Zee Entertainment CEO Punit Goenka also announced the new lower price of Zee5’s annual subscription plan and commented on the streaming platform’s pay-per-view experiment with Salman Khan’s film Radhe.
Due to the pandemic, Zee will scale down its investment in hyperlocal Content Delivery Network company Margo Networks, which operates under the brand name SugarBox. The winding down was announced by Punit Goenka, Managing Director and CEO, Zee Entertainment Enterprises Limited, during the company’s fourth-quarter earnings call for FY 2021.
“Considering the opportunities that lay before our two core businesses, we are prioritising content investments in digital and television. Additionally, the prolonged uncertainty due to the pandemic has made the operating environment quite volatile. In light of these factors, we are re-evaluating our investment in SugarBox and will be scaling it down in the foreseeable future,” Goenka said in his opening remarks.
Zee had announced a Rs 522 crore investment in SugarBox in April 2020; the deprioritisation of the subsidiary marks a significant setback for the company. The service was positioned as an edge CDN, which is to say that it would have content cached near the edges of a network, closer to where users were, to stream content to them quicker than a traditional CDN would be able to.
ZEE5 continues losses amid customer acquisition
ZEE5’s international launch has not appeared to bear fruit just yet, given how recently it happened. “ZEE5 in international markets has just started and the numbers are small. I would say it has started well and it’s been taken up well but the numbers are pretty small to take it up,” Goenka said.
- Cheap ZEE5 for increased userbase: Goenka said that the price of Zee5’s annual plan has been reduced to Rs 499 to get more market share. The service is currently lossmaking. He also acknowledged that the Zee5 product is not too top notch at the moment: “This approach will help us in reducing the customer churn and is in line with our long-term strategy of increasing share of B2C subscribers. The second aspect is to work on enhancing the user experience, where we have been behind the curve. We have drawn up a technology and product roadmap, in order to upgrade this digital platform to the next level. I believe ZEE5 will certainly see an all-round improvement in performance over the next few quarters,” he said. (emphasis supplied)
- Inflation of digital rights pricing not a concern: Goenka said that while prices for digital content were inflating, Zee’s in-house co-production strategy meant that it didn’t have to shell out more money in comparison to before. “Considering our presence across multiple formats and geographies, we acquire most of the rights of a movie. Our strategy of co-producing movies with renowned film makers allows us to build a strong movie catalogue, that can be monetised across the different businesses which I just mentioned. This strategy allows us to refrain from entering into a bidding war for movie rights on several fronts,” he said.
- Radhe and pay-per-view: In response to a question from analyst Abneesh Roy from Edelweiss, Goenka said that the company bet big on Salman Khan’s film Radhe — offering it free with a yearly subscription — because it was a fresh experiment.” Radhe has done what we had expected it to do for us,” Goenka said. “The bundling that we did because this was the first experiment of pay-per-view to be launched in this country, was an innovation that we did and it was quite successful.” As for depressed Zee5 revenue, Goenka said, an outstanding telecom operator renewal had not come through yet.
- Most AVOD subs in India: ZEE5 in other countries is mostly subscription-only, Goenka said. “Firstly, the way India operates which has an AVOD and an SVOD strategy, the international markets are tailor made for each market independently. I can tell you that apart from Asia Pacific or the SAARC region and parts of Middle-East, we do not run AVOD service anywhere independent of SVOD. It’s only few select markets where AVOD also is available. In markets like Europe, UK, USA where we are yet to launch ZEE5, we’ll have only a SVOD service because we are a paid service in those countries. Once we get off the linear platforms, we will be only available on ZEE5. So, we will be running an SVOD service only. Our majority of AVOD customers today are India based, and not largely in the international markets. I would say 90% plus are India and the rest will be outside,” he said.
Zee5 performance — Q4FY21
- Revenue: Rs 110 crores
- EBITDA Loss: Rs 160 crores
- Daily Active Users: 6.1 million
- Monthly Active Users: 72.6 million (mostly through ad-supported viewers)
Also read
- Theatrical Window Eliminated (For Now) As Radhe Gets Simultaneous Streaming Release
- Zee5 Had 65.9 Million Monthly Active Users And 5.4 Million Daily Active Users In Q3FY21
