In 2016-17 (FY17), Zee Digital Convergence Ltd, the company that houses two of the Zee Group’s digital businesses – DittoTV and OZEE – reported a turnover of Rs 18.9 crores, and a loss after tax of Rs 45.1 crores, according to the Annual Report from its parent company ZEEL, which houses the Zee Group’s entertainment businesses.

This is a significant change from a turnover of Rs 46.4 crore, and a loss after tax of Rs 32.3 crores that the Zee Group reported for FY16. Zee had transferred Ditto TV and its digital business into Zee Digital Convergence Limited in FY16, and had launched OZEE towards the end of that financial year. Zee Digital Convergence Limited, prior to this transfer, was called Zee Sports Limited.

Refreshing Zee’s digital offerings

“We are in the midst of refreshing our digital offering,” ZEEL said in the Annual Report, “consolidating the learnings from our subscription and advertising based platforms. We will be launching this product in the second half of the year.” Zee has two key digital products:

  • OZEE is an advertising video on demand (AVOD) platform, which allows the viewers to watch all of Zee’s content on the go, including TV shows from ZEEL, music from Zee Music Company, and movies in Hindi and regional languages. During the fourth quarter of FY17, the platform witnessed an average of more than 50 million video views per month.
  • DittoTV, a subscription based video on demand (SVOD) platform, launched in 2012, offers over 90 live channels and seven days of catch-up content. “It is the live TV offering for the subscribers of major telecom operators”, Zee said. Things changed significantly for DittoTV during the year: it was relaunched at a much lower price of Rs 20 per month, and tied up with telecom operators for billing and distribution, including with Airtel, Vodafone, Idea and BSNL. These alliances drove “a strong growth in subscriber base. These alliances give access to subscribers in smaller towns, which are likely to drive the next wave of digital consumption.” Ever since it announced that it will rework plans for DittoTV, Zee has stopped releasing figures.

So, what is this revamp going to look like: a platform that combines the advertising and subscription businesses – DittoTV and OZEE? Zee is already doing that with its global digital strategy. In May this year, the company launched Z5, a global platform which consolidates its Subscription and Advertising video on demand platforms. Running those businesses separately never made much sense anyway. In comparison, STAR India’s video streaming business HotStar runs a freemium model: an advertising supported free service and premium content behind a paywall. The number of platforms operating India is large, from Netflix, Amazon Video, to ALT Balaji, Hungama, NexGTV, Yupp TV, among others.

On global content aggregators like Amazon and Netflix entering India, Punit Goenka, CEO and MD of ZEEL had recently said that “the amount of content that they are making is a fraction of what we are making. As I just called out, we do over 360 hours of programming in a week. For anybody to start doing that, it is not an overnight game in my view.”

Growth in broadband has been helping, though: “Content consumption on both our OTT platforms, OZEE and DittoTV, saw significant growth”, the company said in the annual report. “Online consumption of video content has surged”, it added, “and the trend is likely to continue. Despite the drop, because of low pay television ARPU, the total cost of watching video online still compares unfavourably with television. Low penetration of wired broadband is another limiting factor for wider adoption of online entertainment.”

As we mentioned earlier this year, Zee plans to do original content as well. Punit Goenka had said then:

“I think it is essential that you have some original content on the digital platform, whether it is only produced for digital platform or it is produced for multiple platforms is a question that one can ask. We will be investing in the original content for digital platforms, or what I like to call Digital-First content. The quantum, etc., again, we can talk to you about it in quarter two.”

Interestingly, Amit Goenka, CEO International Business for ZEEL, said in an interview published in the Annual Report that he expects consolidation in the video streaming business: “This will also lead to players finding their own content niche in which they would want to operate. We have our own strategy in place and are geared to create a distinct positioning for ourselves despite the cluttered market.”

Goenka also feels that digital and TV will complement India: “In a market like India where television penetration will continue to grow for years, it will remain the primary medium of entertainment for majority of the population. Digital allows content consumption on the move and is adding to the overall video consumption. Even in evolved markets like the US, television advertising is still growing despite the increasing share of digital. While we see growth in both the mediums, digital will grow at a higher rate over the next few years in India,” he said.

Download the annual report here.