Online video streaming service Hotstar, owned by Novi Digital Entertainment, has raised Rs 516 crore from Star US Holdings to invest in its content production and strengthen its technology platform.
The Indian over-the-top (OTT) content firm raised the capital at a valuation of Rs 1849 crore, according to news reports. Hotstar faces stiff competition from global giants such as Netflix and Amazon’s Prime Video.
Though company’s revenue rose significantly when it aired the 2018 season of the Indian Premier League (IPL), it continues to remain in the red due to the high cost of content acquisition, advertising, and promotional expenses.
ALSO READ: WeWork is the next Alibaba, says Masayoshi Son
Hotstar, which was estimated to have over 75 million users at the start of this year, continues to drive a majority of its usage through free online viewing unlike rivals Netflix and Amazon Prime Video. Only 2%-3% of Hotstar’s users are paying customers.
Though Hotstar has the lead over Netflix and Amazon Prime Video, both the US firms are investing heavily to build more India-specific content to win over users. While Amazon plans to invest $300 million in programming for India. Netflix is witnessing fast-paced growth in India with subscriptions starting at Rs 500 per month.
According to a KPMG report, India’s market for OTT video would grow from $400 million in 2018 to $1.5 billion by 2025 with advertising being the largest source of revenue for the online video sector, driving $300 million in revenue in 2018 and $1.2 billion in revenue by 2025. Revenue via subscription is expected to grow faster to reach $1.1 billion by 2025, the report added.
Click here for Latest News updates and viral videos on our AI-powered smart news genie