“YouTube is now probably in the range of 40-60% of the digital revenue and telecom is about 10%, the rest [of the digital revenue] is a combination of syndication and ShemarooMe,” Hiren Gada, CEO and CFO of Shemaroo Entertainment Ltd. said on an investor call on Tuesday.
“Overall YouTube at some point used to be 25%, it has gone up now. Telecom, which used to be upwards of 50%, has now gone down to 25%. In fact, this quarter it’s actually 10% of the total, because telecom has got a severe beating. I wouldn’t call it a severe beating, it’s a shift from the business model of traditional VAS, which was a feature phone product to a smartphone product which is ShemarooMe and others,” Gada added.
Shemaroo’s digital revenue contributed 39% of the company’s FY20 revenue. This stood at 62% for the quarter ended September 30, 2020 (Q2FY21). However, this is likely an aberration since the major impact of COVID-19 has been on advertising, which has hit the company’s traditional business, Gada said. Digital revenue should remain between 30-40% of the total revenue in normal quarters, he added.
Revenue in post-COVID-19 period
In the post-COVID period, Shemaroo’s revenue for the first half of this fiscal year, between April to September, fell by half or 50.4% compared to the first half of the previous year. However, the traditional business was hit harder, with revenue for the same period falling 61.6% over the previous year, while the company’s digital media business fell by 30% over last year.
We are seeing 80% of pre-COVID levels in advertising revenue in television. Everyone is waiting and watching for the festive season and the post-IPL period to see where the numbers take off. It’s a ball by ball development, and as of November 10, we are at 75-85% recovery in TV advertising, Gada said.
In Q2FY21 (July-September), digital media revenue stood at ₹38.7 crore, down by nearly 30% YoY, while traditional business revenue fell 78.5% YoY to ₹20.5 crore. Contribution of the digital arm to the company’s overall revenue has grown from 10% in FY14 to 39% in FY20. The digital business has seen very good consumption growth, and digital advertising is already seeing revival, giving a decent outlook for it in the next quarters, Gara said on the call.
There was a severe hit on GDP and therefore most advertisers cut down on ad budgets. Even though consumption (of TV and digital content) went through the roof, the attendant ad revenue crashed by 75% in Q1 Gada explained the impact of advertising stalling on the company:
Media houses running movie broadcasting channels would typically be buying content on a regular basis. But if their revenue and cashflow crashes so badly, they will be holding on to their content investments. Broadcasters this quarter have said that ad revenue is back at 75% in TV, which is essentially still 25% lower. Advertising being a key business model for most broadcasters, this is still a 20% hit on the topline for most channels. Most channels have their own content libraries available – and they are okay to defer [buying content from others] for a few quarters, and they will come back and buy when advertising sees revival.
Even with the impact of COVID-19, the economy witnessed some greens shoots in consumption and recovery in advertising spends. The company deferred content investments by movie channels affecting the traditional syndication business which has put pressure on the top-line. While there was also some recovery, overall cash flow and profitability remained stretched as the company continued to invest in B2C.
Broadcasting: The company invested in two channels, Shemaroo TV and Shemaroo MarathiBana, to improve viewership and reach. The latter began monetisation via ads during the quarter.
Standing of digital business
Shemaroo Filmi Gaane, one of the company’s YouTube channels featuring songs, crossed 40 million subscribers, making it the 27th most subscribed channel in the world. Gara said that the company’s YouTube channels have grown the fastest this quarter. As of last quarter, Shemaroo Bhakti channel had 5.7 million subscribers: It now has 6.6 million subscribers.
ShemarooMe, the OTT platform launched in February 2019, has partnered with JioFiber to bring content to the JioTV+ app. ShemarooMe’s library includes content around Bollywood, Gujarati, Marathi, Punjabi, kids, comedy, devotional, etc. During the quarter the company:
- Launched ‘ShemarooMe Box Office’, a TVOD service in partnership with BookMyShow
- Partnered with Telkom in Indonesia
Q2-FY21 performance (Consolidated):
- Revenue from Operations: ₹59.3 crore
- Digital Media: ₹38.7 crore, down 29.7% YoY
- Traditional media: ₹20.5 crore, down 78.5% YoY
- EBITDA: ₹(0.7) crore
- Net Loss: ₹9.2 crore
**Update at 4:45 pm (Nov 10, 2020): This story was updated with information from the investor call, which began at 2:00 pm IST. Original story published at 12:14 pm on Nov 10, 2020.