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Disney+ Hotstar Is Getting Its First Price Hike

By Adam Levy – Jul 30, 2021 at 6:00AM

Key Points

  • Disney is changing its offerings for Disney+ Hotstar.
  • The move should result in a positive impact on revenue per user.
  • Offering more content at a lower price can improve retention and gross additions, too.

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But the new plans could grow the subscriber base by offering more value.

Walt Disney's (DIS -0.15%) streaming service in India, Disney+ Hotstar, has been a huge success. An estimated 38 million households have signed up for the service as of the end of June, accounting for more than one-third of global Disney+ subscribers.

When it launched last April, Disney+ Hotstar was priced well below Disney+ in other regions. Now, Disney is changing its pricing tiers, and it could mean more revenue. The company has already made several price hikes for its services in other markets.

The Disney+ logo on a blue background.

Image source: Walt Disney.

Disney+ Hotstar's new pricing

Disney currently offers two tiers of Disney+ Hotstar in India: Disney+ Hotstar VIP and Disney+ Hotstar Premium.

VIP includes all of the Hotstar content and Disney's film franchises, but there's no top-tier licensed content like HBO or Showtime series. Additionally, Disney+ originals are only available in dubbed languages, and there are limited advertisements.

Subscribers pay 399 rupees per year for the service. Premium subscribers get everything Disney has to offer in the country with no ads and pay 1,499 rupees per year.

Those tiers will go away on Sept. 1, replaced by Disney's new plans. These will do away with gated content and look more like Netflix's plans in the country.

Plan

Devices

Streaming Quality

Price

Mobile

1 (mobile only)

HD

499 rupees/year

Super

2

HD

899 rupees/year

Premium

4

4K

1499 rupees/year

Data source: NDTV.

The mobile-only plan notably costs 100 rupees more per year than the old VIP plan. But with access to the entire Disney+ Hotstar content catalog, it represents a bargain compared to Netflix. The global streaming leader offers a mobile-only plan for 199 rupees per month.

Premium members will see no change in price when the new tiers go into effect in September. The Super plan could be an opportunity for Disney to upsell customers currently on the VIP plan, more than doubling the amount they pay per month, but it could also be an opportunity for existing Premium subscribers to downgrade their service.

Considering that Disney+ Hotstar average revenue per user (ARPU) was about $0.75 in the second quarter, the higher tiers should push ARPU up in the region.

Bringing in more subscribers

Expanding the available content on the low-tier plans to include premium originals and American series and films could help Disney grow subscribers in a region where it's already extremely popular. Netflix has had a lot of success with its mobile-only plan, which provides the same content as its other service tiers, but limits streams to a single mobile device.

During the second quarter, Netflix managed to add more than 1 million subscribers in the Asia-Pacific region. It also decided to expand the mobile-only tier to 78 other countries last quarter.

"We have found that the mobile only plan has been an effective way to introduce more consumers to Netflix while being roughly revenue neutral as the lower average revenue per membership is offset by incremental acquisition and generally better retention," management shared in its letter to shareholders.

Disney is hoping for similar results from its mobile-only plan, which is notably priced at about one-fifth the cost of Netflix's similar plan. There are over 500 million smartphone users in India, leaving a lot of room for Disney to grow its subscriber base. It expects to reach between 70 million and 100 million Disney+ Hotstar subscribers by the end of fiscal 2024, and the new tiered pricing ought to help the streaming service get there.

Adam Levy owns shares of Netflix and Walt Disney. The Motley Fool owns shares of and recommends Netflix and Walt Disney. The Motley Fool has a disclosure policy.

Stocks Mentioned

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