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Star India pumps Rs 1,233 crore into Hotstar to take on global OTT giants
MUMBAI: Bullish about the prospects of its over-the-top (OTT) platform Hotstar, Star India has injected Rs 1,233 crore ($192.04 million) into its digital content arm Novi Digital Entertainment over the last six months.
The fund infusion comes at a time when the OTT platform is locked in a battle with international players like Netflix and Amazon Prime Video, who are investing in local content to grab a slice of the nascent Indian digital video market. The OTT space is also occupied by several home-grown players including ALTBalaji, Voot, Sony Liv, dittoTV and Ozee.
Star infused the money in the company through a rights issue. Novi Digital Entertainment runs streaming platforms Hotstar and Starsports.com.
Star could use a major chunk of the investments in beefing up Hotstar’s technology platform creating local content.
On Tuesday, Star won the global TV and digital rights to the Indian Premier League (IPL) until 2022 with an astonishing consolidated bid of Rs 16,347.5 crore ($2.55 billion).
The broadcaster trumped Sony Pictures Networks India for TV rights and social media giant Facebook for digital rights. Sony had bid Rs 11,050 crore for India TV rights, while Facebook’s bid for India digital rights was Rs 3,900 crore.
In fact, Star had acquired IPL digital rights in 2015 for Rs 302.2 crore with an eye on building Hotstar. The OTT platform was launched in February 2015. Live sports have been the biggest USP of Hotstar. The OTT platform also has entertainment and movie content in multiple Indian languages besides a premium service featuring HBO, Disney and CBS content in addition to international sports.
With the acquisition of IPL rights, Star is looking to build Hotstar into a global platform targeted at South Asian diaspora. It has already extended its premium subscription to the US and Canada. The subscription price for the US is $9.99 per month and for Canada it is CAD 12.99 with a one-month free trial. Initially, it will be available on iOS and Google Play. Apps for Android TV and Roku will be launched soon.
After winning the IPL media rights, Shankar had said that Hotstar would be rolled out globally. He had also stated that Star was very clear about getting both TV and digital rights when it had joined the bidding.
21st Century Fox CEO James Murdoch had recently said that Hotstar had crossed 1 billion minutes of watch time in a single day during the fourth quarter ended 30 June for the first time since its launch.
“And Hotstar set the pace for the streaming market in the world’s fastest-growing economy, crossing 1 billion minutes of watch time in a single day during the fourth quarter,” he had noted.
As reported by TelevisionPost.com earlier, Novi Digital Entertainment had reported an EBITDA loss of Rs 365.5 crore in FY16. Being in investment phase, the company’s net loss stood at Rs 409.1 crore in its first full-fiscal period.
Hotstar garnered revenue of Rs 185.7 crore in FY16 with advertising revenue comprising Rs 138.6 crore. Subscription revenue accounted for Rs 24.2 crore, while licensing of content rights stood at Rs 19.2 crore in FY16. Other income was at Rs 3.7 crore.
Hotstar’s prime investments are in content, marketing and technology. Content cost stood at Rs 165.9 crore in FY16. Advertising and promotional cost was at Rs 154.6 crore while expenditure for technical services was Rs 147.5 crore.