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Personal Code: xyz Session: May 2023
Business Management Extended Essay
INTERNATIONAL BACCALAUREATE DIPLOMA PROGRAMME

BUSINESS MANAGEMENT EXTENDED ESSAY
Title: Exploring the Impact of Hotstar India’s Product Development strategy on

competitive advantage in the Indian Video Streaming Industry
Research Question: To what extent has the product differentiation strategy
through product development helped Hotstar India gain a competitive
advantage in the Indian Video Streaming Market?
Word Count: 3990
1
Table of Contents
Introduction .......................................................................................................................... 3
Case Definition............................................................................................................................. 4
Methodology: ............................................................................................................................... 5
Tools Used .................................................................................................................................... 6
Consumer Profile of Hotstar’s consumers ........................................................................... 8
Porter’s Five Forces Analysis ............................................................................................ 11
Potential of New Entrants into the Industry (Weak) ................................................................ 12
Power of Suppliers (Moderate) ................................................................................................. 13
Power of Consumers (Strong) ................................................................................................... 13
Threat of Substitute Products (Moderate) ................................................................................ 14
Competition in the Industry (Strong) ....................................................................................... 14
VRIN Analysis .................................................................................................................... 16
Competitor Analysis ........................................................................................................... 19
Netflix Inc .................................................................................................................................. 19
AmazonPrimeVideo ................................................................................................................... 20
Sales Forecasting and Analysis .......................................................................................... 21
Conclusion: ........................................................................................................................ 24
Bibliography: ..................................................................................................................... 26
Appendix ............................................................................................................................ 30
Appendix A- Subscriber Count of Hotstar ............................................................................... 30
Appendix B- Hotstar Financial Statements .............................................................................. 31
2
Introduction
In 2015, Star India Private Limited 1established Hotstar. It is currently the most popular service
in India, providing TV shows, live sports streaming, documentaries, and other content. Its
strategies support its mission statement 2, aiming to make entertainment accessible and
delightful to all people through seamless and intuitive technology. With the acquisition of Star
India Private Limited ,Walt Disney made it’s debut on Indian screens by integrating with
Hotstar’s app in early 20203.
Hotstar has a diverse product portfolio consisting of classic television channels, Sports
streaming, along with Disney. They offer such a wide portfolio due to two main reasons, their
Parent Company which is Star India Private Limited, and their merger with Disney+, allowing
them to showcase content from both ends. Due to this increased revenue stream, Hotstar has
the ability to finance the production of original content.
However, like any firm, Hotstar has their fair share of issues. Hotstar has a lot of competition
in this market and problems in user acquisition and retention coupled with the strict content
regulations imposed by the Indian government. Hotstar has tried their best to overcome these
with gaining an upper hand in the market, especially through their product development.
1
“How Disney+ Hotstar Broke the Internet.” Hotstar - Journey & Success Story - Star India, www.disneystar.com/join-our-
journey/we-change/how-hotstar-broke-the-
internet/#:~:text=In%20the%20early%20hours%20of,entertainment%20platform%20called%20Disney%2B%20Hot
star.
2 “About Us.” About Us | Disney+ Hotstar Tech,

careers.hotstar.com/aboutus#:~:text=We%20seek%20to%20move%20the,their%20best%20work%20every%20day. Date
Accessed: 10th January 2022
3 Misra, Shubhangi. “Disney+ to Make Its India Debut through Merger with Hotstar on 29 March.” ThePrint, 5 Feb. 2020,
theprint.in/india/disney-to-make-its-india-debut-through-merger-with-hotstar-on-29-march/360199/. Date Accessed: 10 th January
2022
3
Case Definition
Product-Development can be defined as a growth strategy wherein a business introduces new
products into an existing market. This the strategy that Hotstar adopted in order to ensure they
have a competitive advantage over their competitors. This was one of their main objectives of
integrating with Disney.
4
Figure1: Number of users in the Indian market (2023-2027 extrapolated).
4
http://statista.com/outlook/dmo/digital-media/video-on-demand/video-streaming-svod/india. Accessed 9 January 2022.
4
With a growing number of users gaining interest in the video streaming industry due to the
technological boom in India, forecasting the market to have a total of 97.1 million users, as
seen above, existing firms have noticed this opportunity and have developed their own products
to compete in the market.
Hence, there lies a potential risk in competing in this market without a competitive advantage.
With so many entrants and competitors in the market as Hotstar implementing similar
strategies, will Hotstar be able to stand out is the question. This essay aims to evaluate whether
Hotstar has gained a competitive advantage through their product development strategy and
how it can be sustained.
Methodology:
This research is based largely on the book, Product Design and Development 5by Karl Ulrich
and Steven Eppinger , secondary data obtained in articles, research papers and academic
journals. It also explores the financials of Hotstar India from the years 2016-17 to 2021-22 as
FY 2022-23 ends only in the month of March 2023 6.
Research papers/
Academic Journals
Online Articles Books
Figure 2: Methods of Research used in EE
5
Ulrich, Karl T., et al. Product Design and Development. McGraw-Hill Education, 2020.
6
“Financial Year and Assessment Year - Difference Between FY and AY.” Groww, https://groww.in/p/tax/financial-year-
and-assessment-year. Accessed 15th January 2023.
5
Incorporating research papers and academic journals into this essay provides valuable
access to credible information that not only lends clarity and support to claims made, but also
offers broader perspectives to elevate the overall quality of the research.
Online Articles such as news reports and articles are essential to gain information pertinent to
the firm. Sales figures, business decisions, etc. are examples of information from online articles
and are essential in evaluating the true extent of Hotstar’s competitive advantage, if any. They
provide different perspectives for the same decisions, allowing one to compare and contrast,
enhancing the knowledge and quality of research accessible. In this essay, articles will be
heavily relied on due to the lack of primary research.
Books tend to have content specific to topics, that benefit the gain of knowledge that can be
implemented in the analysis of tools that have been used in this Extended Essay. Furthermore,
the knowledge acquired can also implemented in other areas.
Based on the knowledge obtained through the above sources, with the help of analytical tools,
a consensus has been reached.
Tools Used
A consumer profile 7is necessary, especially for a service as it caters to different ranges of
audiences that are divided into sub-categories. Different groups have different needs and
demands, and as a result, knowing the consumers of Hotstar leads to a better understanding of
the uses of the product, allowing the firm to satisfy these demands, giving them a competitive
advantage.
7
“Consumer Profiles.” Mobilewalla, https://www.mobilewalla.com/consumer-profiles. Accessed 13 Feb 2022.
6
Porter’s Five Forces 8allows a firm to identify which groups have power in an industry. This
demonstrates the position of Hotstar’s competitive position and the strengths of other positions
that could be strengthened, benefitting Hotstar over their competitors.
The VRIN Analysis model 9highlights the key resources of firm and if they are able to provide
a firm with a competitive advantage. It allows Hotstar to determine the strongest and weakest
resources and what they could capitalise on to gain a competitive advantage.
10
Competitor analysis is a systematic process of evaluating the strengths and weaknesses of
existing or potential competitors in a market to inform business strategy development. It
involves collecting and analyzing data about key competitors, their product to understand the
competitive landscape and gain a competitive advantage by leveraging this information.
Sales Forecasting is a method through which data is extrapolated, and the sales of a firm are
predicted based on their current performance.
Limitations of Research Process-
1. Multiple sources had conflicting information or exaggerated data, making it
challenging to determine which are reliable. This essay relies on sources cited in the
bibliography to present research and data.
2. Apart from product development, there could be other reasons that have not been
considered in this Extended Essay, that might have provided Hotstar India a competitive
advantage in the Indian Video Streaming Industry.
8
“Porter's Five Forces of Competitive Position Analysis.” Chartered Global Management Accountant, 10 June 2013,
https://www.cgma.org/resources/tools/essential-tools/porters-five-forces.html. Accessed 21 Feb 2022.
9
Nicholas, Jerry. “Introduction to VRIN Framework | VRIO Analysis | BusinessAnalystMentor.com.” business analyst
mentor, https://businessanalystmentor.com/vrin-framework-vrio-analysis/. Accessed 13 September 2022.
10
“What Is a Competitor Analysis & How to Do It (with Template).” Semrush, 2 December 2022,
https://www.semrush.com/blog/competitive-analysis/. Accessed 19 July 2022.
7
3. Hotstar themselves don’t provide financial information, and so all financial data was
taken from third party sources.
Consumer Profile of Hotstar’s consumers
11
Consumer profiles are descriptions of a customer or group of customers with similar
characteristics such as demographics, purchasing behavior, location behavior etc. Given the
competitive nature of today’s streaming industries where content is being developed for a
variety of consumers, consumer profiling has become a key component.
Hotstar has tried to improve the content they have in the existing markets. Consumer profiles
allow the firm to see what interests their consumers have, and hence they can suit their
strategies; in this situation, a content strategy in order to satisfy the demand that the different
consumer profiles the market has. Hotstar is trying to cater to the demands of the Indian video
streaming market, as shown in the consumer profile.
Due the fact that majority of Indian subscribers in the SVoD market are from the younger
generations (Ages 18-44) 12comprising about 94.4% market, it makes more sense to divide the
market in different geographic locations across the country, as there is a change in the demand
of the product as we move from urban to rural areas for a variety of reasons, including but not
limited to family income, availability of choices, Internet etc.
11
“Consumer Profiles.” Bloom Intelligence, 7 June 2022, bloomintelligence.com/crm-database/customer-profiles/consumer-
profiles/.
12
“Video Streaming (SVoD) - India.” Statista, Statista, https://www.statista.com/outlook/dmo/digital-media/video-on-demand/video-
streaming-svod/india#demographics. Accessed 12th January 2022.
8
Hence, we can divide this market into three main categories, Urban areas which includes
metros and Tier I cities, that can be defined as having a population of above 100,000
13
inhabitants, Tier II and Tier III cities, that have 50,000 to 99,999 and about 20,000 to 49,999
respectively. These segments tend to have different tastes and preferences and are evaluated
below.
Geography User Consumer Content Watched Product Features in

Segments relation to the
(Product)
content watched
Urban Areas (Cities) Children (Main Cartoons, movies, Hotstar has a wide
users) Disney range of cartoons
and movies. Due to
its integration with
Disney, it offers
Disney shows as
well. However, this
does come at an
additional premium.
Parents (Consumers) News, Olden shows Hotstar’s library of

and movies. movies and shows is
Monitoring kids quite large.
watch history as Furthermore, the app
well. has a section where
you can see
“recently watched”
shows allowing
parents to track
watch activities of
kids.
Millennials and Indian, American Hotstar offers a

Gen-Z TV shows, Sports variety of Indian and
Content American TV
shows, movies, and
documentaries,
including original
content.
Additionally, they
13
Gupta, Surbhi. “List of Tier I, Tier II, Tier III, Tier IV cities in India (2023).” 99acres.com,
https://www.99acres.com/articles/list-of-cities-in-india.html. Accessed 12 January 2022.
9
offer a diverse range

of sports content,
from cricket to
kabaddi.
Tier I and II cities Tech Savvy News Content, Hotstar has an

consumers who Sports, Regional application,
prefer watching Shows, Movies available on play-
content on digital stores, where
platforms rather than consumers can
on Television access their
subscription. Hotstar
also has a number of
news channels in its
coverage such as
TimesNow. They
also have regional
content, a wide
range of sports along
with a large library
of movies.
Rural Areas Smartphone Users Regional Content, Hotstar has a large

with a working Sports, News amount of regional
Internet Connection. Channels content in its library
that consumers can
access. Furthermore,
they have a mobile
app allowing
consumers who may
not have televisions
or laptop to access
the content they
have.
Table 1: Consumer Profile of Hotstar’s Consumers
From the consumer profile, we see that Hotstar seems to be satisfying a lot of the consumer
demand by the varied product portfolio. The main differentiator that we see in Hotstar is the
10
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that they televise sports. In 2019, 79% of televised sports viewership in India came from
cricket. Hotstar has invested heavily in sports, especially in cricket wherein they bagged the
sole rights to stream the Indian Premier League until 2022. This has given them a competitive
advantage
15
Hotstar also offers about 100,000 hours of content over 9 languages. However, their
predominant focus has been in Hindi. Their other languages do not have enough content and
this is one area where they can improve on their product.
Investments in areas where customers have unmet needs and desires can offer a stronger
competitive advantage in the future. Although Hotstar has made some improvements, there are
still areas for them to enhance, as highlighted previously.
Given that Hotstar has developed differentiated products for its varied consumers, it’s position
in the industry is evaluated using the Porter’s Five Force analysis.
Porter’s Five Forces Analysis
A Porter’s Five Forces provides information about an industry.
14
Basuroy, Tanushree. “India: Sports Viewership Share on Television.” Statista, 29 Sept. 2022,
www.statista.com/statistics/1016925/india-tv-sports-viewership-share/.
15
About Us - Disney+ Hotstar. www.hotstar.com/in/about-us.
11
Figure 3: Porter’s Five Forces Infographics
Potential of New Entrants into the Industry (Weak)
The Indian video streaming market is saturated, with an average consumer having 2.4
subscriptions16. Brand development is necessary to succeed in this market. New entrants
face a challenge due to the power of established firms to source content and consumer
preference for popular products/services. However, the low GDP per capita 17in the country
suggests that firms charging low prices could benefit from the volume of consumers
present, as the Indian video streaming market valued at $1.9bn USD18. Hotstar does not
need to worry about competition from new players.
16 “A CRED-like platform is what Indian OTT users want to juggle multiple subscriptions.” Business Insider India, 1 July
2022, https://www.businessinsider.in/business/news/a-cred-like-platform-is-what-indian-ott-users-want-to-juggle-multiple-
subscriptions/articleshow/92570894.cms. Accessed 21 Feb 2022.
17
“GDP per capita (current US$) - India | Data.” World Bank Data,
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=IN. Accessed 20 September 2022.
18
“India's Overall Online Video Market to Grow at 26% CAGR to Reach US$ 4.5 billion by 2025: Report.” IBEF, 12
January 2021, https://www.ibef.org/news/indias-overall-online-video-market-to-grow-at-26-cagr-to-reach-us-45-billion-by-
2025-report. Accessed 21 August 2022.
12
Power of Suppliers (Moderate)
In the Indian market there is a vast number of production companies that exist, offering
suppliers a wide range of potential buyers for their content. However, this threat is offset
somewhat by the increased investment in original programming by many firms. This
development reduces the number of potential buyers for the content and creates a more
competitive environment for suppliers. Nevertheless, given the immense size of the Indian
market, established content production companies such as Yash Raj Films and Reliance
Entertainment can still maintain a moderate level of bargaining power. Ultimately, the Indian
market presents a complex environment with several factors influencing the bargaining power
of content suppliers, and success in this market requires a nuanced understanding of the
industry and its unique characteristics.
Power of Consumers (Strong)
As mentioned earlier, the Indian market is heavily cluttered with a wide array of competitors
19
such as Zee 5 and Amazon Prime in the market. Firms in the Indian streaming industry
employ pull strategies on their pricing to maintain competitive pricing and attract consumers.
Additionally, low economic and psychological switching costs give consumers significant
power as substitutes are easily available due to a large piracy market. The tech boom in India
has also led to lower mobile-data prices, providing consumers with greater access to content.
19
Fox, James. “India's OTT Media Services Industry: Key Players and Market Trends.” India Briefing, 8 November 2022,
https://www.india-briefing.com/news/indias-ott-media-services-industry-rapid-growth-amid-competition-for-market-share-
26375.html/. Accessed 22 November 2022.
13
As a result, consumers have considerable power over Hotstar's pricing strategies, making it
challenging for the company to compete solely on price. To overcome this, Hotstar needs to
focus on a stronger product development strategy and other innovative developments that can
differentiate it from its competitors. This would help the company to maintain its competitive
edge and improve its pricing power.
Threat of Substitute Products (Moderate)
The threat of Substitute Products in the Indian market could be categorised as moderate for
Hotstar. This is due to the fact that substitutes often involve television and conventional
theatres. Whilst theatres have remained closed due to the COVID pandemic, with regulations
easing, the threat of theatres is rising. This is due to the psychological association and
satisfaction derived from watching films on the big screen as opposed to mobile devices or
laptops. In terms of conventional television, whilst other firms may struggle, Hotstar has an
advantage. According to a financial newspaper, Mint India, 2032% of consumers in the Media
and Entertainment Industry in India still watch conventional television whilst video on demand
streaming makes up only 8-10% of the market. But as Hotstar shows television channels along
with video on demand streaming in its product portfolio, they negate the threat of television
channels, whilst still having the threat of theatres looming, allowing us to categorise the threat
of substitutes as moderate.
Competition in the Industry (Strong)
20
Jha, Lata. “Subscriptions to make 60% of OTT revenue by 2030: Report.” Mint, 16 November 2022,
https://www.livemint.com/industry/media/subscriptions-to-make-60-of-ott-revenue-by-2030-report-11668592606910.html.
Accessed 13 January 2022.
14
The Video streaming market in India is huge, and as a result Hotstar has many competitors
with Netflix, AmazonPrimeVideo and Netflix being the largest competitors holding about 40%
of the market. Each competitor tends to have different forms of content and acts as a subset of
Hotstar in the streaming segment. Netflix and AmazonPrimeVideo tend to have web series and
films that are not tailor made for the Indian market; allowing Indian users to access
international television. AmazonPrime has a similar modus operandi. However, due to recent
investments by both firms in their respective businesses, both firms have begun to create video
streaming for the Indian market through contracts with Indian filmmakers and investments in
the production of their own original programming. Zee5 is another app operating and with its
main focus being Indian television shows and movies, which is quite similar to Hotstar, the
content in Zee5 is highly restrictive and not as diverse as Hotstar’s product portfolio which
covers far more avenues of content and media. Thus whilst certain competitors might not be
strong in the industry, there definitely are players in the market who pose a serious threat to
Hotstar, categorising the competition in the industry to be strong.
From the Porter’s Five Forces analysis, we see that Hotstar is in a relatively weak position in the
Indian Video-Streaming market and their product development strategies are yet to yield them
success. In order to cement their position in the industry as a leader, they have to try and negate the
threat from the other forces to weak/moderate. As a result, the competition in the industry would
be unable to compete with Hotstar, providing them with a competitive advantage in their industry.
The VRIN Analysis explores this further.
15
VRIN Analysis
Figure 4: VRIN Analysis Framework
To gain a competitive advantage in such cluttered markets, it should satisfy 4 points; Valuable, Rare,
In-Imitable and Non-substitutable21
Valuable- To be valuable, a resource must either allow a firm to achieve greater performance than
competitors or reduce a weakness relative to competitors.
Rare- Given competition, a valuable resource must be rare
In-imitable- For value and rarity to persist, a resource must not be easily imitated.
Non-substitutable- Even if valuable, rare and imitable, a resource providing advantage.
21
16
Hotstar appears to be a valuable firm based on the VRIN framework analysis. In the fiscal year 2021-
22, Hotstar generated 16.7 billion rupees in revenue (Add citastion here). While Hotstar's content
in the video streaming market may not be considered rare, its sports streaming content is. As a
result, Hotstar is considered a "rare" firm due to its unique adaptability to meet the demands of
different consumer markets and regions, setting it apart from its competitors. Additionally, Hotstar
has a strong risk assessment function that enables it to identify potential opportunities and areas
where it could fulfill the demands of underserved markets which is a valuable feature.
While Hotstar is considered valuable and rare, it may not be inimitable. Competitors have the
potential to replicate Hotstar's unique content offering with significant investment in acquiring
similar content. This poses a threat to Hotstar's competitive advantage. In fact, AmazonPrimeVideo
has already shown cricket matches from Jan1 202222. , which is a sport that Hotstar has been
predominantly known for streaming. Therefore, Hotstar needs to continue to innovate and create
new offerings to stay ahead of its competitors and maintain its unique value proposition.
Hotstar can be considered non-substitutable due to its large and diverse product offering. Unlike its
substitutes, Hotstar offers various forms of content under one platform, which is not offered or
offered only in limited quantity by its competitors. With a massive brand following and the backing
of the Walt Disney Corporation, Hotstar has significant bargaining power and can secure media
rights deals, which attract consumers to subscribe to its service. This gives Hotstar a competitive
edge in the market. Therefore, Hotstar's unique value proposition and bargaining power make it
non-substitutable in the streaming industry.
22
“Streaming Live Cricket on Amazon Prime Video.” Amazon India Blog, 21 December 2021,
https://www.aboutamazon.in/news/entertainment/amazon-prime-video-to-stream-live-cricket-starting-january-1. Accessed
17 September 2022.
17
Figure 5: VRIN Analysis Conclusion
From the VRIN analysis, we can come to the conclusion that Hotstar possesses a temporary
competitive advantage in the Indian video streaming market. Hotstar’s current investments have
provided them with this. However, to attain a sustainable competitive advantage, improvements in
their content and UI,23 they can differentiate themselves further, and turn in- inimitable.
It is now important to understand why Hotstar’s competitors have also been successful in the same
space to evaluate whether Hotstar truly has gained a competitive advantage and what they could do
to match them.
23
UI- User Interface
18
Competitor Analysis
24
Figure 6: Market Share of Indian Video Streaming Industry
A competitor analysis is a strategy involving researching major competitors to gain insight into their
products, sales, and marketing tactics. 25
The chart represents the Indian Video Streaming Market. From this, we see that AmazonPrime and
Netflix are Hotstar’s main competitors We can do a competitor analysis on both these firms to
describe the reason behind their success by evaluating both their marketing mixes.
Netflix Inc
The competitor analysis will be carried for data available for the latest fiscal year.
24
“Indian SVOD Market Share: Disney+ Hotstar gains significantly while Netflix nosedives.” MediaNews4U, 3 November
2022, https://www.medianews4u.com/indian-svod-market-share-disney-hotstar-gains-significantly-while-netflix-nosedives/.
Accessed 15 July 2022.
25
White, Christine. “What's a Competitive Analysis & How Do You Conduct One?” HubSpot Blog, HubSpot, 10 Nov. 2022,
blog.hubspot.com/marketing/competitive-analysis-kit.
19
Product Pricing Place Promotion
Netflix is a leading global Rs 149 for mobile- Netflix has a strong Netflix has a heavy online
video streaming provider, only and 199 for distribution strategy. presence with Instagram27
26
offering a vast selection of basic plan With them having a and YouTube28. They
films and TV shows, with a monthly. They use mobile app that regularly interact with
focus on psychological allows customers to influencers across India to
Hollywood/English pricing and also download and watch promote their product and
content. They are also a top offer a one month content on the go, are relatable to their
original content provider, trial to entice along with a website, consumers. They also use
regularly introducing potential customers. commercial billboards,
captivating new content to which is beneficial
viewers. especially in big cities
where traffic is common.
Table 2: Competitor Analysis of Netflix
AmazonPrimeVideo
Product Pricing Place Promotion
Amazon as a firm is Rs 179 29monthly. Amazon is an online Amazon has a decent

amongst the largest in They use market store with multiple online presence with their
the world and has a oriented and value- websites in operation. Instagram and YouTube.
diverse product based pricing to AmazonPrimeVideo Whilst they are not as
portfolio with differentiate similar to Netflix has popular as Netflix, they
PrimeVideo being one. themselves due to an online website still have a strong online
Amazon Prime Video is the added value alongside a mobile presence, benefitting them.
26
Dutt, Shubham. “Netflix Subscription Plans 2022: Monthly and Yearly Price in India, Validity, Jio, Airtel & Vi Recharge
Offers.” MySmartPrice, 3 February 2023, https://www.mysmartprice.com/gear/netlfix-subscription-plans-india/. Accessed
19 June 2022.
27
“Netflix India (@netflix_in) • Instagram photos and videos.” Instagram, https://www.instagram.com/netflix_in/. Accessed
15th June 2023.
28
“Netflix India YouTube.” YouTube, https://www.youtube.com/@NetflixIndiaOfficial. Accessed 29 August 2022
29
Dutt, Shubham. “Amazon Prime Plans 2023: Membership Price, Prime Video Mobile Edition Free Trial, Subscription
Benefits, More.” MySmartPrice, https://www.mysmartprice.com/gear/amazon-prime-plans-benefits/. Accessed 7 July 2022.
20
inclusive with Amazon consumers get with application through Furthermore, bundling in
Prime, a service where AmazonPrime. which it aims to multiple services has
Amazon parcels are Furthermore, under appeal to target allowed them to generate
delivered quicker. They one subscription, customers. greater revenue.
also focus on original consumers can use AmazonPrimeMusic
content programming, AmazonPrime has its own separate
but are more tailored to Music, a music- application, but is
India with a lot more streaming app. linked under the same
regional content. account.
Table 3: Competitor Analysis of Amazon Prime India
Hotstar’s competitive pricing strategy and vast content selection make them a strong player in the
streaming market. Currently, their competitive edge comes in terms of sports, which alone is not
enough. To improve this, they could address and fulfil market gaps, and have better user
engagement through more relatable promotion which could help them expand into new markets and
gain a larger competitive edge.
To better understand the impact of their product development strategy, a sales forecasting and
analysis has been carried out.
Sales Forecasting and Analysis
In order to evaluate the effectiveness of the decisions taken by Hotstar, it is important to
understand and evaluate the sales revenue 30for Hotstar.
30
Basuroy, Tanushree. “Disney+ Hotstar: revenue 2021.” Statista, 9 March 2022,
https://www.statista.com/statistics/1231769/india-hotstar-revenue/. Accessed 16 August 2022.
21
Data was available for the Fiscal Years 2016-17 31to 2021-22. The remainder of the data was
extrapolated through MS Excel’s software.
Table 4: Sales Revenue of Hotstar India from FY 2016-17 to 2021-22
A 3 point moving average 32was taken, and the data was extrapolated with the help of a line of
regression. This allowed us to forecast the data for the sales of Hotstar for future years.
31
Farooqui, Maryam. “Hotstar posts 20% increase in losses at Rs 489 crore for March 2017, revenue up by 81%.”
Moneycontrol, 27 April 2018, https://www.moneycontrol.com/news/business/companies/hotstar-posts-20-increase-in-losses-
at-rs-489-crore-for-march-2017-revenue-up-by-81-2558761.html. Accessed 17 August 2022.
32
HOANG, PAUL. Business Management 5th Edition. IBID Press, 2022. Accessed 20 September 2022.
22
Hotstar Revenue in Crore (INR)
5000
4000
3000
2000
1000
0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Sales revenue (Inr Crore) 3 point moving average Linear (3 point moving average)
-1000
Graph 1 : Extrapolated Expected Revenue of Hotstar
The graph shows the expected revenue of Hotstar in the coming years. Data has been
extrapolated for future with the help of a regression tool(Excel).
In 2019, Hotstar merged with Disney+Hotstar and relaunched in 2020 resulting in product
development. We can see the results of this business decision in the sales forecast. Since the
merger, we see that Hotstar’s revenue has grown constantly due to constant product
development in the form of new content, better UI, etc. . Whilst there is some straightening as
2020 approaches, this could be attributed to the Coronavirus Pandemic. This can be seen
through their subscriber count as well which went from 8.7 million 33in Quarter 3 of 2020, to
45.9 million in Quarter 1 of 2020. There has been a year on year growth for the firm, in terms
33
“Disney+ Hotstar's paid subscriber base rises to 45.9 million.” Moneycontrol, 10 February 2022,
https://www.moneycontrol.com/news/business/disney-hotstars-paid-subscriber-base-rises-to-45-9-million-8069471.html.
Accessed 8 July 2022.
23
of both revenue and the number of subscribers. Hotstar continues to make investments to
prolong this growth, hence justifying the figures. This has given the firm a competitive edge
as controlling the market and becoming a larger player benefits the firm in many ways such as
economies of scale and high branding, which are essential skills for success in the market.
We also see that the market share that Hotstar has held in the market has increased. In 2020,
Hotstar held about 17%34 and went to 21% in 2021.
Conclusion:
To determine whether Hotstar’s product development has given them a competitive edge, the
findings from all the tools must be analysed.
Firstly, the consumer profile analysis demonstrates that Hotstar caters to a diverse set of
consumers from different age groups and geographic areas with varying preferences, indicating
that their product development strategy has effectively targeted a wide audience.
Secondly, Porter's Five Forces Analysis identifies the threats to Hotstar's success, which
primarily stem from consumers and competitors. However, despite these threats, Hotstar's
subscription figures and revenue growth suggest that their product development strategy has
helped them gain a foothold in the market.
Thirdly, the VRIN framework highlights that Hotstar possesses a competitive advantage in the
market, particularly in areas where it has developed rare and unique content. The competitor
34
Buchholz, Katharina, and Felix Richter. “Infographic: International Brands Rise to the Top of Indian Streaming Market.”
Statista Infographics, 23 Sept. 2020, www.statista.com/chart/23009/market-share-streaming--ott--platforms-in-
india/.
24
analysis further emphasizes the difference between Hotstar and its top competitors in the
industry.
While sales data shows that Hotstar is currently operating at a loss 35, the growing number of
subscribers and the overall growth of the OTT market in India indicate that Hotstar's product
development strategy is positioning it for future profitability.
Overall, the combination of these analytical tools shows that Hotstar’s product differentiation
strategy through product development has helped them gain somewhat of a competitive
advantage in the Indian Video Streaming Market. There still lies scope for improvement to
achieve a full competitive advantage.
Hotstar's competitive advantage requires ongoing product development and differentiation to
sustain its position in a crowded industry. As a loss-making firm, it must carefully manage
investments in these areas to achieve profitability. To maintain their edge, Hotstar could
penetrate international markets with a significant Indian diaspora, which could increase cash
flow and profitability by charging higher prices for access to Indian content that is not widely
available abroad. Thus it can be concluded that Hotstar has gained a competitive advantage
using its product development strategies without which it would not have been able to offer
varied content to a diverse Indian consumer market.
35
Appendix 2
25
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29
Appendix
Appendix A- Subscriber Count of Hotstar
30
Appendix B- Hotstar Financial Statements
Appendix for Fiscal Years
2017-18
2018-19
2019-20
31
Fiscal FY 21-22
32

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Personal Code: xyz Session: May 2023

Business Management Extended Essay

INTERNATIONAL BACCALAUREATE DIPLOMA PROGRAMME

Title: Exploring the Impact of Hotstar India’s Product Development strategy on

Research Question: To what extent has the product differentiation strategy

through product development helped Hotstar India gain a competitive

advantage in the Indian Video Streaming Market?

Word Count: 3990

Hotstar’s app in early 20203.

the ability to finance the production of original content.

2 “About Us.” About Us | Disney+ Hotstar Tech,

Product-Development can be defined as a growth strategy wherein a business introduces new

integrating with Disney.

to compete in the market.

how it can be sustained.

FY 2022-23 ends only in the month of March 2023 6.

Figure 2: Methods of Research used in EE

offers broader perspectives to elevate the overall quality of the research.

heavily relied on due to the lack of primary research.

the knowledge acquired can also implemented in other areas.

a consensus has been reached.

that could be strengthened, benefitting Hotstar over their competitors.

resources and what they could capitalise on to gain a competitive advantage.

existing or potential competitors in a market to inform business strategy development. It

competitive landscape and gain a competitive advantage by leveraging this information.

predicted based on their current performance.

Limitations of Research Process-

1. Multiple sources had conflicting information or exaggerated data, making it

bibliography to present research and data.

advantage in the Indian Video Streaming Industry.

taken from third party sources.

Consumer Profile of Hotstar’s consumers

variety of consumers, consumer profiling has become a key component.

streaming market, as shown in the consumer profile.

limited to family income, availability of choices, Internet etc.

Geography User Consumer Content Watched Product Features in

Parents (Consumers) News, Olden shows Hotstar’s library of

Millennials and Indian, American Hotstar offers a

offer a diverse range

Tier I and II cities Tech Savvy News Content, Hotstar has an

Rural Areas Smartphone Users Regional Content, Hotstar has a large

Table 1: Consumer Profile of Hotstar’s Consumers

this is one area where they can improve on their product.

still areas for them to enhance, as highlighted previously.

in the industry is evaluated using the Porter’s Five Force analysis.

Porter’s Five Forces Analysis

A Porter’s Five Forces provides information about an industry.

Figure 3: Porter’s Five Forces Infographics

Potential of New Entrants into the Industry (Weak)

subscriptions16. Brand development is necessary to succeed in this market. New entrants

need to worry about competition from new players.

Power of Suppliers (Moderate)

somewhat by the increased investment in original programming by many firms. This

industry and its unique characteristics.

Power of Consumers (Strong)

edge and improve its pricing power.

Threat of Substitute Products (Moderate)

Competition in the Industry (Strong)

Hotstar, categorising the competition in the industry to be strong.

The VRIN Analysis explores this further.

Figure 4: VRIN Analysis Framework

In-Imitable and Non-substitutable21

competitors or reduce a weakness relative to competitors.