 Top Strategy for Binge Indians and we have with us Mr. Tarun Katyaal from Z5 India, considered one of the most successful executives in the Indian media industry. Tarun Katyaal, as you know, is the CEO of Z5 India. In his current role, he is responsible for steering Z5 India's largest and most comprehensive digital entertainment platform for language content towards gaining industry leadership position. Ladies and gentlemen, we also have with us Mr. Abhishek Rage, CEO of Endemol Shrine India and he's part of the world's largest independent production company. Abhishek has been leading the company's foray into digital and web-based content. He has been at the forefront, nurturing key growth areas of business, like regional programming. And also, steering this whole conversation is going to be Mr. Naval Ahuja, co-founder, exchange for media. Very warm welcome to you gentlemen and thank you both of you, Tarun and Abhishek. Thanks for spending time and Tarun especially. I know you had a review with your boss and we managed to extricate you. So I'm sure you're happy to be here. I'm sure Puneet would have been happy to be with you. OTT is one of the parts of their business which is doing really well. So well done on that. Well, you guys don't need any introduction so I'll jump straight into the topic. Tarun, let me start with you with a very simple question. Yesterday I saw Sensor Tar released this report which said Zee in June was among the top 10 downloaded apps in the world. Even I saw the report in the media article. Tell me three things that work for you. I'm sure there are lots of things that are moving parts that go into making a content company do well. But tell us three things that you've done really well over the last eight months, nine months which have worked for you, which has got you there. So, you know, it's been a long journey. Now, it's not easy at all to compete for real estate on anybody's connected device. There is all those challenges that you have to meet about people's, you know, your own unique proposition in the user or consumer's life. Your ability to deliver that proposition once you get downloaded and your ability to even eventually move that user up to becoming a subscriber from being just a free user. And that journey is, you know, it's easier said than done. I think what works for us or what worked for us and what continues to work for us is our connect with India. We've always been very proud of the fact that we work for all Indians and whether we have a wide spectrum of use cases. So, whether at the one end, we have, you know, free content or catch up content from all our 40 TV channels that Zee produces and hours and hours of content that drops in every single day. To moving to the other end, we have high-end series and originals and now direct original premiers for top-end consumers who watch it on 4K, 8K TV devices. And that's really a wide spectrum. At one end, we serve a platform like ChiOS, which is very, which is bottom of the pyramid, which is a very no-frills platform on the Geo feature phone. And on the other end, we've got to have, you know, features and more to compete with platforms like Netflix on TVs like LG, Samsung and so on and so forth, their magic remotes and everything else in between needs to service. And so that connect, that diverse connect with India through technology, through content, and through also UI UX, which is served in 12 to 14 languages actually makes it happen for us. Fantastic. Let me hop across to you, Abhishek. You've been in the content space for a long time, especially in India. Tell us three things that you noticed, you know, OTT and television content consumption has kind of, you know, charted very different courses in the last few months, especially, you know, COVID times. Tell us two, three things that you've seen, which you believe will last post COVID, especially when it comes to content consumption and OTT. What's your take? So, I think largely at a basic level, the content consumption or the taste hasn't really changed. If you look at how people are consuming content on linear channels or not, the platform and the digitization as what is changing the platform and delivery systems. So, you will find that the taste for a certain type of content will continue considering what that TG wants or what that age group wants. We see a shift coming by where people are viewers are now getting used to, especially with COVID as they've tasted a lot of these OTT shows, they want some closure at the end. So binge watching a show and a series is becoming largely the norm. But I think if we really look at the spectrum of the TG, if you break it down, the requirement that they have largely hasn't changed or what kind of genres they want and how they want it. And like Tarun said, I think when you look at India, you have to create programming that works for the mass audience. And which is why the spectrum of the audience will have to be catered at various levels. You start off from very mass daily soap type of storylines, which could only be made finite like telenovelas really. And going right up the value chain into what you have as these 10 episodes, eight episodes and those kind of scaled up as well. So I think from a viewer perspective, we really need to kind of keep our content offerings as diversified as possible. And I think you're really catering across a multiple spectrum. And I think that should be the focus in the future. That's an interesting point you brought about catering to mass audiences. And I had a subsequent question on that, but let me pick it up now. I don't know whether I can, let me try to share my screen. Tushar, can I do that? There is a graph I saw in the Ohti Tikki ENY report. I'm sure you gentlemen have seen that. Let me just put it up for the sake of the audience. And here it is. I think you're able to see this, right? This is a number of users across consumer segments. By timeline, as you can see, there's digital only tactical digital bundle mass consumers, free consumers. And mass consumers are the ones who are sampling some sort of content, but not really, haven't really converted into paying audience. You correct me if I'm wrong here. And that's the biggest part if you see in terms of the size of the audience. What is the way to go after this audience? Because as we all know, a large amount of content on OTT right now is either being consumed free or coming bundled with telcos or at a very, very small, tiny sum of money. So what is the way to go after this large consumer base? So it's a right time and a right question. We just launched Z5 Club as of yesterday. And this is a pack that has three things in it. One is all our 40 TV channels and all the TV shows that go on it are now early access to all consumers by 24 hours. So you can actually watch a prime time show one day before it hits prime time. Right. So I can watch Goon Lee Bhagya, Coom Coom Bhagya tonight for tomorrow's episode that was going to be on TV. It then has all the drama content that we make with all biology and our output deal with all biology that gives us many, many hours of content. Yes. And then it has what we used to have a TV channel called Zindagi, which had a lot of international dramas. And it has that library now being redone with original shows and limited duration shows. But the biggest proposition on that is really your favorite TV shows before TV. That's right. Yeah. And we price this at 365 rupees for 365 days, which is really one rupee per day to watch your favorite shows before 24 hours before TV annually. And we think that this will be really the game changer in building mass consumers into paying consumers. And to answer your question about bundled or free and so on and so forth. Like Abhishek said, this COVID has actually changed the thinking of the consumer and they are willing to pay for content. The increase we are seeing in our base of paying consumers is quite phenomenal. And paying directly, not paying through the course. And even with telcos, the increasingly operating is that we are increasing the pack price and creating a bundle that the user pays for. So we've got a 79 rupee bundle with etel and we've got a 289 rupee bundle with etel prepaid where if you buy 289 rupees and you could be at 249, 200, whatever on your prepaid charge. But if you upgrade to 289, you get Z5 with that. So it's a paying customer for etel who's paying us in turn for all our Z5 users. And that's an interesting point you make Tarun and it's good that it's moving in that direction. But my follow up question to you is right now as a user, there is tons of content, OTT content available across platforms. If I want to consume only a part of the content, right, I want to watch a movie on one OTT platform and jump into watch a movie on another OTT platform. The options for the consumer right now are to buy packs which are at least a month in duration. Are you looking at a kind of pay per view scenario where you know you charge say 10 bucks or 15 bucks for a movie because what that does is as you know, telecom companies themselves have seen the moment you start reducing the ticket price, the entry price, consumption over time keeps going up. So would you look at something like that say a year from now where you are charging 15 rupees for one movie? We've tried it. So we tried it for regions where we realized that people in the regions didn't have to pay for national packs. So we had a Tamil pack and a Telugu pack and a Kannada pack. It worked very well. But the feedback was that, you know, people again within that, they were users who only wanted to watch TV content and our South Indian channel content before time. And then there were some who wanted to watch actually Hindi and Tamil or Hindi and Telugu or Hindi and Kannada and to have access to all the larger movies and the big series. And we saw that upgrade journey for the ones who watch movies and originals much more than the guys who want to watch TV. So for TV, we launched the 365 days pack, which is 365 for 365 days, which is too much at all. The ticket price compared pay for a Netflix, which is 600 bucks a month is, you know, this is deep penetration stuff. And we do believe that, you know, as payment gateways, as your ability to pay, now we have we've been listed on Paytm as a utility. So like you recharge your phone on on Paytm, or like you pay a Lexity bill on Paytm, you can pay for your for your OTT play on all your wallets. And you're not using the wallet as a payment mechanism on my platform, but you can pay for me like a utility on any platform. Right. I don't know whether you understood the, the tectonic shift that it makes, that it makes your utility versus you being a service. Absolutely. And all wallets have recognized that this is now the new utility in town. So where DTH recharges used to happen, where phone prepaid recharges used to happen. Now OTT recharges happen. Brilliant. I mean, entertainment, consumption of entertainment, one of the key aspects of our daily life. So it's only natural that it becomes a utility. Abhishek, let me pick up on Tarun's point about, you know, regional content. They tried a model in the regional space. How do you see the regional content space trends different from what's happening, say in Hindi, though, you know, India is, you know, 20 languages or at least 10 major languages in which content is being produced. Hindi is naturally the largest. English as a niche. What about other regions? What are the different trends you've seen vis-a-vis Hindi COVID and post COVID? What's your sense? Yeah. So I'll first start by another point that Tarun had made was on the pricing thing. It doesn't make sense to kind of charge per film or something because at the end of the day, you'll never be able to recover the cost. That thing is a very DTH window kind of an idea where it's a revenue share, which is very additional fringe revenues. That's right. The idea is to get someone to come on your platform and subscribe to the overall content and therefore continue consuming it. So a single film or a product strategy. You started pricing for films per film, 15, 20 rupees, it'll take you maybe 70 years to recover the cost of the film. Absolutely because the biggest is where people want to come is never going to be easily recovered. So it doesn't make sense. Now, similarly, there's also that implication that comes down to regional content versus national like they're not put it. Now in regional content, I think there are two big factors that that that will play a role on how we see it developing. It is a given that everyone wants to see content in their vernacular and would love to see that and that we're seeing from linear channels and how the growth of the regional industry has been. But technically, today we have about six regional languages. That's the four southern Bengali and Marathi as the key monetizable languages. Gujarati, Punjabi are still the fringe players on in terms of monetization of content. What is changing is the dubbing and subtitling of global content and of content created in India as Hindi content as well. Right. So the moment you go into that, you automatically are although maybe dubbing some people prefers most people don't subtitling still works better. That's debatable. But I think the access of content that is created in general is suddenly very huge. And the second part is but the medium does not now require a lot of technological or channel support like a linear channel has a lot of overheads and costs to be able to deliver a regional content lineup. Here now you can start off with very little and this could be the game changer to the other languages that have so far been termed as non monetizable. So if you were to make it at a decent price point, I think you'll see a huge jump in other languages. Northeastern Assamese even Bojpuri for that matter is popular, but you could see a big jump in terms of how that converts on an OTT space. Punjabi for that matter or Gujarati again. I think the OTT space will change that consumption numbers to a very high point. I think we'll see this as a big catalyst for that regional space grow. Give us a bit of an idea about cost because eventually monetization is also determined by the cost of the content that goes into acquisition or production. How does it vary for say OTT fresh content? How does it vary vis-a-vis television because you know the quality of shows has to be international standards exposed. See frankly it is subjective. So typically if you take up a regular linear television cost and if I were to compare let's say let's say Hindi soap let's say 8 lakh rupees an episode. Suddenly what you see is it's not no longer a 260 episode series therefore whether you make a set or you do any fixed cost that's going to get layered over 10 or 15 episodes. Now those are the kind of things that get that hits you largely in terms of the amort etc and therefore your price goes up. It's not that there's a big difference in how we always treat it. Now there is a different storytelling there's a different approach I guess but those are not always the points that take the cost up. It's also the amort of a 250 episode suddenly coming down on 10-15 but if you were to use certain live locations pre-plan a lot I don't think a huge spike will be seen from where regional programming today is at cost especially something that is made on the bi-weekly side on the weekend or something. So I think at a decent jump of about 40-50% from their smaller shows can be made to test out the feasibility in smaller regional markets and then we could start off on scaling it up if there is a good consumption scene. Again this would be spread between how would you look at it from a perspective of AVOD and SWOD which is also a major difference for you to see and I think that's the approach to really start off and see what's more successful what's more financially feasible and then take the larger next steps to create a much larger content plan. And what's the way to kind of look at content cost that is being done right now I'm not talking about the regional space but Hindi content that is being done for the so-called big screen OTT and that's coming at a very expensive kind of ticket. Do you see those costs kind of coming down over the next three years? Yeah I think they're already down and I think most players have rationalized their costs. It is not about pure cost cutting but without cutting down on scale we I think there's been a big shift also on focusing on what is required from a production angle vis-a-vis what is the above the line talent cost etc. So I think their calls being taken on seeing not everything has to be a-listed. So we figure out what's good quality what's been done at different prices. So there's a different spectrum again on costs as well something that we are doing across shows varies in a huge way. We're doing some great content at a much lesser price with something that gets loaded with an A-listed talent will obviously be at a slightly higher price. So I think those angles are already being looked at and I think the well right sizing of cost as such is already underway and COVID has only accelerated that. So I think we're looking at that already. Arun you would of course you would prefer cost of content come down as much as it can. What's your sense I mean 12 months out 18 months out cost of content is going to get rationalized even more? I don't think so that the focus should be on costs. The focus should be on telling great stories. This is the time that OTT or digital is working very hard to make the migration from all other entertainment platforms to digital video streaming and I think in your investment phase if you start to think costs ahead of the user you tend to cut on momentum that you can create for yourself. I think this is the time to be able to excite the user with something new something novel something that they haven't seen and something that they've been meaning to consume which was not on television because you know on television it is the lowest common denominator who cannot create too much diversity too much special interest content in fact even too much male focus content. So in all of that I think if you were to start thinking costs ahead of stories you'll make the mistake. Having said that I think you know technology AI data we're using all of that in planning our content better. So we know at the user level we know what we should and shouldn't make but also in the production side we're now bringing in tools to be able to optimize location usage, optimize cost usage and so on and so forth and all of that will eventually take out the wastage from the system. It'll create a huge amount of efficiency. So efficiency is good but cost for cost sake is a bit you know a bit wrong to work on. Fair enough. Let me then jump to the other part you know you're right in the sense. Which thing are you happy with my answer? I would love it I mean that's that's something you should get more people to come up on line and say that I'm waiting for it. Tarun has to make sure that his purchase guys watch this video. That's why he's asked me again. Tarun let me take you to the other part of the equation you know you write you want to create scale don't bother too much about cost of course don't go you know here I have a cost but don't bother too much. The other part of the equation which is you know one user engagement and then monetization monetization right now is entirely or largely I would say dependent upon advertising the venues right in the OTT space and there has been a lot of attempt if you you know rewind 20 years back television companies were in a similar situation I remember 80% of the revenue used to come from advertising. Print is today still in that same board because they never kind of bit the bullet. Television companies today have a kind of healthy and you've run television businesses yourself so you know how the transition took place over those years. Three five years out from now if you were to you know uh better number how much do you think and how more than how much how do you think OTT players in the current environment where you have 30 40 players and let's say you don't count the long tail at least 10 meaningful large players. Is it possible to go after subscription revenues increase arches in this market and over next three years reduce your dependence on advertising so both will grow advertising pie is also small but say the percentage revenue that comes from subscription going to 20 30 percent for OTT players so let me answer this at an industry level and then let me answer it at a z5 level at an industry level there are two ends of the spectrum right the first end of the spectrum which started very early in the digital video streaming space is YouTube right and that skews all of what you're saying you're right YouTube is estimated to be about 6000 crores in India already yes uh if I'm you know I could be wrong it could be seven it could be five but I think it's in that range they think that it's closer to a billion dollars and then at the other end of the spectrum there is Netflix which is pure play uh as for subscription and there is Amazon Prime which is a part of a bundle but again pure play subscription right Amazon Prime and you can't attribute Amazon Prime only to uh Amazon Prime video but is is is now slated to be about 15 million to 18 million uh users in this country right which in itself uh if you take at their price point of you know 999 is a substantial sum of money but but you can't attribute that to Amazon Prime video alone right and then everything in between there is there are there are use uh there are platforms that skew towards advertising which are uh fully avod like you know vote is now getting into SWAT but has been largely avod uh sony live has been largely SWAT and they are avod and now getting into SWAT and there in there is a long tail of those that you know that do largely avod there has been us and uh hotstar which have been avod and and SWAT what we call the premium platforms uh and we've actually invested significantly on our SWAT slate we're now at about 130 original original series and and movies and so on and so forth yeah so at the at the industry level um the understanding that uh advertising is more than a subscription may not be entirely true uh novel uh and then coming down to our level I can tell you that we are already uh more skewed towards subscription than advertising on our revenue stream right uh and in fact our our I want our advertising stream to go up and this year because of covid anyway it's been challenging but uh the fact is that if not 70 30 60 40 if it it's not less than 50 50 for most players so in the fact that payment gateways are easier to buy in fact is that you can reach out to the consumers quickly and easily the fact that this is also a very easy bundled option for people for acquisition and retention for their own services as SWAT actually in this business grew fairly well and fairly early compared to the layered distribution structure that TV had the problem in broadcast was the leakage and the it was not a direct to consumer business right it is it goes through a distributor a cable operator and within a cable operator and lco and and so on and so forth and eventually the the 100 piece that are 200 or 500 that gets distributed from a cable operator gets split between so many lines of you know channels of distribution and then between so many channels within that are so many content providers between that here you buy z5 directly and it comes to me directly and there is nobody in the middle except the payment gateway who takes a payment piece and you're selling it as a service then anything else and that actually took the subscription game much faster and easier into the country than anything else also very structural changes like auto renewal so the government put in auto renewal capability on all our credit cards and almost all our debit cards and now only also on UPI so the churn on its own comes down because once you buy on an auto renewal card and we only sell most of our services on an auto renewal card we don't sell non-renewal if you have to buy a non-recording pack for us you have to buy a minimum three-month pack but you cannot buy a one-month pack or non-recording at all so these are the kind of structural changes that have made payment from consumers and direct to consumer for subscription much more lucrative for platforms and that's why platforms have been investing behind subscription content considerably over the last 18 months so give me a number three years out what do you think the industry will be earning i'm not asking z5 from advertising approximately what would be the figure three thousand the rules five thousand the rules so you know if you include youtube then the industry is already earning a lot right and youtube is the true blue digital video streaming on on youtube is already five thousand six thousand crores whatever you even if you make youtube 50 percent of the industry eventually then the overall industry should be where it is you know about 10 to 15 thousand crores fantastic last question i'm getting messages and i see the next set of panelists are also online acquisition of content and the you know huge cost especially using covid we've seen movies releasing i recall you know your parent company z entertainment i think it was 18 years back or 17 years back launched friday premieres uh new movies being acquired and aired every friday in the evening that was a massive hit and something similar is getting replicated because of covid partially uh we released yara today and yara is a very big direct to digital yeah how long do you see the sustainable because eventually unless money comes in how long do you keep spending on you know content acquisition you can't spend money on content acquisition looking at a four-year window unfortunately every a lot of these companies are shareholder driven quarterly results are important so what happens to movie content acquisition costs i think uh you know one theaters will come back so the split of the way you know the pie got split between theatrical and satellite and digital will come back after some point the other is we all are already investing in direct to digital movies ourselves which are at our cost not at the cost defined by the market yeah and we are in in the process of building our a slate of at least 18 to 20 movies in the next 18 months so at least a movie premier a month which is direct to digital for us so that helps us actually average out our costs but there will always be a role of rich builders and big titles and and you know they do cover their costs out quite well over a period of time right if amisha permits me i'll take a couple of questions uh there is a question for abhishek about the panjab market uh this is from briju pillai do you looking at the scenario that you know new shoots are challenging right now that the panjab content market will also split into tv and ott very soon um i sure like every regional i think it's it's worth trying because panjab market has basically worked on two factors one is music videos and second is bits of comedy which mh1 and other players have played on um and you see that we've seen that now that z's also come out strongly with fresh programming on panjabi etc we've seen some movement into uh content as such i think it's a good time to look at um content to grow there so everything will have to be split into ott and linear the monetizability of any product is going to decide how much of a split it's going to be or do we have a network play where content from linear will automatically be also monetized on ott so that's the only real difference and that's the yardstick really fantastic thank you uh gentlemen for a interesting engaging session i wish we had more time but the next set of panelists is already here and we have a you know couple more sessions to go thank you for your insights and uh people who have further questions can take it offline look forward to meeting you person in person very soon stay safe sure thank you navel thank you for doing this thanks for working with us together