As internal issues and the economic slowdown put brakes on Zee’s expansion plans last year, Punit Goenka, MD & CEO of Zee Entertainment Enterprises Limited, used the time to set his house in order. Now, with 23.9% growth in profits, he is ready to launch another Hindi GEC, Zindagi, and make more forays in the international market
By Simran Sabherwal
As a new government prepares to take charge in the country this Monday, an important talking point in the media is – will relations with Pakistan improve? Will cultural barriers be removed and will we see more interaction between the two neighbours? While it remains to be seen what direction Indo-Pak relations take, Zee Entertainment Enterprises Limited (ZEEL) has taken the first step to bring life across the border closer to Indians with the launch of a premium mass Hindi GEC – ‘Zindagi’, the content for which will be initially sourced from Pakistan.
Zee, one of India’s largest integrated media and entertainment companies, had gone slow in launching new products over the last three years amid the economic slowdown. Even as Star stuck to leadership position in the GEC space, leaving Zee and Colors to fight it out for the second spot, Zee worked on getting its house in order. Now, its latest offering Zindagi looks set to capture a new set of audiences, and as Punit Goenka, MD & CEO of Zee Entertainment Enterprises Limited (ZEEL) says, the network’s goal will be gunning for leadership position in the genres it operates in, as also being network strategy leader. “The reason you have not seen anything happen in the last two-three years, in terms of new products coming from Zee, was because we were getting our house in order. We had to fix the existing part before taking on anything new,” Goenka explains.
THE HINDI GEC PLAY
Zindagi will see the first ever national launch for a Hindi language channel and will present the best shows picked from across the border that embrace universal emotions. This will be followed by bringing in content from other markets like Latin America, Turkey and Egypt. While content will be initially sourced, the company is looking at producing content in collaboration or buying stories from markets abroad and producing them in India or abroad. It is estimated that the launch budget is Rs 80-100 crore, primarily for content and marketing. The channel proposition is ‘Jodey Dilon Ko’ – meaning that even if people across the globe are culturally different, the stories of their lives are universal. While Zee bets big on Zindagi, it will be interesting to see what are the lessons learnt from its earlier attempt at launching a Hindi GEC, ZeeNext, introduced with much fanfare in December 2007 but shut down within a year.
Besides Zindagi, the network also launched two new channels - a Hindi Free-to-air GEC, Zee Anmol and a premium movie channel under a new brand -&Pictures last year. In the pipeline is another Hindi GEC under the ‘&’ brand (reportedly targeting Tier I cities). With this, the number of Hindi GECs in Zee’s kitty goes up to six (including Zee Smile and 9X).
MOVIES – THE TICKET TO TRPS?
A big talking point in the media was Zee’s acquisition of the Hindi blockbuster movie, ‘Chennai Express’ starring Shah Rukh Khan and Deepika Padukone. While the movie opened with ratings of over 19,000 TVTs, industry sources valued the deal at over Rs 400 million for seven years. While terming Chennai Express was an exception to the rule, Goenka says that the time has come for the industry to have a relook at the movie acquisition strategy, “It is becoming unviable to acquire films,” he adds, “We have taken a conscious decision this year not to acquire any movies. We need to cool off and relook at how the movie acquisition strategy has to work for the industry. I certainly am not in favour of this kind of pricing going forward.”
Meanwhile, Zee has successfully managed to recover lost ground in the regional space. In the very competitive Southern market, while it is ahead of competition in Andhra Pradesh, it still has some catching up to do in Karnataka and Tamil Nadu. The company is looking to strengthen its reach in the Southern region before launching a Malayalam GEC, post which Zee will be present across all four major southern regional languages. Goenka says, “I am still very gung-ho about the Tamil market. It is not an overnight game, it is a long haul and we are ready for that long haul. We have grown that market significantly for ourselves but it is still very small. We will continue to invest there and post the success of Tamil; we will explore the Malayalam market.” Looking ahead, while the media conglomerate is not looking at entering other regional markets, it is exploring different genres within the existing regional markets that it is present in. Also on the cards, is a possible extension of the ‘&’ brand to the regional space.
NICHE, THE STABILIZING SPACE
With digitization kicking in, niche was the buzzword and Zee with an array of channels in this space was expected to be a big beneficiary post digitization. Currently, the English genre – Zee Café and Zee Studio are in a small niche that has done well for the group. The English movie channel, Studio, has held its own despite running second or third runs. The HD propositions have also paid off well, not only for Zee but for the industry overall. With four products in HD already on air, Zee is looking to roll out two more HD products soon and expects the HD space to be profit-worthy in future.
The group’s edutainment space venture ZeeQ is built with the strategy to put the interest of the child first. The proposition to get parents to encourage their kids to consume ZeeQ has mandated a restrictive advertising policy wherein any product that is in conflict with a child’s interest is not allowed to be on ZeeQ. However, Zee is looking at stabilizing its current offering and shutting down non-viable ones. Goenka says, “We have done so many niche launches and are looking to stabilze those first before we launch any new formats or genres. In fact, I am currently in a mood where I am shutting channels rather than launching new ones. We shut Zee Trendz a few months back and most recently we shut ETC Punjabi and I have another five or six channels which would be killed over the next 18 months.”
SPORTS IS A DIFFERENT GAME
The sports genre, however, has proved to be a proverbial thorn in Zee’s side. While its competition has accelerated spends in this genre and primarily focussed on cricket, Zee has looked to build a more holistic offering with TEN Sports. But concerns about acquisition costs have gone up dramatically over the years as there has not been a subsequent increase in what the broadcaster can charge the end consumer. As a matter of fact, Goenka says, “The sports business is affected by the way the overall industry is functioning. We were quite hopeful that with digitization and transparency coming in, things would have improved but the last mile has still not fallen in place. The price forbearance continues to be a big issue for sports where our prices have been frozen since 2003-2004. These are the issues that plague the industry overall and they have to be addressed if the sports business is to be turned around.”
IS DIGITIZATION A GAME-CHANGER?
Digitization was expected to be a game-changer but even after implementation of two phases, broadcasters are yet to reap the benefits of what was anticipated. Putting it bluntly, Goenka says, “In my view, digitization has not yet happened. While my expectations on subscription revenue are met, the industry is still bleeding. And if the industry continues to bleed, then sooner or later I will also bleed. That is what I believe in. Hence it needs to course correct very soon or else we are heading for Doomsday.” On what should be done, Goenka adds, “The delivery mode to consumer may have changed from analog to digital signal but until packaging is implemented and the consumer is able to choose his packaging, the entire value chain from broadcaster to the MSO to the LCO has visibility on each consumer and his choice of content. Thus, it is not working.”
‘VIDESHI’ YET DESI
Zee was among the first home-grown entertainment companies to look beyond Indian shores and also transitioned in the last few years from being a broadcaster to being a content company, creating tailor made content for several markets like the Middle East and Russia. With a presence already established in Malaysia, Zee is beefing up its presence in South East Asia and has just been launched in Indonesia and Thailand. With Vietnam next on its radar, the media conglomerate is betting on Africa to be its next big market to expand aggressively. On the business front, though the international business has shown growth, the subscription revenues have remained flat due to the focus on the South Asian business. However, all the non-South Asian businesses have seen tractions, especially on the advertising front, making the growth trajectory return to the international business.
ON THE DIGITAL FRONT
With multi-device consumption on the rise, the company is reaching out to consumers via its web portal India.com and Ditto TV, an OTT (Over-The-Top) distribution platform. First launched in 2012, Ditto TV has had its own share of teething problems and was re-launched earlier this month. With all the bugs worked out, Ditto, an online subscription service, currently has 3.5 million downloads and over 2,00,000 active subscribers and the rehashed product has also been recently launched in the international markets of US, UK, Middle East, and South-East Asia. With the right product in place, the company is currently drawing up its marketing plan which is likely to be unveiled over the next three to four months. While Ditto TV offers live TV, it is looking to build its video-on-demand (VOD) service aggressively.
Though the revenue generation from VOD remains minuscule, this platform could drive growth. “We have to build it in an aggressive manner. Today, our digital play has grown multiple folds and the number of ‘uniques’ that we get on a monthly basis is close to about 36 million which is probably the highest compared to any of my competitors.”
Goenka says, “The cornerstone of our expansion will be GECs and movies. After Zindagi’s launch, we will extend the ‘&’ franchise. The other leg of expansion is the international business. So, these are the core strategic areas that we are going to focus on for the next two to three years.
Feedback: simran.sabherwal@exchange4media.com
