. One is that video has benefited disproportionately. For us what the last two years -and the last year in particular - has really established is the bet that we made if data was not a constraint, people will gravitate towards long-form content including on a mobile. That what we saw in the early stages of the ecosystem , people consuming short form clips, user generated content - that it did not represent the truth. It was not the end state; it was the beginning of the market. That has really played out And you see that in the data, the time spent time..the watch time on video has grown disproportionately to social media.. And by multiple factors. And Hotstar has grown – disproportionately to any other video platform.
300 million I don’t think somebody else has this kind of numbers in the world.
I think Jio has been an enabler. But more and more you are seeing that for sieving out where consumers are going, both in terms of adoption and in terms of watch time. I think data is an enabler. My sense is that the more people have access to 4G, the cheaper data gets – a high quality propostion like Hotstar that has both the content proposition and is compelling as well and we are seriously investing in technology to keep improving the consumer experience. I think that combination is quite powerful.
We are seeing that in the numbers which are substantive. One of the numbers that stands out for us is that just on the Google Playstore globally we crossed 100 million downloads a couple of months ago. From what we know, only Netflix has done that globally outside of Hotstar and may be in the entertainment space, Spotify. And it does feel like even being in one market in India, I think the scale of what we are seeing clearly compares to the best in the world.
I believe this should be a moment of pride for the country as well that in the mobile ecosystem that we are blazing the trail in terms of what can be done. And for us, we really think of ourselves as “we are not replicating models that have happened in other parts of the world. We are truly creating a template for what a mobile centric business could look like which would be relevant in any market.”
How many of these are active?
In the month of May and June 2017, we crossed more than 100 million active users
How would you define these actives?
Somebody coming and spending meaningful time at least once a month. The reality is almost everyone who comes to Hotstar comes multiple times a month. And very often multiple times a day. But a monthly active way is a good way to look at it as it a common measure for looking at adoption across the ecosystem. And all our 100 millions actives are unique.
Some of the OTT players are distinguishing between monthly active users and uniques.
Digital is an interesting space where is there is no common measurement system in place and that equally applies to Facebook, Youtube or Hotstar. It makes sense to have a common measurement that is consistent. To the extent that we know how to identify unique users, their presence on devices, not everyone logs in. It’s not the same login across Hotstar, Facebook, Google - all of those still remain. But We are seeing more than 100 million users coming to Hotstar.
Are you still in the consumer acquisition mode or you have passed that. In what phase are you?
I think we are going to be in a perennial growth mode for a long time because of two reasons: I think that's the kind of company we want to build. The proposition is so exciting, it’s relevant for more than 100 million users.
Second, the context of India where as more people get access to data… one of the things that we are convinced is the primary use case for getting people getting online can be video and Hotstar.
The next 100 million or the first 500 million to go on digital in India.. we think mobile video and especially around the entertainment proposition that we have.. more than search, social media or ecommerce we can be the beach head. Because people love stories and it's relevant for a larger number of people. From that point of view I don’t think we are going to stay away from focusing on growth for a long time. I think we can be the primary use case for bringing people online in India.
But your customer acquisition cost are going up or down?
I think costs are going down. It's a two and half year old platform now; there is a lot equity of the Hotstar as a brand. Once you reach a certain scale and have broken through I think the organic momentum starts kicking in. We are in the stage where it feels like growth is happening with far less effort than two years ago. Having said that it looks exciting to look for the next100 million users..and the next 100 million users after that.
It's not in an optimization mode, it’s in growth mode and in growth mode our focus is all three: adoption of new users, it’s watch time and the third is revenue.
I think for a uniquely consumer internet company we believe there is a virtuous cycle between consumer adoption, engagement and revenues. We don’t see it as competing, we see it as going together.
Varun (HotStar head of product and engineering EVP) said in some conference that he would like get some billion minutes. Correct me if am wrong?
A year ago in APOSTech in Shanghai Varun had articulated this ambition of crossing a billion minutes a day in watch time. I don’t think we have said this publicly but we have crossed that number a few times in the past couple of months.
How has the playground has changed since you were here last year. What do you seeing? Your tech is keeping up or you have to spruce up your tech. You invested in Zapr to get some analytics in place. What has changed?
Three things in my mind have changed.
We have made significant movement in the past 12 months. I think we have hired 60 engineers just in the last nine months. I think we are looking at doubling that number in the next six months.
We have the clarity that we can build something unique in India and compete with some of the best global tech companies. It comes with building our own technology muscle.
Second, if you look at the consumer internet space with lot of actions across e-commerce, fin-tech and our own media space, we have been quite thoughtful in building a deep bench in leadership. The past 12 months have been marked by a significant bulking up of our leadership capacity in Hotstar.
Third big change that has happened as a result of that there is starting to be a bit of a separation in terms of services that are standing out from an adoption, engagement and scale point of view - and clearly that's happening.
The last 12- 15 months have seen the launch of whole bunch of new services in OTT and a lot of them have very interesting propositions. They are occupying interesting positions in the market …some fairly niche but if I step back and think about it what we are proud of at Hotstar is we are breaking away when it comes to serious scale and engagement.
And for me it looks like we are competing with Google and Facebook on the free side which is all about its large scale, ad supported and big numbers. And on the other front its subscription, which is still nascent, much smaller audience at the moment, we are competing with Netflix and Amazon Prime. At Hotstar, we have two sorts of vertical, one is the free ad supported business and the subscription business where we are facing two different sets of competitors.
But I believe the ad supported services, IPL got you good revenues from two partners Vivo and Maruti. Agencies have told me its Rs 20 crore per head.
I think we did okay.
But that is serving out well in the terms of revenue.
One of things is clear to advertisers and that's a big movement in the last 12-24 months especially at a time when there have been a lot of issues around brand safety that came up in the UK. I think two things are showing up I think most advertisers started to recognizing that the Hotstar proposition is unique. In most parts of the world high quality on demand content on streaming is completely behind the paywall. Therefore it's not available for brands to advertise on like you can’t advertise on Netflix in US.
So Hotstar represents a unique opportunity on digital where for the longest time advertisers could only reach audience through user generated content or short clips whereas on HotStar you get premium content which is very different from most streaming business models.
Second thing that the advertisers started recognizing the power of its engagement. I think it different when you reach an audience when they are scrolling and checking something on social media for 30 seconds or when watching a 40 second clip. It's a very distracted audience. So even when you presumably get scale and you get metrics like video views what you are not getting is real engagement that comes with long form content. There is a reason why television helped build brands for 50-60 years. It was because people spent time deeply immersed into stories. And that's the proposition we offer on Hotstar.
Sports is driving you plus Hollywood. You kind of have tip toed away from originals unlike what Amazon Prime or Netflix are doing?
I feel I keep answering this question but for whatever reason people don’t want to embrace the answer – especially my peers. Sports is big on Hotstar. Sports is less than 15 per cent of our total watch time. It’s definitely played a meaningful role for us.
But TV shows and movies are much larger on Hotstar. The proposition of Hotstar at least for consumers is that they know that Hotstar is beyond cricket or sports. On originals, almost everything we have is exclusively on Hotstar on digital. Right from the early stages we believe in the power of exclusive content. Which is why Game of Thrones, a Star Plus show is all exclusively on Hotstar. The originals bandwagon was started by the people who did not have the enough content. I am not sure why Hotstar with the most compelling content portfolio in the world would want to get on the same bandwagon.
Why is Republic TV there on your platform?