Journal of Case Research Volume IX Issue 02 Hotstar: Decoding the Enigma Aadithyaa Symbiosis Centre for Management Studies, Pune Email: aadithyaa98[at]gmail[dot]com Abstract The case is about Hotstar, a digital and mobile entertainment platform which is a part of the Indian video OTT industry that is currently valued at $109 million. The case tries to decode the enigma of the company which overshadowed global giants and pioneered its own rat race. To achieve the objectives of the study, secondary data in the form of newspaper reports, case articles etc. were consulted and existing literature on the subject was thoroughly reviewed with major reference to the conceptual framework of Sujata, et al. ( 2015). The research hints at a combination of quirky marketing, sustainable technology and adaptive content as the drivers of the success of Hotstar. Key words: Hotstar, 3-Tranche model, OTT industry Introduction of tension in the room as the team took “Hotstar sees more app downloads than turns refreshing the analytics page to keep babies born in India per minute” - track of the numbers. When the numbers (Malvania, 2018) finally arrived, Hotstar had beaten every On 1st February 2015, a handful of people application in the world to achieve the celebrated on the 27th floor of their office million mark and literally broke the as they had finally launched the project internet. It had streamed the ICC World they had been working on for over 15 Cup 2015; the most viewed sporting event months called ‘Hotstar’. There was a sense ever on a digital platform beating 1 Hotstar: Decoding the Enigma Journal of Case Research Volume IX Issue 02 viewership of the Fifa World Cup 2014 Hotstar is a part of the Indian video and Super Bowl 2014. OTT industry that is currently valued at Hotstar is a digital and mobile $109 million and is expected to touch entertainment platform owned by Novi $218 million by 2022 (Deloitte, 2015). Digital Entertainment, a wholly owned The Indian video OTT industry is subsidiary of Star India. Hotstar was currently populated by international launched on 1st February 2015 after a players like Netflix, Amazon Prime and month of beta testing during January 2015 regional players like Sony Liv, Voot apart (Kamanth, 2016). Hotstar was born as a from Hotstar. It is in this market that result of necessity more than an Hotstar tasted its success only a few days innovation. The necessity came as Star after its launch. India had different YouTube channels for each broadcasted with over 50,000 hours Hotstar in the Indian Video OTT of content which needed to be segregated industry as per consumer demands. The consumer To understand how Hotstar stands up wanted to have a variety of content on a against its competitors in the Indian video single platform with differentiated OTT industry three independent research playlists as per his/her tastes and reports are presented. preferences. Consequently, Hotstar was 1) The Kalagato report published in born as a unified platform for over 50,000 August 2017 presented a breakdown of the hours of content in 7 different languages market share in the Indian video OTT and also streamed sporting events such as industry for the respective players. The Cricket, Kabaddi, Hockey etc. (Kamanth, report states that the Star India owned 2016) Hotstar was a market leader with 73.19% with Amazon Prime trailing behind with 2 Hotstar: Decoding the Enigma Journal of Case Research Volume IX Issue 02 9.66% market share. Sony Liv was a close subscribers of the given players (See third 6.99% market share and was followed Exhibit 1). It may be inferred from by Wynk movies run by Airtel with 6.36% . Exhibit-1 that Hotstar lead the industry US based Netflix held a mere 1.26% of the with a massive 75 million monthly active market share. The massive difference in subscribers as on the date of the report. It market size between the players can be on follows a hybrid revenue model i.e. it account of Hotstar’s 1,00,000 hours of provides free content which is ad- content spanning drama and movies in 8 supported and the premium content has a languages and live streaming of sporting payment gateway and has to be paid for events. Also, the huge pie of Hotstar is a by the consumer. Hotstar, Voot and Sony result of the mammoth downloads by more Liv benefit from being the subsidiaries of than 250 million users as on the date of the television giants like Star India (owned by report (Bhattacharyya, 2017). 21st Century Fox), Viacom 18 (owned by 2) Counterpoint Technology market research Network 18) and Sony (owned by Sony report was published in December 2017 Corporation) respectively (Tecnology, and gave necessary insights into the 2017). nascent Indian video OTT industry. The 3) The second report by Counterpoint report considered the Top 5 players in the Technology Market Research was market which included Hotstar, Voot, published in June 2018 and it analyzes Amazon Prime, Sony Liv and Netflix. the Indian video OTT industry with the They presented a more comprehensive app installs between January 1, 2018 overview of the Indian video OTT industry and March 31, 2018. Exhibit 2 by studying the revenue model, monthly represents the market share with active subscribers, parent firm, respect to the app installs as on subscription cost, percentage of paying January 1, 2018. Hotstar led the 3 Hotstar: Decoding the Enigma Journal of Case Research Volume IX Issue 02 market with 76% of app installs all aspects covering market share, app followed by Voot, Amazon Prime, installs, active subscribers etc. Such kind Sony Liv, Yupp TV and Netflix. of dominance is a result of various internal Exhibit 3 represents the market share and external factors that have shaped with respect to the app installs as on Hotstar in becoming what it is today. The March 31, 2018. During this period, 3 tranche model is discussed to study the the biggest gainer was Sony Liv with internal factors for this phenomenon. an increase of 7.1%. The gainers ate into the pie of the ‘monster’ Hotstar ‘The 3 Tranche’ Model which held a colossal 70% even To decode the success of Hotstar, a though it witnessed a drop of model has been presented called the 3 approximately 6% from the beginning Tranche Model. This model has been of the year. However, the numbers adapted from the conceptual framework of were only expected to shoot up again Sujata, Sohag, Tanu, Chintan, Shubham as Hotstar was to see increased install and Sumit (2015). Exhibit 4 presents the activity due to Vivo Indian Premier conceptual framework of Sujata et al. League (IPL) in the month of April- (2015). The framework explains the May. The finals of the same saw ‘Trends’ affecting ‘Factors’ which in turn Hotstar serving 10.3 million affect ‘Adoption of OTT services’ and concurrent streams which was a new finally go on to have “Impacts on Telco’s’. world record (Team, 2018). The Factors in the framework which impacts OTT adoption of services are cost, From all the three reports studied it can content availability, convenience, be inferred that Hotstar is unanimously the smartphone & mobile internet penetration, leader of the Indian video OTT market in user experience, features and net 4 Hotstar: Decoding the Enigma Journal of Case Research Volume IX Issue 02 neutrality. This case study limits its focus model’, the three tranches are Technology, on the Factors aspect of the conceptual Content and Marketing. Where technology framework and more specifically on the relates to user experience, content relates internally controlled factors. The to content availability and marketing internally controlled factors are user relates to promotion of the features. experience, content availability and Hence, ‘The 3 tranche model’ studies only features. the internally controlled factors ( Sujata et The model developed from an adaptation al. 2015) affecting the OTT services which of this framework has been termed as ‘The directly or indirectly influences the 3 tranche model’ and is specific to the customer, allowing us to examine the OTT video industry. Under ‘The 3 tranche intricacies more comprehensively. Figure 5 - The 3 tranche model for OTT video market Technology is controlled by the service etc. while the user experiences the same in provider in the form of systems, support the form of user interface, playlist 5 Hotstar: Decoding the Enigma Journal of Case Research Volume IX Issue 02 segregation, keyword searches etc. Content huge. Hence, in order to cash in early in a is controlled by the service provider by way yet to be exploited market Hotstar decided of originals, partnerships, content license to outsource product design and etc. but is heavily influenced by the taste engineering to Accenture Video Solution and preferences of the target user (AVS). The internal teams of Hotstar and (Guichard, 2016). Marketing is also AVS worked together to develop a controlled by service provider by way of platform with basic functionalities in order advertising, free trials etc. but is consumed to livecast the ICC World Cup 2015 (KJ, by users through various media like digital, 2015). print, platform itself etc. Hotstar used quality tech stacks Studying ‘Hotstar’ Through ‘The 3 where ‘tech stack is a set of components or Tranche’ Model layers in a software offering that provides For the purpose of studying the broad functionality’ (Hanburger, 2011). case of ‘Hotstar’ with the help of ‘The 3 The following are the tech stack that tranche model’, Technology will be Hotstar uses internally corresponding to studied through the three subdivisions of their functionality (Products Hotstar, n.d.) Virtual Reality, Knol – data platform and ● Productivity and Operation : Machine Learning.