Analysts sanguine on Astro after Disney+ Hotstar deal

KUCHING: Analysts are upbeat on Astro Malaysia Holdings Bhd (Astro) after the Walt Disney Company has picked Astro as their official distributor of Disney+ Hotstar streaming service in Malaysia which will be launched on June 1, 2021.

The streaming service will feature over 800 films and 18,000 episodes of Disney’s award-winning contents, Marvel, Star Wars, Pixar, National Geographic, FX, 20th Century Studios, blockbusters from Hollywood and leading Malaysian studios and many more.

Astro customers that are subscribed to the group’s Movies Pack will be able to access the streaming service via Disney+ Hotstar mobile app and website. The group is aiming to make this SVOD available via their Ultra and Ulti connected boxes by end of 2021.

Current Movies Pack subscribers will automatically be charged an additional RM5 per month starting June 1, 2021 for Disney+ Hotstar content whereas Astro’s non-Movie Pack customers can either pay an additional RM30 to add Disney+ Hotstar to their existing package or upgrade their existing package to include Movies Pack.

The team with Kenanga Investment Bank Bhd (Kenanga Research) was positive with this new partnership as it sees Astro benefiting from the partnership through subscriber retention, regaining of lost subscribers and new customer acquisitions.

“As the group does not provide details of their content subscription base, thus, based on our back-of-envelope calculation, we estimate that the group has a total paying subscriber base of three million of which we assume 50 per cent are Movie Pack subscribers paying RM5 additional monthly subscription fee effective June and the remaining are non-Movie Pack subscribers whereby 10 per cent would upgrade their package,”it calculated.

“We also assume that it will cost roughly RM20 to upgrade to the nearest tier package that includes Movies Pack. As the streaming service launches in June 2021 and will impact earnings from the second quarter of financial year 2022 (2QFY22) onwards, we believe the group will gain an extra RM108 million in FY22.

“This would translate to six and seven per cent increase in revenue for FY22 and FY23, respectively.”

Researchers with Hong Leong Investment Bank Bhd (HLIB REsearch) described the partnership as a win-win situation for both parties.

“Overall, we are positive on this development. Disney would be able to capitalise on Astro’s large customer base to penetrate into the Malaysia market; while for Astro, this partnership will increase its subscription revenue from its Movies Pack customers,” it said in its own analysis.

“IT will also make its subscription package offerings more attractive with the addition of Disney+ Hotstar content, and add more content to its on-demand library. Given Astro’s large customer base, we believe Astro would be able to negotiate favourable terms for this partnership.”

MIDF Amanah Investment Bank Bhd (MIDF Research) said this affirmed Astro being on a clear path to become a subscription-based video-on-demand (SVOD) aggregator.

“The group has set its eyes on becoming the super-aggregator of the OTT services.

“It currently already has contents from US’ HBO GO and China’s IQIYI in its coffers and is eyeing to include more into its collection of streaming services,” MIDF Research said, adding it was in line with Astro’s aim of becoming an aggregator for streaming giants and target to get 15 SVOD services by 1QFY23.

“In this case, with the influx of streaming providers in the market, it is more beneficial to collaborate with them.

“Although there is a choice to choose between Disney+ Hotstar as a standalone service or together with Astro, we think that with the various offerings in Astro’s package, it would be an attractive option to customers.

“Hence, we opine that Astro’s plan to be a super-aggregator would bode well with the group’s subscription revenue, average revenue per user and earnings.”