By Simran Sabherwal
Group CEO Sudhanshu Vats has been in the driver’s seat of Viacom18, the 50:50 joint venture operation in India between Viacom Inc and the Network18 Group, for close to a year-and-a-half now. He lays down his game-plan for the company’s growth and tells us that he believes driving synergies within the organization is key to its success
Among the first things Sudhanshu Vats, the amiable Group CEO of Viacom18 did when he took charge at the firm’s Andheri headquarters in 2012, was to clearly define the four key strategic pillars on which he would peg the company’s growth. Thus, sharper segmentation, building ecosystems to yield alternative revenue streams, creating synergies within the Group and moving decision-making from gut to insight became his avowed focus areas for the company. Since then, the six-year-old firm has grown at a compounded annual growth rate of over 23%. Vats happily states that it is the company’s first PAT profitable year and that is big news for Viacom18. “We should build on it as we go forward because all sustainable businesses are built profitably; if you cannot build a business profitably, you can’t build it sustainably, that is the key area,” adds Vats.
Q & A: ‘A media organization should be run like a consumer goods business’
CATERING TO A CUSTOMIZED AUDIENCE
The media conglomerate which broadly operates across three verticals – broadcast, films and distribution – has global brands in its portfolio courtesy its parentage but Vats believes that though the company has made some progress on its stated agenda, there is much more that needs to be done. He explains, “You need to stay with good strategies for a long time and I am not going to reassess some of these midway. As we go forward, we are going to continue to strengthen them.”
With demand for customized content rising across multiple screens, accompanied by cable digitization, the pipeline will have the capacity to carry more content. Based on this insight, Vats believes that sharper segmentation is the need of the hour. Starting with the children’s genre, where the other international giants Disney and Turner are leaders, Viacom18 added two more channels to its bouquet, taking the number to three. While the marquee Nickelodeon caters to kids in the age group 4 to 14, the new channel Sonic focuses on kids above nine with content that revolves on action and adventure.
The media firm also leveraged its Viacom parentage for content to launch Nick Jr. for pre-schoolers. The company is experimenting in the music genre, an advertisers’ favourite, with the launch of MTV Indies to promote independent music, art and theatre.
Viacom18 also finally launched Rishtey, its second Hindi GEC (launched first in UK in 2012). However, the pace of launches has been slower compared to its competition, particularly Star and Zee, that have aggressively launched channels across multiple genres in the same time span. With Hindi GECs accounting for 30% of viewership, it would be interesting to see how Rishtey fares in the second GEC space when compared to Life OK (Star) and Sab TV (MSM).
However, it is Colors, the money spinner for the group, which is in the news for all the right reasons. Vats talks with great pride of the channel’s experimentation with different sub-genres to launch the ratings killer, Comedy Nights With Kapil and the critically acclaimed investigative series, 24. This partly helped the channel maintain its second place for most of 2013 in the TRP race, behind market leader Star, but ahead of Zee.
MORE REVENUE STREAMS & SYNERGIES
With building ecosystems being the second strategic thrust area for Vats, the agenda was to strengthen brands across touch-points with an emphasis on creating a 360-degree experience. Brands were leveraged to create experiential live entertainment shows such as MTV Bollyland, a dance music festival, Vh1 Supersonic, an Electronic Dance Music (EDM) festival directly taking on Percept’s well established Sunburn in Goa, Comedy Central’s Chuckle Festival across three cities, to using popular characters such as Dora The Explorer to increase engagement with children through the kids’ theatre, Dora’s Pirate Adventure, an animated musical. While the contribution from live Viacom18 events is still small, the company is betting on this being a significant revenue generator going ahead. Leveraging to full extent the strong brands in its portfolio, strengthening the consumer products business and expanding the franchise line is another key area.
Branded solutions is seen to be another potential revenue generator, with MTV tying up with FMCG major, Hindustan Unilever, to promote branded films. With top-notch Bollywood filmmakers on board, these short films aim to provide brands with a platform to convey their message effectively and build a deeper connect with the viewer. The other significant move in this space is the partnership with Pepsi to launch Pepsi MTV Indies, making them among the early movers in the space to launch a cobranded channel with an advertiser, after NDTV collaborated with Kingfisher for NDTV GoodTimes and more recently with MicroMax and other sponsors for NDTV Prime. Vats says that these tie-ups help brands connect with the consumer and in the case of MTV, the music channel’s strong understanding and connect with the youth is what brands are looking for. He adds, “I am very happy with this partnership because it is one which is useful and good for us, but also equally good for Pepsi.”
Leveraging prime assets to bring in scale and efficiencies, Viacom18 replicated its tent pole programme Bigg Boss on Colors, on two of its regional channels – ETV Kannada and ETV Bangla. Literally sweating the asset, the same set was used for all three shows. The same idea was extended to the Indian version of the reality show, Dancing with the Stars (Jhalak Dikhhla Jaa) which was turned into an advertiser funded programme, MTS Takdhimita Dancing Star on ETV Kannada. Besides this, Viacom18 is now operationally managing its five regional bouquet of channels post the merger of Network18 and Eenadu Group channels.
THE POWER OF ‘ONE VIACOM18’
Further driving synergies within the entire Viacom18 Group are four core values laid down by the company stating the vision, mission, five-year goals and the matrix by which it will be measured. To build on this, ‘One Viacom18’ was conceptualized and the entire top management, across the group, was entrusted with driving synergies in the organization to become one. Further building on this, and to increase interaction between teams, cross functional teams of eight to 10 individuals from different streams were set up to discuss common themes, issues within the company and how they should be dealt with. The top management has also been assigned a scorecard with a set agenda of goals that he or she is supposed to deliver that year.
Viacom18 operates two channels in the English entertainment genre, VH1 and Comedy Central. With the distribution issues of Comedy Central solved, Vats is satisfied with the performance of both the channels and says that it is a genre where they are looking to do much more. The English genre saw viewership increase by 40% post Phase I and II of digitization and networks are now looking at premiumization to drive a subscription based model by offering content almost immediately after its telecast in the US.
In contrast, a lot of content on Comedy Central is time-tested and the aim is to provide a mix of new and old content going ahead.
INSTINCT VERSUS DATA
Being a former FMCG marketer, data is a big priority for Vats. He believes, while creative ideas still come from one’s gut, the focus must be on data to make decisions. He says, “Data has the ability to make ideas powerful, make them sustainable and we use data to chisel these ideas, in a manner of speaking to polish uncut diamonds.” Helping Vats is a small strategy cell that works closely with him along with a small team for analytics based on data.
MOVIES: THE BIG PICTURE
Over the last few years, the movie arm of Viacom18, Viacom18 Motion Pictures, has had a golden run at the box office with a strike rate of 50 to 60%. With the ‘heart of the strategy’ being on newer genres and differentiated content in small to midbudget cinema, the company has literally struck gold at the box office with hits like the recent Queen, Kahaani, Special 26, Chashme Baddoor, Bhaag Milkha Bhaag, Madras Café, Gangs of Wasseypur – Part 1 and 2 and OMG - Oh My God! in the last couple of years. In the initial years, the firm focussed on big budget movies like Kidnap and London Dreams with disastrous results. The focus now is clearly on content and not stars. Though Vats believes the film entertainment business has a lot of potential, he notes that the business model is skewed to unduly rewarding only the top talent – male and female lead and director.
He believes that there should be a risk weightage of the reward linked with the success of the film instead of big rewards upfront. Vats says, “We would like to do cinema where there is greater emphasis on good content and build a business model where there is a balance between the reward for both the creative force as well as the people who have invested in it.” He adds, “I am unhappy with the profitability of the business and have to get the balance right. We dabbled with some big movies which did not do well and if we are more disciplined, focus on content-led cinema, are ruthless on costs and have transparency, we will be able to do better.”
CRYSTAL-GAZING FOR VIACOM18
While the other three major GEC players, Star, Zee and Multi-Screen Media (MSM) have entered the sports genre, Vats says that Viacom18 is not looking at this genre simply because there are no clear synergies as both its parent Groups are not in the space. The other missing link in Viacom18’s portfolio is a movie channel. While there have been intermittent talks, Vats says that with rising costs of satellite rights, the investment made in acquiring a film is very high and the return on investment very weak. While plans for a movie channel may currently be on the backburner, what also needs to be kept in mind is that in terms of viewership, Hindi movies are the largest genre after Hindi GECs. A quick look at numbers shows that acquisition costs for movies have gone up substantially over the last few years. While the other players can leverage a movie played out across multiple channels, Viacom18 until recently had only a single platform, Colors for the same. While a world television premiere can guarantee a bump in rating, as seen in the case of Chennai Express, which was acquired by Zee for upwards of Rs 400 million for seven years and got a TVT of over 19,000 on its first telecast, Vats says, “While movies should be there, the numbers and costs need to be constantly evaluated. The same investment can be better utilized in series, non-fiction and judicially made into some movies as well. Having said that, we need to keep revisiting them and if it works for us, we will look in to it.” On a final note, Vats adds, “We will continue to bring in new offerings but we will make sensible investments and drive profitability. The game-changers for us will be to drive synergies within the company, capitalize on our assets and aim to become the most admired organization in the media space.”
Feedback: simran.sabherwal@exchange4media.com
