India’s English movie market is dead! Long live India’s English movie market.

Star India’s exclusive deal to acquire premium content from Time Warner's HBO is another indicator that Hollywood movies are becoming increasingly niche and premium-oriented in India.

Today, India’s English movie channel market represents less than US$120 million in revenues, according to Media Partners Asia (MPA). That’s only 3% of the US$4 billion that pay-TV channels generate in the country, including advertising and subscription.

HBO sibling Turner has 25% of the English movie channel market, after acquiring HBO’s branded basic tier and ad-supported offering in December 2014. The service has ~16 million subscribers in India.

The lucrative deal with Star closes the chapter on HBO’s premium service (HBO Defined) with Star India securing premium content, largely consisting of HBO originals, for its own HD channel, Star World Premiere, as well as for its ad-supported OTT service Hotstar.

Content will include Game of Thrones and True Detective as well as forthcoming HBO originals such as Westworld and the Martin Scorsese-directed and Mick Jagger-produced Vinyl.

Popular HBO Original programmes will show on Hotstar on the same day as telecast in the US.

Such day-and-date and acquisition deals are also part of lucrative deals that HBO has signed with players such as Foxtel in Australia, Star Channel in Japan and Tencent in China.

SVOD and linear

The deal may also provide a path for Hotstar to launch a subscription-based window for its content.

Hotstar has close to 30 million registered users, with content anchored to live sports, Hindi and regional entertainment, as well as international programming.

According to MPA, the market for OTT in India will reach more than Rs10 billion (US$150 million) in net terms in 2015, with advertising contributing more than 90%.

SVOD has failed to take off in India due to sparse payment infrastructure as well as high data charges, says MPA India vice president, Mihir Shah.

Future SVOD pricing, along with several TVOD options, should fall within the Rs50-85 price range, Shah adds.

Lower price points will encourage more people to sample and value content, making it easier for viewers to become monthly or annual subscribers.

Meanwhile, the HBO deal is something of a coup for Star World Premiere. The HD premium channel now has content from all the major Hollywood players, including Disney, Fox, Time Warner and Universal.

As a premium subscription channel however, Star World Premiere has yet to take off in terms of paying subs, with about 500,000 customers so far.

Some DTH operators however are looking to reignite growth for the channel, by moving it into more widely subscribed packs.

It may well be that premium content consumption shifts to pass-through SVOD and OTT options, linked to linear channels that reposition themselves with a broader offering in the basic tier.

This will help protect linear revenues for pay-TV operators, while providing space for an ecosystem around premium content to grow.