Mumbai: Zee Entertainment Enterprises Ltd will launch Zindagi, an entertainment channel that will feature syndicated content from Pakistan, later this month. Punit Goenka, managing director and chief executive officer, spoke in an interview about the new channel, changing consumer preferences, newer markets and his firm’s sports strategy. Edited excerpts:
Tell us about your new channel Zindagi.
While the first set of content that we are starting with is sourced from Pakistan, we are actively sourcing content from various other geographies as well, be it from Turkey, Latin America, Egypt, etc. What we have found is that content which has relevance with cultural affinity of India will play a good role here. That’s point one. Point two is that it’s not about cheap content or syndicated content, it’s about finding the right stories that will make that connect here. In terms of cost, this channel will end up costing us, similar to what any other GEC (general entertainment channel) would cost us, apart from the fact that we are syndicating content, everything else remains constant.
I won’t comment on how much it would cost Zee to do it, but if anyone wanted to enter this market with a GEC product, anything below $500-800 million it’s not possible to make a dent. Having said that, of course, incumbents such as Zee would not have to spend that kind of money, because we have a base and a network that itself can support such a product launch.
The budget for Zindagi’s launch phase is Rs.80-100 crore. Out of the total budget, primary spend will be on content and secondary on the marketing campaign. In the upcoming phases, the total spends for content production might go up by 15%. Both dubbed content and remade shows are options now. Even with the Pakistani shows, though today it’s purely syndicated, we are already actively working towards remaking shows, whether making them in India or Pakistan or in Dubai or anywhere else, that is economically feasible.
Is this decision coming out of some sort of research? Is there a change in what consumers want?
The consumer is always looking for differentiated content and with digitization and newer technologies coming in the options to the consumers have increased manifold and therefore fragmentation will continue to happen. Hence smaller sets of audiences will choose what they want to consume, either on television or on the second and third screen.
The idea didn’t come from research, it came from a gut feel. And when we researched that thought, it proved that it can work.
How does a media company increase size and scale of business, considering that ad rates haven’t risen substantially and subscription revenues are still not where you want them to be?
Growth in advertising is going to be a function of both volume and value. I think ad rates, in general, for the industry have not grown but content companies that have performed well in terms of increase in market share, etc, have seen value growth and you can see that from our results in the first three quarters itself that we have beaten the industry very heavily, with a 20% growth rate on advertising, which is a function of volume as well as value.
As a content company, we have to continuously endeavour to increase our market share, whether on the existing product itself or by creating new products and fragmenting the market.
On the subscription front, again, we have seen disproportionate growth over the last three years and I do expect that with digitization with the lag effect, let’s say maybe a year of it, we will start seeing growth.
MediaPro Enterprises India (the distribution joint venture with Star India) has been dissolved. How do you see that impacting your subscription revenues?
We formed MediaPro at a time when India was only analogue, apart from DTH (direct to home). So the benefit of MediaPro came largely in the analogue market. The digital markets, we already had the benchmarks established with the DTH players. What MediaPro helped us do is expedite that in the cable market as well.
I think the benefit of MediaPro have pretty much played out. A network the size of Zee will have the negotiating power even on its own to get the right value from distribution entities. So I don’t see any issues on that front.
With Ten Sports, you don’t have any India properties in 2013-14, and few lined up for 2014-15. How do you see that panning out?
Now with the MediaPro separation, we will be merging the sports business with the entertainment business for distribution. So we see some leverage there. Secondly, it’s a myth that Star has invested in everything in sports. They have invested heavily in cricket. We have equally invested in other sports as well. Today, we have a substantial amount of international football as well as tennis.
So apart from India cricket, the so-called thing that people are dying for, we have invested heavily in other sports. While the numbers are small for us in sports today but, therefore, the losses are also small. So from that perspective it’s going to be a game of consolidation and taking the benefits of our entertainment to on to our sports as well, by bundling (for distribution).
What are the developments at Broadcast Audience Research Council (BARC)? Are you on track for the October launch?
Things are moving along, though a bit slower than we expected. We are struggling with the whole IRS (Indian Readership Survey) fiasco. So that is a cause for concern, but otherwise things are on track and we are looking at implementation of our plans in the latter part of the year, from October to December.
We have our funding in place, our technology partners are in place, we have short-listed and frozen (on names for) other partners for design, quality and panel management. They have not been announced as yet because we are waiting for board clearance. So we have finalized internally, but will make the announcements after the next board meeting which is scheduled in June.
I am confident we will be able to achieve our goals.