Star US Holdings put in Rs 516 crore in Hotstar parent company Novi Digital Entertainment

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Novi Digital Entertainment, the ownership entity of Star group’s OTT platform Hotstar, has received a ₹516 crore funding from Star US Holdings.

The funding is primarily aimed at quelling the competition from US major Netflix and Amazon’s Prime Video. The US rivals are investing heavily on India-specific content to edge past Hotstar, currently the market leader. Star-owned Hotstar currently has the lead over Netflix and Amazon Prime Video, but both the US firms are investing heavily to build more India-specific content to win over users. Amazon reportedly has plans to invest $300 million in programming for India, which includes more than ‘originals’ by the end of 2019.

Hotstar has raised the capital on July 24 at a valuation of ₹18.49 billion, according to financial documents sourced from business intelligence platform In the quarter ended on June 2018, Hotstar has reported ₹569 crore in revenue as against ₹ 571 crores during the year ended on March 2018. This fast-paced revenue and operating profit growth is pushing the company evaluation.

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The Indian Premier League 2018 has been the major contributor to the Hotstar revenue growth. “We understand from the management that the significant increase is mainly on account of advertisement and subscription revenue from exclusive sports content of the IPL in the said period,” said the valuation report for Hotstar, which was compiled by corporate finance advisor Duff & Phelps.

The company’s operating losses, thanks majorly to IPL earnings, as percentage of revenue have improved to 6.7% in the June quarter, compared to 66.5% in 2017-18. Net operating losses in first quarter of 2018-19 stood at ₹379.6 million.

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. Just 2-3% of Hotstar’s users are paying customers, while the others are monetised through video ads, according to a Business Standard report.

Also Read: Online video consumption to cross 1-hour per user, per day mark in 2018: Report

The Business Standard, quoting a KPMG report, has stated that India’s market for OTT video would grow from $400 million in 2018 to $1.5 billion by 2025. Moreover, advertising would be 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.

The Chennai Super Kings and Sunrisers Hyderabad final in the IPL 2018 has created a world record of 10.3 million concurrent viewers on Hostar. This is the highest number ever for concurrent viewership for a live-streamed event.

Also Read: IPL brand value up to $6.3 bn in 2018; $1 bn rise since last year: Duff & Phelps