With an increasing focus on original content, input costs for subscription video on demand services are set to rise, Balaji Telefilms has said in its Annual Report, adding that on an average, the cost of 20 to 30 minutes of fiction content on digital can be as high as Rs 12- Rs 15 Lakh (around $18,750-$23,450), which is almost twice of that of TV. Balaji Telefilms has been in the TV business for many years, and it’s understandable that they’ve got TV production costs firmly in check. Even back in 2007, the company was churning out 16 serials (and thus episodes) a day. Content factory, indeed.
On controlling costs, here’s what it said about how TV operates, in its 2002 annual report (pdf):
At Balaji, we bring a rigorous logistical and financial discipline to the business of storytelling. As a result, production costs and schedules are frozen even before an episode is. For a start, each director and project head was accountable in that they were required to maximise the number of scenes shot per day without comprising on their quality. To control the actors’ fees, the company worked with new and talented artists whose fees were more reasonable than those quoted by the established names in the business. Thanks to a far-sighted policy of backward integration, the company invested in recurrently-used sets, infrastructure and post-production equipment, resulting in a quicker payback. For instance, the company invested aggressively in the sets of Kyunki Saas Bhi Kabhi Bahu Thi and generated a significant value-addition over the prevailing average that translated into a healthy profit.
It hasn’t elaborated on what might have led to costs being almost double of TV, but one can only presume that it’s because it’s a different kind of content, the requirements for repeated usage of a set are lower, they’re occasionally with better known actors, and that each show appears to be very distinct from the other. The Annual Report also highlights ALT Balaji’s approach to content: “Hosting premium, high-quality shows featuring popular celebrities, acclaimed writers and award-winning directors”…and, working with known actors/directors, including “Nagesh Kukunoor, Juhi Chawla, Nimrat Kaur, Rajkumar Rao, Hansal Mehta, Sakshi Tanwar, Ram Kapoor, Atul Kulkarni, Sameer Soni, Yudhishtar Urs, and Dipannita Sharma Atwal among others.”
Others take a different approach. I remember once, the late Rajjat Barjatya telling me that Rajshri tried to keep production costs of their YouTube videos down to between Rs 2000-4000 each, but those where mostly of the Bollywood News, Cooking types of videos. Any less, he said then, and the video will lose money. Things have changed since then (around 3-4 years ago): videos get more views, more money is now in online advertising, and the subscription model has taken root. The Balaji kind of original content creation is a different beast, and will have higher costs.
Other notes from the Annual Report
1. Loss of Rs 12.68 crores: During the FY17, ALT Digital Media Entertainment Limited (ALT Balaji) reported a loss of Rs 12.68 crores, up from a loss of Rs 7.58 crores in FY16. Total expenses were Rs 20.53 crores, compared with Rs 7.94 crores the previous fiscal (where there were no revenues).
2. Subscription Video on Demand model is yet to gain traction in India: “due to low television subscription rates and evolving data and digital payments ecosystem”. However, this “is fast changing.”
3. Customer acquisition strategy: something that we’d pointed out in our analysis of the company, which reminded us of The Viral Fever’s approach to app installs:
4. Owning the IP: Balaji confirms in the annual report what we’d pointed out in an earlier analysis of the company: “Our digital foray is an opportunity to connect better with our customers and also own the content IP.”