Gupta’s exit—announced in November—mirrors the departure of Ajit Mohan, ex-Hotstar CEO and a direct report to Gupta, who moved to social media leader Facebook to run its India business in January 2019. Google reached out to Gupta after losing its long-time India head Rajan Anandan to VC firm Sequoia in August—Anandan moved to manage Sequoia’s early-stage startup program, Surge. (We’ve written about Surge before.)
But why would Google look to Hotstar for a replacement? It’s doing something right. At least in terms of video consumption.
Hotstar’s quick rise to 300 million monthly viewers, since its launch over five years ago, has made it a prime target for poaching by deep-pocketed global tech companies in search of talent. Mohan, for one, is said to be earning around $2 million plus stock options at Facebook, according to a report from The Times of India. That’s “significantly” more than what he previously made, the report claims. It is not clear what Gupta’s salary at Google will be.
Gupta’s impending move to Google also comes at a pivotal time for the US technology giant in India. YouTube, Google’s video platform, is the company’s crowning jewel in the country—its largest and fastest growing market with 275 million active users—but its run as a more-or-less monopoly has been legitimately challenged. Not only by Hotstar, but also the rapid rise of TikTok, the vertical, short-duration video app from China’s ByteDance, the world’s most valuable startup with a reported label of $76 billion.
YouTube, to take a larger bite out of India’s growing internet market, needs a better local focus in India. With an estimated 451 million active internet users—second in the world to China—and 829 million more to come in the coming year, according to a report from Cisco, India makes for an awful lot of eyeballs and advertising dollars up for grabs.
Enter Sanjay Gupta.
Gupta is credited with pivotal deals for Star, which include its sports programming and the launch of Hotstar itself. Experience he could bring to YouTube. A former executive with consumer goods retailer Hindustan Unilever and telco Bharti Airtel, Gupta is known for his sales prowess and strong relationships with content companies and telecoms business.
But where YouTube gains Gupta, Hotstar is short of another leading executive. But that may not be an impediment, according to a senior executive in the digital entertainment industry. Hotstar may be bereft of two key executives and no longer an underdog that can go underestimated by its rivals, but its core remains strong.
“The Hotstar bench depth is very good and its asset set is unique,” the executive said requesting anonymity as they are not authorised to discuss rival companies. “You have Disney, Fox and Star—they will never be taken away and will always attract strong talent.”
A star is born
Hotstar was launched in February 2014 after more than a year of internal development to refine the product and strategy. The goal was to expand Star India’s significant traditional television presence—its network spans over 60 domestic channels—into the digital domain. That footprint gave Hotstar a rolling start to life, but its 2017 acquisition of the global rights for the Indian Premier League (IPL), India’s most popular sports league, catapulted the business.
Hotstar’s watershed moment came in May 2019, when it broke its own global record of 10.3 million concurrent viewers. 18.6 million watched the final game of the Indian Premier League (IPL) cricket tournament during the weekend of 11-12 May. It shattered the record again in July when 25.3 million tuned in to watch India take on New Zealand in the Cricket World Cup semi-final.
But its appeal isn’t just sports. Hotstar has given viewers major titles like Game of Thrones—which it said was its most popular show in 2019—and blockbuster films like Marvel’s Avengers: End Game.
Success was far from a guarantee, however.
“YouTube never expected Hotstar to succeed, but it has,” a senior executive at an OTT business told The Ken under anonymity because they are not permitted to talk to the media. The Mountain View-based video giant wasn’t alone in thinking that. Gupta himself has said many observers told him the business would be a “disaster.” It wasn’t, and Silicon Valley leaders have been keenly watching, even before the end of this year’s cricket season.
Mohan accepted Facebook’s offer last year and joined the company in January 2019. The social network has always shown an interest in acquiring content in India—it lodged an unsuccessful rival bid for the IPL deal Hotstar won in 2017—but under the new executive, it has picked up its efforts. While the rights to broadcast Spain’s La Liga football games on Indian soil and an International Cricket Council (ICC) package may not be as attention-grabbing, they represent a clear directive to broaden appeal.
Even for Facebook—which operates the planet’s most popular social network with more than 2 billion monthly users and has 400 million WhatsApp users in India—nothing can be taken for granted.
“They realised they need to hire people with operational media experience,” the OTT executive said. “The is the first time they’ve hired anyone from this kind of business.”
Google, then, finds itself in a similar position. A position that Gupta is more than qualified to navigate. “[Gupta] won’t just help across YouTube, but he’ll enable Google to get deeper into the ecosystem and work with telco partners,” the aforementioned executive claimed. “He’s a consumer media guy.”
That approach, the person added, is likely to see YouTube win an even greater share of advertising dollars than it currently owns. To be clear, the company is already dominant, but Hotstar has made impressive progress during its five-years so far. Indeed, Hotstar’s advertising revenue is higher when averaged against its number of daily engaged users than that of YouTube, according to estimates from analyst firm Media Partners Asia.
The Ken reached out to Google and Facebook, who declined to participate in this story.
Let me entertain you
Hotstar’s pursuit of sports programming has reaped dividends, but the company’s products themselves have also been developed with a particular user in mind. The service’s Watch ‘n’ Play feature lets viewers play games related to cricket during IPL matches, thus evolving the static one-way dynamic of traditional broadcasting.
“The same audience, when they go to a sports arena or a cinema hall claps, whistles and hoots. We want to give the same level of engagement to people who are watching content on a screen,” Uday Shankar, president of The Walt Disney Company APAC and Chairman of Star and Disney India, said at a recent event.
The results have been impressive. Beyond the overall audience numbers Hotstar has to show for its work, it says Watch ‘n’ Play brought in 64 million viewers during this year’s IPL. That, it claims, is double the previous year. Already, there are plans to expand its interactive experiences beyond sports and into other content. Away from gaming, Hotstar has also tied up on-demand Swiggy during live match broadcasts—that’s said to have generated 14 million interactions, according to Hotstar’s own data.
It remains unlikely that YouTube—or Facebook—will blithely adopt such features, but there’s certainly room to customise their most popular services to fit with the habits of Indian consumers. A key part of Google’s localisation strategy to date has been to create data ‘lite’ versions of apps like Google Maps and YouTube, which are faster to download and take up less of the limited memory on budget smartphones—with inexpensive data powered by telco Reliance Jio. But these tweaks have not drastically changed the core user experience.
“The way products will evolve is just going to be different than North America, and I think that Facebook and Google are realising that,” the digital entertainment executive said. “On Hotstar, you can play games while watching cricket, it’s so different to Western options,” the person added. “You can imagine that they might take the core product experience in that direction, but it’s an extraordinary challenge.”
The consumption patterns and devices used in India are a whole new game for Big Tech. A game TikTok seems quite adept at playing. (We’ve written about TikTok’s India advertisement rulebook before.)
A lavish advertising campaign—which included spending $300 million on Google ads alone in 2018, according to a report from The Information—has pushed TikTok into the mainstream in the US, while simultaneously racking up over 145 million users in India. That’s second only to its presence in China, and it accounts for a large chunk of its 500 million monthly user base worldwide.
With the service reaching critical mass, TikTok’s parent company ByteDance is looking at act two, which will include pushes into educational content, music and potentially more. Now, while ByteDance can’t compete head on with the appeal of WhatsApp or Facebook, TikTok’s unique riff on video—vertical content lasting under 15 seconds popularly used for lip-sync videos—is presenting a new paradigm to reach Indian internet users and to lure advertisers that Google and Facebook appeal to.
Now, the Big Tech stalwarts need to stack up to keep their large pieces in Indian internet market share pie. And the buck doesn’t stop at streaming.
A whole lotta business
Streaming is the hot space in India right now, but Gupta has other areas to manage given Google’s reach is wide.
Google’s payment app Google Pay has been a success. It has cracked over 100 million downloads and posted a stiff challenge to established fintech names like Paytm*, India’s highest-valued private tech company at $15 billion.
Google’s projects to provide internet have reaped rewards in terms of adoption—the company says over 8 million people go online via its railway WiFi project each month—but not everything Google touches turns to gold. A neighbourhood app, Neighbourly, released in India in May 2019 has received little attention since its launch, and Google’s investment thesis seems disjointed as well. Direct investments in on-demand startup Dunzo and e-commerce service Fynd have failed to light up. Fynd sold to Reliance in August in an undisclosed deal, while Dunzo continues to mount dizzying losses in its battle to compete with deep-pocketed rivals.
For Gupta, simply taking the reins won’t guarantee success. Managing the relationship with head office in the US is the ultimate challenge for any country head of a global company, let alone a technology business. Even here, things are evolving.
Mohan’s arrival at Facebook, for instance, has triggered a change of approach. The former McKinsey consultant reports directly to the social network’s Menlo Park headquarters without any middle-man or regional executive in Asia. That’s a first for any India country boss. Notably, his remit does not extend to managing WhatsApp or Instagram—his focus is solely on Facebook. Keeping it competitive and on good terms with the government appear to be key targets.
Gupta, too, is tasked with building bridges with those in the Indian government at a time when US tech companies increasingly find pushback overseas. States are increasingly demanding that tech companies share local user data. When it comes to India, requests to Google have centred around a desire to store payment-related data on Indian soil.
The challenge for Hotstar in 2020 is more familiar. Without two of its prize executives, it will need to continue its streak and increase momentum as a likely resurgent Facebook and Google nip at its heels on content deals.
But there’s an adventure around the corner. Disney CEO Bob Iger has publicly stated that Hotstar will venture overseas to Southeast Asia. Perhaps the streaming service can now go on a hiring spree of its own.
Headline image via Patrick Hendry/Unsplash
Clarification: A previous version of this story incorrectly stated that Facebook had picked up an IPL highlights package. It’s deal is with the International Cricket Council (ICC). We regret the error.
A data about Swiggy Pop interactions was incorrectly stated as orders.