New Delhi: As the economy shows definite signs of a slowdown, the ad revenue-dependent business models of India’s entertainment firms are coming into sharp focus. While many of these firms have initiated efforts over the years to leverage their brands and assets (read content) to create alternative revenue streams, few have achieved significant scale. Recent years have seen a redoubling of effort in licensing and merchandising, content syndication and brand solution services. However, barring some cases, these activities contribute a very small chunk to total revenues, in sharp contrast to the healthy monies made by global entertainment companies from these streams.

On a roll: Jiggy George, executive director of Cartoon Network Enterprises, says retail business accounts for about 10% of Cartoon Network’s revenues in India. Ashesh Shah / Mint

“Media companies in India, as a whole, have not valued their brand enough," says Uday Shankar, CEO, Star India Pvt. Ltd. “They focus too much on superficial benchmarks such as market share. One has to invest in building the brand and recognize its power and potential. As for Star, being one of the biggest media brands in the country, with a strong connect with every member of the family, we have an opportunity to monetize the customer engagement. We did a decent job with an early start, but candidly speaking, we are still scratching the surface," he adds.

Star was one of the earliest entertainment firms in India to take these secondary revenue streams seriously. In 2006, it hired Nanette D’Sa, who was then the marketing director at toy maker Mattel Toys India Pvt. Ltd, the firm behind bringing brands such as Barbie and Hot Wheels to India, to focus on building these streams.

“There are 40 million women in India who spend at least 2 hours everyday with Star. They love the celebrations, the weddings, the clothes, the jewellery and the homes that they see in the shows, and then we found out they were asking their local retailers for similar stuff. So, we realized there was an opportunity for us to be present there and invite them to be part of the Star brand beyond the TV screen," says D’Sa, who is now senior vice-president, licensing and merchandising, at Star India.

Star India has brought out a range of consumer products based on its popular soaps and reality shows. Ethnic jewellery and Indian wear, such as saris and salwar kurtas featuring designs from the so-called saas-bahu (mother-in-law, daughter-in-law) serials, are sold under the Star Parivaar brand. “Research has shown (that) what protagonists wear becomes points of reference for fashion among viewers," says D’Sa. In January, the firm tied up with retail chain Big Bazaar, owned by Pantaloon Retail (India) Ltd, to distribute the branded merchandise and consumer response has been terrific since, she adds.

Star is also cashing in on these brands through publishing. The broadcaster has at least 120 comic-book titles from shows across the Star network, such as Sarabhai vs Sarabhai, Sonpari, Prithviraj Chauhan and Antariksh. The firm is about to launch a range of apparel and accessories based on music station Channel V shows, collaborating with a leading jeanswear brand. In 2009, the licensing and merchandising division will also launch products based on characters from shows such as The Simpsons and Ice Age. Rights to these brands are owned by the US-based Fox Network, which is part of Star’s parent, News Corp.

Cashing in: Nanette D’Sa, senior vice-president, licensing and merchandising, Star India. Star India has brought out a range of consumer products based on its popular soaps and reality shows; these are sold under the Star Parivaar brand. Ashesh Shah / Mint

Channel V’s rival MTV has a range of apparel and accessories as well as bed linen in collaboration with garment manufacturers. The channel launched a special series of cargo pants themed on its popular reality show Roadies. MTV’s focus is on offering a slice of the brand to loyal customers and on offering clients new ways to engage with the target audience, says Aditya Swamy, vice-president, marketing, MTV. “It’s a successful way for marketers to engage their audience. Our brand is an entertainment platform and has a loyal following among the youth. For marketers who want to reach that target group, we offer 360-degree solutions," he adds.

The channel creates marketing activities for clients — ranging from ground activation, digital platforms and creating marketing campaigns, including conceptualization and execution. “We did MTV Nivea What’s Your Sport at 100 spots across three cities. We created MTV Dhoni’s Eleven for Brylcream," he says, citing two recent examples. MTV has a co-branded credit card with Citibank India and has created an online platform called Roadies Battleground for Sony Ericsson India. It also created campaigns for mobile service network brand Vodafone and Lux soap recently.

According to Swamy, 25% of MTV’s revenues come from such activities.

Admittedly, the market for such branded merchandise is limited. Star’s D’Sa says a study her firm did last year with consultant KSA Technopak estimated the market for such products to be worth Rs350 crore annually. She declined to say what percentage of Star India’s revenues come from licensing and merchandising activities. What is interesting, however, is that such a division is unique to Star’s India operations, though the network has an Asia-wide presence. “India has huge potential for growth in these areas," D’Sa says.

That potential is what Jiggy George is also excited about. The executive director of Cartoon Network Enterprises, the branding and merchandising arm of Cartoon Network, says the potential for growth in this segment is unlimited. His firm markets characters owned by Cartoon Network, such as Dexter, Johnny Bravo and Powerpuff Girls, and also represents third-party characters, such as Bob the Builder and Thomas the Tank Engine, in India.

George started licence and merchandising activities in India in late 2003, starting with promotional licensing, jargon for lending cartoon characters for third-party products. “In five years, we have done at least 50 promotions," George says, citing collaboration with brands such as Bharat Petroleum Corp. Ltd, Britannia, Frito-Lay, Citibank, ICICI Bank and Red Label tea. “We closely study children’s behaviour and it was clear that they were influencing not only purchase decisions in the case of products for kids, but also everything the parents buy. So, if a BPCL petrol pump was branded with the cartoon characters the kids liked, they would push the parents to drive there." Cartoon Network Enterprises ventured into consumer products in May 2006, bringing to the market apparel, toys, stationery, gifts and novelty themed on its characters.

But it hit the jackpot with one product the firm was representing in India — Beyblade. The spinning top based on a hit Japanese anime series, which retailed in India for Rs350, had sold around a million units by February 2006, according to George. The firm repeated its retail success with Blazing Yo-Yos, based on the popular TV series Blazing Teens. George says that toy also clocked sales of one million. Priced between Rs150 and Rs300, the spinning toys also retailed through Baskin Robbins outlets.

On target: MTV’s focus is on offering a slice of the brand to loyal customers and suggesting new ways in which clients can engage with their target audience, says Aditya Swamy, vice-president, marketing, MTV. Kedar Bhat / Mint

Star India’s D’Sa echoes similar sentiments. “People always say licence and merchandising is big globally. In the US, you create a toy and you can instantly place it in the 3,500 Wal-Mart stores across the country. Imagine the scale you are able to achieve immediately. I’m having to do with just 40 Star Parivaar corners when I have a potential customer base of 40 million," she says, referring to the branded sections reserved for Star Parivaar products in Big Bazaar outlets.

For newer broadcasters, who do not yet have characters or shows with the kind of brand pull that established players have, syndicating expensive shows to broadcasters in different languages has emerged as a new, albeit small, alternative revenue stream. INX Media Pvt. Ltd, the broadcaster of the general entertainment channel INX, has syndicated two of its mythological serials — Jai Ma Vaishnodevi and Kahaani Hamaray Mahabhaarat Ki — to Chennai-based Raj TV.

The revenues from this stream are healthy, says Indrani Mukerjea, founder and CEO, INX Media. “At a time like this, when ad revenues are slowing down and getting further fragmented with increasing competition, any new revenue stream is welcome. Syndication can be big if you are able to produce content with global appeal, which is what we aim to do eventually," she adds. NDTV Imagine had earlier syndicated its popular serial Ramayan to the Chennai-based Sun Network.

“The only alternative to advertising is subscription, but unfortunately, customers in India don’t like paying for content. So, content owners would do well to explore every possible alternate revenue stream. Be it syndication, be it licensing to others or creating merchandise around your characters. These are still early days for all these activities but we are seeing more and more firms getting into it," says Farokh Balsara, who heads the media practice at consultant Ernst and Young.