(By Preethi J & Nikhil Pahwa)
Gaming contributed significantly to revenues – as much as 22% for Q4, and 18% for the full year ending March 31st for UTV Software, while New Media is still struggling to get off the block at just 2% of total revenues. UTV Software reported consolidated operating revenues for FY09 at Rs. 6769 million; Q4 Total Operating Revenues were up Rs. 2087 million, buffeted by Rs. 266 in other Operating Income, which was up from Rs. 71 million for the same quarter last year.
Clarity On Disney’s Stake in UTV
Disney currently owns more than 59% of UTV, while its voting is capped at 32%. The founder promoters have the option to buy back 22% tendered in the open offer.
For the 2008-09 fiscal, UTV’s gaming business recorded revenues of Rs. 1105 million, on an investment of Rs. 3493 million. The company reported an EBITDA loss for its gaming business at Rs. 131 milion. It’s worth noting that UTV expects the revenue contribution to gaming to increase in the 2009-10 fiscal: Games Content vertical for UTV will grow to contributing $150-200 million in revenue to the UTV Group within the next 18-24 months. Already, the contribution of gaming to revenues is higher than UTV had estimated in an investor presentation in February:
Mobile Gaming Supporting Games On Demand: UTV suggests that while the mobile division will grow well and deliver on margins, that money will be reinvested in the Games on Demand service. Mobile gaming appears to be supporting Games on Demand to quite an extent, it appears: UTV has said that if India Games would be a 10-15% EBITDA margin business but if it wasn’t for the money being re-invested in the Games on Demand subscription service.
UTV claims 60% marketshare for Indiagames, which the company says has grown 120% in 2008-09. They believe there is still scope for growth: “In Mobile, we believe India is the fastest growing market and Games on Mobile has hardly made its presence felt.”
Consolidation For Higher Revenue Share: UTV claims to have initiated a consolidation of the Mobile Content aggregators in India to move to a higher revenue sharing with telecom operators. “We need to take our mobile margins to 20-25% but for that the collective initiative with Telco’s has to work.”
All in all, UTV had deployed Rs. 464 million to buy stake in Indiagames, and no further investment has been made in the company.
Ignition and True Games
Disney’s gaming team has “started close involvement” with three of Ignition’s gaming IPs. UTV says that they would have invested around $50-60 million into three large and 2 smaller gaming IPs, for a global release, particullarly targeting North America, Japan and the European Union. UTV will unveil the three large IPs and one smaller one at the E3 trade show in LA. They’ll be released in the 2010-11 fiscal and UTV plans to seek co-Production and distribution partners by September 2009.
True Games will launch their own MMORPG platform in USA and Turkey in Q2 of the 2009-10 fiscal. Between True Games and Ignition, they have a creative team of over 200 people in London, Florida, LA and Tokyo. UTV is eying $150-200 million in revenue from gaming within the next 18-24 months. They’ve suggested that the MMORPG business is a 25-30% margin business.
So far, UTV has invested Rs. 510 million in True Games. In case of Ignition, they have put in Rs. 2.5 billon for 70% stake, working capital, and in the 3-5 IPs being created.
During the year, UTV New Media acquired the digital rights for 10-12 Tamil language films and a Bengali catalogue. UTV has so far spent Rs. 40 Crore towards New Media for licensing of Digital Content and creation of Web Portals. New Media is expected to be profitable in 2009-10.
Business new website UTVi.com is ranked as the #2 finance business portal in the
country, racing by Yahoo Finance and Myiris.com, the company reports. The website saw a dip in page views during February to 5 lakh views but March brought an upsurge to 8 lakh views again. The site has also recorded an unusual spike in pageviews per visit to 25 in March after a dip in February to 14.