Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy morning, folks. 🙏

Hope you had a great weekend.

Today we’re diving into -
- Hotstar’s slowly sliding subscriber base,
- Nykaa’s plateauing fashion frenzy,
- And, Krafton’s bumper $150m India investment.

Our read time today is 4 minutes and 56 seconds - faster than you can Zepto yourself some dhaniya and doodh. 🥛

Let's dive in. 👇

Market Vibe Check 🥵

Hotstar’s subscriber fire fizzles out… 🔥

TLDR -
- Disney Hotstar lost 25% of their subscribers last quarter.
- Subs fell from 53mn to 40mn in just 3 months.
- Biggest 2 reasons - Hotstar losing IPL rights + free alternatives like JioCinema.

Last month, headlines were blaring about how Disney had appointed bankers to help sell the Hotstar business.

Today, we get a little clarity on why.

Hotstar lost ~25% of their subscribers and sustained some horribly low revenues/user.

Problem 1 - subscriber loss?

Cricket is a religion in India.

Ever since Hotstar lost streaming rights to IPL (the world’s biggest cricket league), people started ditching them for other platforms.

Folks like JioCinema (backed by Mukesh Ambani) also came into the market and handed out free streaming, at the cost of ads.

India’s price sensitive market loved this (since time ≠ money 😂) and Hotstar started bleeding traffic.

Problem 2 - Low revenues per user

In the streaming business, the ONLY important metric is ARPU (average revenues per user).

The higher the ARPU of a customer, the more long-term business they can drive.

Average Disney+ subscriber (OUT of India) generates $4.44 in monthly revenue.

Average Hotstar subscriber (IN India) generates a measly $0.59 in monthly revenue.

All other things held constant, a Disney+ subscriber is worth 7.5X more than a Hotstar subscriber.

As a big corporate like Disney, you only take billion-dollar-bets on markets that make you big money - and India clearly doesn’t.

Someone’s saying bye-bye… 👋

Nykaa’s blistering growth slows down. 🦥

TLDR -
- Nykaa revenues are up 24% from last year.
- Net profit stayed the same at 5.4 Cr over last 12 months (which means that the business’s profitability worsened).
- CEO herself admitted that growth was lower than their long-term projections.

All the COVID-fueled bang-and-boom of online marketplaces is starting to lose it’s steam.

The latest victim is Nykaa - one of India’s biggest fashion retailers.

Their GMV rose 24% from a year back but their net profit stayed flat - which translates to crumbling unit economics.

But GMV (which people use as another word for revenue) is one of the most misleading metrics out there.

GMV = gross merchandise value.

In other words, if I sell a Rs. 100 product at a 90% discount for Rs. 10, I will have revenues of Rs. 10, but a GMV of Rs. 100!

Never mind the fact that I lost Rs. 90 on the product’s sale.

This paves the way for startups to hand out VC-subsidized lollipops while still optically saving face.

The number you NEED to focus on is NSV - net sales value.

This is the actual sales number, and in Nykaa’s case, their NSV is 70% lower than their GMV. 🤦

Creative financial storytelling…

Gaming giant Krafton puts down $150mn more into India. 💸

TLDR -
- South Korean gaming giant Krafton is investing $150mn into India.
- This news comes a year after their hit game BGMI was re-allowed to operate.
- Current portfolio is worth $140mn with stakes in Loco, Kuku FM, Pratilipi, etc

A boon for India’s gaming ecosystem - BGMI maker Krafton is all-set to invest $150 million more into startups.

BGMI is basically a jazzier version of PUBG, and it’s easy mobile compatibility has helped it swarm the Indian market.

The game actually got banned from India a year back, but was just reinstated - which is probably why Krafton’s got this fund ready.

They’ve spent $140mn over the last 2 years on Indian startups with investments into Kuku FM, Loco, Pratilipi, and Nodwin Gaming.

Pretty small, and very gaming-centric.

To each his own… 🤔

In other news… ☕

Zee-Sony merger gets approved to create a $10bn media giant (BBG)

US inflation remains tame at 3.2% (FT)

Circle rests on a $1 billion cash safety net (BBG)

Amazon chats to Arm about being an anchor investor in the IPO (FT)

LK-99 drama decides to boil over (TC)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it.

Lots of ❤️,

Team C