About Hotstar

Disney+ Hotstar is India's largest premium streaming platform that has changed the way people watch their entertainment - from their favourite TV shows and movies to sporting extravaganzas.

It offers a wide range of TV shows, movies, sports, news, and original content. It is owned by Disney and is now part of Disney+ Hotstar.

Hotstar offers both a free and a paid version. The free version of Hotstar allows users to access a limited selection of content, including sports highlights, news clips, and select TV shows and movies. However, the free version of Hotstar also includes ads and does not offer access to premium content or live sports events.

The paid version of Hotstar, called Hotstar Premium, offers access to all of the content available on the platform, including premium TV shows, movies, and live sports events such as cricket matches, Premier League football, and Formula 1 races. Hotstar Premium also offers ad-free streaming, the ability to download content for offline viewing, and access to premium content from international streaming platforms such as HBO, Showtime, and Disney+.

What is Hotstar's Core Value Proposition?

Hotstar's core value prop is providing engaging digital content (movies, TV shows, sports etc) in convenient ways (TV, laptop, tablet, mobile phone) that can be consumed on-demand and that is not interrupted by ads.

Litmus Test – Is Hotstar Ready for Monetization?

Retention

The retention curve flattens after M6 at about 56-57%. The product is ready for monetization.

Deeper Engagement

*this is basis user interactions and guesstimates*

Hence, based on the above points, a sufficient quantum of core and power users are active users of the app, with this number slated to go up massively over the next few years

Deeper Engagement = ✅

Willingness to Pay

Willingness to pay definitely exists across customer profiles.

Substitute Pricing

The core problem solved by Hotstar

Hotstar provides a solution for the convenience of people who want to watch entertaining content from the comfort of their homes.

What are the ways to fulfil the same use case?

Validating What Users Are Buying Into

• Users are buying into Hotstar's range of exclusive content to unwind after a hectic day at work
• Hotstar offers different types of content from tv shows, movies, reality shows, sports etc
• Users are also buying into the convenience of watching the latest movies and shows in their homes
• Hotstar allows users to login from multiple devices based on the plan they choose, giving them the opportunity to watch from multiple locations.
• Hotstar's monetization model of subscription plans aligns with what users value.

Pricing Design

Who to charge

RFM Analysis

We should definitely charge Champions and Loyal Customers as their perceived value and willingness to pay is high. But also make sure that Potential Loyalists (who are significant) convert into paid users.

When to charge

When users experience, in their minds, the “perceived value” of the product – then they should be asked to pay. For Hotstar, the perceived value is dopamine.

Hotstar's free plan allows users to get a feel of the platform and explore the content available on it. This enables users to experience the core value prop and develop a perception about the product. Hotstar offers exclusive content that are only viewable on the paid plan.

What to charge for?

Hotstar's freemium model restricts access to certain shows/movies in the free version, making it ideal to prompt casual users to pay when they transition into core or power users and begin to extract value. Charging can be introduced for:

• Access - Hotstar charges a premium for exclusive shows, sports etc that are not available on the free plan
• Time: The user needs to subscribe for ‘n’ days at a time to experience complete benefit of the service
• Output: Such as video quality, number of devices that can be logged in, high-resolution downloads

Hence, the monetisation needs to be on the basis of a combination of access, time and output.

How much to charge?

• Hotstar can create a perceived value vs. perceived price matrix by experimenting with pricing tiers and observing user responses.
• Multiple pricing experiments can help determine the optimal price point that achieves maximum pricing while considering substitute methods and competitive advantages.
• Competitive analysis is crucial to ensure Hotstar's pricing remains competitive in the OTT industry
• Pricing tiers can be designed based on video quality and number of devices that can be logged in
• Super: Rs 899/year & Premium: Rs 1499/year

This comprehensive framework combines the provided points to align Hotstar's pricing strategy with user requirements, perceived value, and competitive dynamics for maximum effectiveness.

How to show the pricing?

For Hotstar’s pricing, we use the following effects:

• Charm pricing: We use 899 instead of 900 for the pocket-friendly plan. This is because nine-ending prices will be perceived to be smaller than a price one rupee higher if the left-most digit changes to a lower level.
• Ownership effect: Hotstar offers a free plan with access to a few movies/shows and users to tend to get a sense of ownership when they start to use it frequently and this is when they would not mind paying more to get access to a lot more content in return.

Should it be System 1 or System 2?

Hotstar is:

• B2C

• Meant for everyone in the family (For monetizing, the user needs to be tech savy)

• Based on access, output and time

• Has a ton of core users compared to power users

• For everday use

Based on these questions answered and observations ☝️, we should go with System 1 Design framework.