While Zee Entertainment Enterprises Limited’s new Zee5 app is now number 5 on the Indian Google Play app store’s top entertainment apps, the company is yet to disclose any details on subscriber numbers. That number will be disclosed at the end of Q2 FY 2019, i.e., September this year, said Punit Goenka, Managing Director and CEO of ZEEL. In a call with investors, Goenka discussed various aspects of Zee’s digital business, primarily led by Zee5, which is a combined and refreshed version of the media company’s two erstwhile offerings, OZee and Ditto TV.
Zee5 is set to launch a slate of fourteen original shows, spearheaded by Karenjit Kaur, a biopic of actress Sunny Leone.
Comments during the earnings call
In a wide-ranging call, Goenka commented on several aspects of Zee’s digital business. Below are excerpts of his responses to analysts, edited for clarity and structure.
— On Zee5 marketing strategy: In terms of marketing, we were waiting for [Zee5’s first original show] Karenjit Kaur to be ready, and now you’ll see a significant marketing push not just for that but for the other shows. For regional titles, advertisements will largely be restricted to the local markets [where those languages are spoken]. We see different extent of success for originals in different languages — it’s a good sign for us to see that our content is working in most languages. (Goenka was answering a question from an investor wondering why Zee5 shows were not being as thoroughly marketed as Netflix’s Sacred Games.)
— Impact of JioFiber and cable industry consolidation: Structural changes in the industry are bound to happen. But multiple technologies can co-exist in an industry the size of ours. For a content company like us, it doesn’t matter. I have no doubt that Jio will be aggressive on FTTH. The cable industry will come under pressure if Jio takes 50 million customers away. They need to act. But how do things in my context? They don’t. Just like DTH came along and nothing happened to us, the same will happen for FTTH. As long as our content works, it doesn’t matter. Consolidation is a positive thing because the discount on subscription revenues as a result of the fact that we have so much competition [among cable and DTH services]. If there is consolidation, ARPU focus will go up and we’ll see accelerated growth.
— TRAI tariff order impact: TRAI’s tariff order brings uniformity to tariffing and that’s why ARPU will go up. Otherwise, the entire value chain of the industry doesn’t work. You have local cable operators making disproportionate money while direct-to-operator businesses are suffering. Telecom is a one-pipe business while content is so diverse — no one player can control all the content that consumers want.
— Global expansion of Zee5: Zee5 will be available globally by end of the fiscal year 2019. [On international digital advertising cannibalizing TV ads,] if Zee5 subscriptions cannibalize existing subscription revenue abroad, I would be very happy with that. This way we have a direct relationship with the customer as opposed to going through a distributor.
— On JioTV revenue: [Deals where Zee channels are livestreamed on apps, are] restricted to handsets, we’re not even giving those services rights to cast the content onto their TV screens. The stream is married to the SIM card, and can’t leave the device. It’s very different from a household consumer [from who Zee gets subscription revenue]. JioTV and Airtel TV revenue is minuscule.
— Zee5 subscription goals: If at the end of 2–3 years we have 3–5 million paying subscribers, I’ll be very disappointed. [On on-boarding customers] It happens in a gradual way. As we launch more and more content, more consumers will come onto the app. The trend I’m seeing is very linear because consumers come in and discover content and play around with the app. Time spent by users on the app is increasing per session month on month. Absolute numbers are going up too. (Goenka was answering a question on whether Zee5 will grow subscribers in spikes or at a consistent rate.)
— On telco deals for Zee5: Until I get the right value for telco deals [where Zee5 content will be shared on apps like JioCinema and Airtel TV] we will not sign onto them. (Competing apps like ALT Balaji, Eros Now, Hooq, Viu, Hotstar and Sony Liv all have telco deals where they syndicate their apps’ content to telcos’ own aggregator apps.)