Zee Entertainment Enterprises Ltd MD and CEO Punit Goenka doesn’t believe that the company’s content deal with Reliance Jio allows mirroring of the content on TV.

The JioPhone that Reliance Jio announced earlier this year, and has subsequently launched, comes with a cable which allows mirroring of content on TV. While most Android phones allow mirroring of phone screens on connected TVs using Google’s Chromecast technology, Android phones are relatively more expensive than the Rs 309 that the JioPhone is priced at. There’s potential for serious disruption of TV here, given that Jio includes content in its costing for users. An analyst asked Goenka about whether the JioPhone thus threatens the Zee TV groups subscription income.

To this, Goenka said that their “current content license deal is only for streaming on their mobile handsets or mobile devices. They have to be paired with a SIM card. The cable that they have launched, we have not provided them rights for that for streaming to television as of now.”

A couple of points here: firstly, it’s inconceivable that a contract would be such that it prevents a screen from being cast to another screen, or that Zee would have inserted a clause that prevented casting of the device screen on another screen. Secondly, just because the contract is for mobile handsets or devices doesn’t mean that the device screen itself cannot be mirrored on another screen. The content is still linked to a SIM card. The only way for Jio to prevent this mirroring of the screen on TV would have been to prevent mirroring of this content via the app on the JioPhone. As of now, and we checked, nothing prevents a Reliance Jio user from mirroring content on a TV using any other phone. Why would they prevent that with the JioPhone?

The real question is, will Goenka try and enforce his interpretation of the contract with Reliance Jio and try and prevent mirroring of the screen in order to protect his subscription revenues?

Responding to another question in Reliance Jio and its impact on TV viewership, Goenka said that the 10GB per month consumption that Jio talks about includes viewership of Zee content, and advertisers benefit from that, but also that they haven’t seen an erosion of TV viewership yet. He added that India is “a 94% single TV household market and therefore all the consumption that we are seeing on the digital platform is driven by out-of-home consumption or incremental consumption as we call it over and above the TV consumption.”

“So if you look at even when Reliance Jio was giving data free, vis-a-vis what they are doing, now that they are charging. Even in the free environment, the TV consumption which stood at 158 minutes is still intact. It has not moved at all. So, therefore, I don’t see it impacting television in a big way.”

Z5 plans: Content acquisition, impact on international biz

Zee’s new digital platform Z5 will launch in the second half of this financial year. Those subscribed to OZEE and Ditto TV will be upgraded to Z5. Z5 will have both advertising and subscription based models, and “how much is advertising and how much is from subscription will vary.” OZEE reported over 115 million video views per month during the quarter. “DittoTV continued to see improved traction, leveraging its partnership with telecom operators.”

Goenka is very emphatic about the content that they’re planning for Z5, saying that “In terms of content, for now, I can tell you it will be completely unrivaled amount of content that we will put on the platform, which no other OTT platform will be able to match”, adding that “all of the content that we create internally will be exclusive. All of the content that we produce in terms of films going forward will be exclusive. In terms of content that we have licensed from international studios, could be exclusive or non-exclusive depending on the kind of deals that are coming.”

He did, however, concede that Zee has some catching up to do here, saying “It is still quite early days, but we have some catch-up to do compared to some of our competitors and we are gearing ourselves up for all that.”

Goenka did agree that Z5 subscription business might have an impact on international subscription revenues. “…international subscription revenues for the South Asian business will be stagnated or start degrowing in the future and digital will be the answer for that going forward for us.”

Zee accounts digital subscriptions as a part of its overall subscriptions. Thus, “As and when deals do get signed with telecom operators or get renewed with the telecom operators, there will be a bump up in subscription revenues.” The digital subscription is still a smart part of Zee revenues, though.

An analyst pointed out that Zee’s inventory has increased to Rs 2000 crores, from around Rs 700-800 crores from 3-4 years ago. Goenka said that 3 years ago, Zee’s strategy was to focus on Hindi films. Now they’re expanding to different genres, and “need to be aggressive in buying films in the regional markets as well.”

More pertinently, Zee is also “consolidating digital rights as part of our acquisitions. So while they may reflect only satellite, a large part of that inventory also carries digital rights along with it. So it is a consistent strategy for us. It will be lopsided in the next 18-24 months maximum and then it should plateau out”.

Other notes from the conference call:
– TV advertising: was negatively impacted by GST: there was a temporary pull-back in ad spends in the first half of the quarter, but returned. Domestic ad revenue grew 5.8% year on year, and subscription revenue grew 7.2%.
– Zee Music: registered 2.6 billion views on YouTube