In late 2019, Walt Disney (NYSE:DIS) launched its streaming service, Disney+. Driven by the company's impressive content portfolio, Disney+ is off to a blazing start. By the end of 2019, Disney+ paid subscribers stood at 26.5 million, and this figure rose to 28.6 million at the start of February 2020.  

The Disney+ subscription is priced at $6.99 per month  or $69.99 per year. The streaming war has intensified over the past few months, with Apple (NASDAQ:AAPL) and Disney fighting for streaming market share with more established players including Netflix (NASDAQ:AMZN) and Amazon (NASDAQ:AMZN).

While North American markets remain critical for most streaming players, it is emerging markets such as India that will drive the next wave of subscriber growth. Though Netflix and Amazon Prime Video are popular in India, they account for 26% and 5%, respectively, of the country's streaming market, according to a report from Business Today.

The leading streaming platform in India is Hotstar, with a share of 41%. Disney owns Hotstar, which is part of Star India and became a part of Disney with its acquisition of Fox assets. Disney+ will launch in India on March 29, 2020, and Hotstar will be rebranded as Disney+ Hotstar post-launch. 

A person using a remote to stream online content.

Image source: Getty Images.

Why is Hotstar important to Disney?

One reason why Hotstar is the leading streaming player in India is its rich content portfolio. It has the rights to popular shows such as Game of Thrones, Friends, The Big Bang Theory, and Modern Family. These shows have a massive fan base in the country. Hotstar has a vast portfolio of regional movie content with a network of 61 channels in nine local languages.

However, the primary driver for Hotstar's popularity is its access to India's favorite pastime, which is cricket. Hotstar has the online rights to the Indian Premier League (IPL), a tournament played annually and with growing viewership. In 2019, the finals of the IPL were watched by 411 million people. Further, Hotstar has online rights for every cricket match played by India at home and every global cricket international tournament, including the World Cups.

Hotstar has two subscription tiers. Its VIP tier is priced at 365 Indian rupees (INR) per year ($5.10). The VIP package gives access to original programming and sports, while the Premium package is priced at INR 999 ($14), giving users access to the entire content portfolio.

According to estimates, Hotstar has about 4 million VIP subscribers  and 2 million Premium subscribers. Disney+ is likely to keep the two-tier model for India's price-sensitive populace. 

India has tremendous potential

India is a massive market for streaming players due to the country's enormous population and increasing household wealth. India's video streaming market is estimated to grow from $194 million in 2019 to $333 million in 2024, according to Statista. The country's streaming user growth is expected to grow from 53 million to 78.2 million in the same period.

However, even with this robust growth in users, the penetration rate is expected to stand at just 5.5% in 2024. The streaming market in India is still at a nascent stage and is set to experience solid growth in the next decade.

The expanding base of internet users in India and an increase in the purchasing power of the country's middle class will be key drivers for the shift to online streaming from traditional cable channels. This market opportunity is a mouth-watering prospect, to say the least.

Price is key

India is a price-sensitive market. Most streaming services including Netflix, Apple TV+, and Amazon Prime Video have slashed subscription prices to gain subscribers. Netflix's monthly basic plan is available for INR 499 ($7.99), while its monthly standard and premium plans are available for INR 649 ($9.10) and INR 799 ($11.20).

Comparatively, in the United States, Netflix's basic plan is priced at $8.99, while the standard and premium plans are available for $12.99 and $15.99 respectively. The Amazon Prime Video subscription costs $8.99 a month in the U.S. and is priced at a lowly INR 129 ($1.81) per month in India. 

Apple TV+ costs $4.99 per month in the United States and is available for just INR 200 ($2.8) per month in India. Disney+ will have to ensure its subscription prices are reasonable and in line with the competition.

Hotstar has over 400 million users, but a large chunk of them watch ad-supported content. If Disney+ can lure away even a small portion of these viewers to the paid subscription model, it will result in huge incremental revenue for the company.

Disney+ is in an enviable position in India. It is already a leader in what may soon be the world's largest streaming market. The company's strong content portfolio and access to India's entertainment lifeline can very well help Disney rule the streaming space for years to come in the country.