Ronnie Screwvala's Outlook For 2009


An Internal Email sent to UTV employees. Reproduced at MediaNama with permission from UTV. Email via PressTalk.

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To Everyone in TV Content, Motion Pictures, New Media, Bindass & World Movies and Hindi Movies Channel & UTVi Business, and at India Games, Ignition and True Games; and all our colleagues in Finance, Ops, Legal, BD, HR and IT

Firstly – The Very Best for 2009

Secondly – Don't try reading this on a Blackberry – it's a longish one.

When I sat with about 90 of you – in November '07 at Sahara Amby Valley – where we revealed our aggressive growth plan for all of 2008 & 2009 in Movies & TV along with our entry in Broadcasting and New Media & our further consolidation in Gaming – I did sum up the first day session – by saying "2008 is going to be our toughest year till date" – and to many there it seemed strange … as here we were embarking on such ambitious plans – with teams in place.. but it was that precise reason that I shared a word of caution … as also that the "bubble" in Media, the Stock Market and elsewhere was crossing its limits – but I don't think anyone including myself anticipated the carnage to follow… and just how bad it would get.

So I can see – for most of us – 2008 is a year we would be quite happy to leave behind. But 2008 for UTV has been much more a year of Achievements, of Opportunities seized - of Growth and Consolidation and of Successes and of Great Learning than it has been of Disappointments and Setbacks – lets take a look.

BROADCASTING – (Entertainment): The entire Broadcasting space has gone through a massive correction (deservedly so). We picked the "Specialty and Focused Channels" route instead of General Entertainment – and have not fared badly at all especially looking at what's going on around us. I believe we saw the slow down coming as much as everyone else – but – were the first to face up to it and take corrective action (albeit with some mud in our face) in both costs as well as spend and investments. So let me put this into perspective.

Today, at a combined average 80 GRPs (and its higher once we segment it to our core audience) – our Bouquet already crosses many GEC channels and above entire segments in Broadcasting. I believe – now – we have the best "cost" and burn model in Broadcasting.

So only as an illustration – I have taken the NDTV Network with all its 8 Channels (incl New – Lumiere) – built over the last 7-8 years – with a Cost and Loss Model almost 10 times ours – and see how we stock up against it within just the First Year.

(Two clarifications: (a) Have picked NDTV just as an "example" so all of you can benchmark – with something you are familiar with out there AND (b) Have picked Ratings with no – "Slice & Dice" – as in narrowing the segment or cities – its all Hindi speaking markets – HSM - and 4+ Audience)

Take a look:
CS 4+ HSM GRPS CS 15 to 34 ABC HSM Youth Skew
Channels GRPs Channels GRPs
Bindass 16.09 UTV Movies 43.85
Bindass Movies 19.03 World Movies 1.38
UTV Movies 35.36 Bindass 22.27
World Movies 1.46 Bindass Movies 22.92
UTVi 0.6 UTVi 0.92
Group GRPs 72.54 Group GRPs 91.34 126
Channel GRPs Channels GRPs
NDTV 24x7 2.8 NDTV 24x7 3.78
NDTV Good Times 0.78 NDTV Good Times 0.94
NDTV Imagine 64.72 NDTV Imagine 72.09
NDTV India 15.26 NDTV India 17.54
NDTV Lumiere 0 NDTV Lumiere 0
NDTV METRONATION 1 NDTV METRONATION 0.67
NDTV Profit 1.85 NDTV Profit 1.66
Group GRPs 86.41 Group GRPs 96.68 112


I would say – it's a good start – to build on in 2009.

BROADCASTING – (News): There have been many skeptics and pundits of doomsday - in this last year – who have asked me – "why are you in this space" – and hand to my heart – there have been moments on some days – when I have introspected on that decision – BUT – when I see the complete passion and the commitment and the zeal of wanting to prove something and "arrive"… with which the Team has worked the last 9 months – and when we all look at where we have come in such a short time – we are the No:1 Business Channel in the Business Capital of India – (Mumbai) – no trick statistics to establish that – for 5 consecutive weeks now – then the introspection is only – "Where do we take it from here" ...

Of course, - this is the most challenging time to have launched a Business Channel – the Financial and IPO markets are in a mess and we are facing the biggest Advt. cut back in decades – and we are caught in that very unfortunate time warp of all this – but that's our challenge for 2009.

TV CONTENT: It may appear to be operating in its customary low profile manner – but Air Time Sales – has close to doubled its Revenues and for the first time we have our own produced shows across South India – TV Content has had some good high profile shows on Zee, Colours and others – and Dubbing – aside from servicing many clients – has delivered superb Dubbs for Bindass Movies – to make it the No:(1) Hollywood Channel in India – past Star Movies and HBO.

NEW MEDIA: Our newest but busiest Vertical – it has launched an entire Mobile and Internet Digital play – aggregated a strong Library (mostly in regional and focused language space rather than the expensive Hindi language acquisitions) – steered our India No: (1) Technology WebsiteTechtree.com to expand and consolidate – and launch UTVi.com – our Finance and Business portal in conjunction to the News Team – and all of you have been getting mailers on what we achieved at UTVi.com – including overtaking Yahoo Finance since launch 8 months ago.

GAMING: I am sure almost all of you – in India – have no clue what our Gaming Vertical does – which is no surprise as am sure – all of Ignition/India Games and True Games know little or nothing of what's going on elsewhere at UTV.

- INDIA GAMES - (Mobile/GOD): Has almost doubled its size of Business this year – consolidated its India Leadership positioning in Mobile Gaming – and has stayed the course on building the only Subscriber based Games on Demand – On Line model in India today.

- IGNITION - (CONSOLE GAMING): While it's maintained its share in Publishing of Games till Dec.'08. We will between Jan-March'09 see the Release of three high profile titles – a) Vampire Rain b) Blue Dragon c) Metal Slug

– But its main focus has been on the 3 IPs being created for a late 2009 and into 2010 release. The depth of Talent in our Tokyo Studio and the Passion and Zeal in our Studio in Gainesville (Florida) coupled with the Experience of our Ealing (London) Studio – and backed by the reactions we got at our "First Peep" we did a fortnight back in California and Seattle – is going to make this a very challenging yet hopefully rewarding next 15-18 months – and for UTV too – we have a LOT riding on its combined success.

- TRUE GAMES - (On Line): A ground up start up for us – kicking off as recent as Sept.'08 – has gotten off to a great start – the model being - creating original IPs for On Line games – for a world audience – creating our own MMOG platform in the US and in Turkey – and syndicating our Content to leading On Line platforms worldwide. Our Revenue model is micro transactions and syndication and the clock is ticking for a first 6 months of 2009 Launch of all of the above. Log on to www.truegames.com.

On Line Gaming is growing rapidly – much more than console – and many of you would know that in China and Korea – On Line and MMOG On Line is bigger than Console. Hubbed in LA – TG has put together a fab team and again is going to pleasantly surprise all of us by late 2009 and all the way into 2010.

MOTION PICTURES: We stayed the course on our strategy with – (a) strong scripts, (b) committed and long term relationships with Talent and Directors and (c) strong Marketing and belief in our Movies – and in 2008 that paid off and as a Brand and as a Studio I believe 2008 has been our "arrival" year. We also had, by far the best run this year – any studio could ask for – our bigger canvas movies – Jodha/Race/Kismet and Fashion rocked but it was our smaller movies that became the sleeper hits – not one, not two but almost all – and the combination of the Big and Small has earned us our Moment in the Sun in 2008.

As much as our Content struck out – so did our Marketing, Distribution, Syndication and Revenue Teams – push the envelope, pioneered and innovated. I would say it was our firm belief in and marketing push on Jodha that steered it through of its slow start in week one – to become the Big Hit it turned out to be – as much as in Race – the team sensed the opportunity in aiming for a very high opening week and marketed the film accordingly. This year they also re-defined syndication of movies to TV Networks and pioneered the true model of VOD/PPV of Premiers across DTH operators – with "Oye Lucky". Motion Pictures also took a calculated gamble in co-Producing with Fox – "The Happening" and it paid off – as it crossed 160 million $ in just Theatrical BO – with Home Video & Television just starting up.

But its bed rock of work in 2008 – and still to be tested – is to ready a very attractive slate for 09-10.

So all in all – I would not write off 2008, and before I share what we could be looking forward to in 2009 as well as challenges in the year – let me bore you with some of my MACRO views – (A) The World (B) India (C) Media & Entertainment

(A) The World:

- We clearly have not seen the worst – it's yet to come

- The US with its multi trillion $ economy is not going to be wished away – nor marginalised and so its recession will have a world impact

- In the US – with Housing over mortgaged beyond logic – with all of us Banks Technically Bankrupt – with the average consumer changing its spend habits from "twice" their income – thanks to the magical credit card culture – to now complete conservatism – and with its iconic auto giants down on their knees courtesy decades of no innovation or disruptive thinking … there is little light at the end of this tunnel – for some years.

- Notwithstanding the "OBAMA Hope Wave" – all their stimulus packages are going to be funded by even larger Trade Deficit and Borrowings from the Chinese, the Arab world (if they still wish to - after last weeks treacherous attacks by Israel in Ghaza) and the Japanese – which will have its own mid to long term costs and quid procos.

- UK & EU were already a continent in very slow growth – insulated temporarily with a strong common currency – the Euro – and is clearly affected by the global downturn and may see zero growth for close to a decade – barring a few Eastern European or other countries.

- Japan has huge challenges – returning itself from close to recession – and will find some relief in a very strong Yen.

- There will be some stand alone nations that could be least impacted by overall slowdown … like Korea and a few others.

- Dubai – which as a city is to the Middle East as Hong Kong is to China – is on the brink of bankruptcy – only to be bailed out – if not taken over by Saudi Arabia.

- So then all Eyes are on India, Russia and China – and for that my views are that China will make it - as while it grew its position of "Exporter" to the world, it also took strong steps to build a large domestic market and being one of the largest destinations for Foreign Direct Investment. India – I am afraid has many challenges (have expanded on that later) so its going to be quite a while and a lot of affirmative action before it can be benchmarked with China – (except only that it's a much easier country to do business in – comparatively). Russia – again has stepped a little into political oblivion and its just not got the power as on Economy – with oil prices at 35$ a barrel Vs the time it was 140$ a barrel.

(B) INDIA :

- Its an Election Year – and we have an enraged Youth committing to vote for the first time – which is great – but the outcome therefore uncertain and enough to have a cloud over most things till May/June'09.

- The Government will have to commit serious spends to make India Secure

- Any further terror incidents will have a negative impact on the economy – only because it will reflect we are Nation – not in control.

- Thankfully there is absolutely no threat of war – and normally one hears that from the PM/HM/DM but in India we hear it from TV Anchors with a mandate to sensationalize.

- Stock Markets are not the best benchmarks for the Economy – but unfortunately it does dampen sentiments and growth.

- Real Estate, Retail, Banking were serious growth drivers for the service Economy – and so its acute slow down, coupled with overall consumer spending down - will have its impact.

- Lastly the serious differentiators for economic fast track growth vis-a-vis China remain strong – namely

(a) Lack of Political will and mandate

(b) Serious lack of any infrastructure – for eg. most of our cities and towns have power shut down for half of waking hours ... (c) Serious commitment to Education – as we may brag of being the youngest nation – but that could turn out to be our long term challenge …… and many more.

(C) MEDIA & ENTERTAINMENT:

- Demand for the right kind of escapism will increase and so Gaming and Movies will be substantially recession proof

- Movies however will be more dependent on Ancillary Revenues and Less on Box Office – so a slowdown in Broadcasting and Retail will affect overall Revenues.

- In India – the recession for the movie industry will come in by mid 2009 – and more movies will not see a release. Mid Term this will be positive for the Industry and in the Short Term – only those that have Distribution & Release locked in pre start of production will see it through.

But the successful movies can actually get Bigger and so the slow down effect will be felt by many but not felt by a few at all.

- In a consumer recession – the first cut back by all is Advertising and most hit by cut backs will be Broadcasting which is 80-95% dependent on Advt.

- DTH – could be the savior in 2010 – as we could have 20+ million DTH homes by then – proving to be a good source of income for Broadcasting

- DTH will also change consumer spending for Content on the small screen and Pay for what you View can recharge the Content industry.

- Internet Advertising will grow – also because its much more measurable and 2nd to that will be Radio.

- Many Newspapers world over have announced that in a year or 18 months they will discontinue in physical form – and so I see print Advt. declining and could be a long term decline

- There's many more – but I will sum up with – many will be surprised to see forced consolidation and shut downs of business – something we have not been used to seeing since 1992 when it all started.

- Lastly – running your business, or doing your job the way you were in 2008 – will marginalize you - and those thinking with conventional wisdom or just saying – but that's how its done – is in for more than a rude shock.

- In short 2009 will only belong to the disruptive thinkers and implementers and multi taskers.

So Onto 2009 at UTV:

- The buzz phrase for 2009 is – "Disruptive Thinking and Multi Tasking"

- TV Content will consolidate its Air Time Sales model and scale up South TV Production and in TV Content we will do less for more – Big concepts or ideas and formats and own IP.


- New Media has to build UTVi.com and Techtree.com and utv@play.com – into leadership positions and a profitable business model around it. UTV as a serious player in internet has to be delivered early in 2009. Their challenge is - Focus and Top of Line Content offering.

- Bindass.TV & Bindass.ground and Bindass.com has to arrive as an accepted Youth Brand. Their challenge is .ground and .com is start up and they need to consolidate their position in TV rapidly and win over perception.

- India Games – is focused to reach a sizeable (75K+) subscription base for its Games on Demand while doubling its Revenue as a company. Their challenge is Marketing and Retaining their community and to get them to pay for Content.

- Ignition – stay the course on Publishing and these 12 months are critical for their creation of 3 World brands in War Devil , El Shadai andReich .

Their Key Challenge remains – that collectively the Team has to Market & Distribute – 3 multi platform Games in 6 months … but with a lot of lead time to pre plan.

- True Games – Launches this year and has set itself achievable yet ambitious targets and till date is well on track on all counts.

Their challenge depends really on the Content success.

- UTVi – has created an interesting position for itself but it faces clear uphill challenges to take on the market leader and the financial environment in 2009 is not going to help its model at all.

Disruptive Thinking – in Content to Sales will be the mantra 24/7.

- Motion Pictures: - has a better line up of a movie slate than it had in 2008.

Coupled with the Disney Movie Slate – its set for a release every alternate week.

Its key challenge remains rationalizing + re investing the rising spends in P&A; and the subdued TV Rights environment.

Here again, Disruptive Thinking to the fore in every aspect.

Other Challenges:

1) Liquidity – will be a challenge for all in Media and at UTV it will not be an exception. Half our business are in Investment or Start up mode in 2009 – and the ones that are not also guzzle cash for growth. Cost of Finance, a real cost will need to be factored in all our Verticals.

2) Build in Setbacks – but not a reason for slowdown or deviation of Goals set. This is a tough year – and so setbacks should not be a "surprise" agenda.

3) Focus: - Each of the Business has very clear Goals – a great and multi tasking team in place driving their business objectives. Wherever we can we will look for synergies – but 2009 is for each Vertical to cross their own Goals.

In 2009 – the Sum of the Parts will be Greater than the Whole – for our internal working.

For our Stakeholders – who have invested into all our verticals – they will view "The whole" and not the sum of parts.

So this turned out to be a longish note – but since many of us don't really know what the other is up to – I think it may be well worth the 2 hours it took for me to dictate this note.

2009 will be a year with its fair share of pressure and stress. We are slated to grow 75% this year over last year (and that was an 80% growth over the year before). The sensible but not appropriate step would be to slow the growth and rationalize – but the truth is the momentum was set in early 2008 and so its not down scalable – but I think we have all accepted this challenge and are preparing ourselves for "stretch mode" on many counts. Now the key is to feel exhilarated about it and hopefully have some fun doing it and knowing that the final outcome will be well worth it – especially when things get to a new level in 2010.

Once again – 2009 is a Year of Disruptive Thinking –

Best,

Ronnie

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An Internal Email sent to UTV employees. Reproduced at MediaNama with permission from UTV. Email via PressTalk.



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