interview with Spacetoon India MD & CEO Rajiv Sangari
the launch of the kids channel, we are ready to
scale up the verticals'
on 16 February 2009|
has been a long wait outside the ring. After building
up verticals in the licensing, publishing and merchandising
space, Spacetoon has launched its kids channel to combat
against multinationals like Turner, Walt Disney and
Viacom in the tough Indian market.
A licensing and merchandising deal with Emerging Media,
owner of the IPL winning team Rajasthan Royals, has
put the company on a totally different pedestal. Talks
are also on with a few other sporting goliaths to expand
the L&M portfolio.
Spacetoon Kids TV, however, will evolve as the prime
property and will guzzle over 50 per cent of the company's
Rs 1 billion investment plan.
In India, the group has floated Kids Media India (KMI),
a company that will take care of the TV and licensing
business. Kids Animation India is the other arm that
will look after the publishing activities.
The shareholding has also been restructured with Japanese
firm Animation International holding 51 per cent stake
in KMI. Dubai-based Spacetoon Media Group holds the
remaining with a small stake as sweat equity resting
with Spacetoon India managing director and CEO Rajiv
an interview with Indiantelevision.com's Anindita
talks about the company's growth plans across the verticals.
What took you so long to launch in India?
Since the germination of the
idea way back in 2004-end, we have spent a long time testing the market. As the
Indian economy and the TV industry went on a zoom and prices skyrocketed, we had
to rethink our strategies as we were going to occupy a niche space. With distribution,
marketing and all kinds of operational spends going beserk as Hindi general entertainment
channels got launched, it would have made no business sense to launch a kids channel.
Frankly, it would have been a business hara-kiri. Now the prices have corrected
and things are much more in control. Despite an overall bleak scenario and a tough
advertising market, launching at this moment definitely makes more business sense.
The shareholding for the Indian venture has changed with Japanese firm Animation
International (AI) holding 51% stake in Kids Media India. Was the delay partly
caused by this?
Both Spacetoon and AI have relations since the last
25 years and they have been partnering and co-operating
with each other on many businesses together. Hence,
changing of the hands in shareholding doesn't have much
to do with any kind of interest level subsiding or increasing.
It is a strategic move by both partners of re-strategising
and restructuring their operations amongst themselves.
Most of the East and South East Asian operations, for
example, will be monitored by AI, while most of the
Western Asian, European and Eastern European operations
will come directly under Spacetoon. I would term this
as strategic restructuring.
Spacetoon was in talks with investors to raise money.
Is that plan still on?
Spacetoon was in talks with a few players and we
had already determined 3-4 of them at various stages
of our discussions. But most of them wanted to basically
take advantage of the position of our fund raising,
rather than sharing our passion. Either they wanted
majority stake or at some point they wanted us to exit.
This did not go with our strategy for India.
Though we realise that for taking our verticals to the next level we require some
support, we are equipped as of now to handle it on our own. But if we get an extra
push in terms of a partner who can value our strength, experience and hard work
which has gone behind making the company and the brand what it is today, we will
definitely look at the possibility. India's economy and retail can only grow and
we have 360 million kids. We require a partner who thinks and aligns with us for
you first focus on developing the licensing, publishing and merchandising platform
before stepping into the kids broadcasting space?
That is the business model Spacetoon has followed
in other markets. We are doing the same thing here.
For over a period of 3 years now, other than TV launch,
we have successfully launched our licensing, publishing
and merchandising divisions and are very soon launching
our own IP programmes.
are glad that we did not divest then. We have done the tough job of laying out
a platform for licensing and merchandising. After the launch of the kids channel,
the time has come for us to scale up the verticals.
much is Spacetoon investing in India?|
plan to invest Rs 1 billion over three years. Out of this, about 50 per cent upwards
will be consumed by the TV operations.
did KMI decide to launch a kids channel when the genre has actually shrunk a bit
last year and the revenue size at Rs 150 crore is still too small to take in so
We need to realise that kids business is not driven completely
by TV broadcasting. Unlike general entertainment channels, ad revenue is important
but not the only source of income in the kids genre. It's always the ancillary
units like merchandising, publishing, etc. which will help it take to the next
level. And TV business is a long term game.
business is not driven completely by TV broadcasting.
Ad revenue is important but not the only source
of income in the kids genre. It's always the ancillary
units like merchandising and publishing which
will help it take to the next level'
Earlier, Spacetoon Kids TV was looking at investing Rs 250 million for carriage
in delivery platforms such as cable TV networks and DTH. However, that number
has been scaled down. Why?
Haven't others too? It's simple, the market
today doesn't allow us or anyone to do so. I hear from some sources that most
of the top to small TV channels have slashed down their distribution disbursements.
And, especially in kids genre, you just can't support such a large distribution
The channel is still not well distributed. How are you planning to tackle this
and by when do we see it more visible?
Our focus is not only to tap the Tam cities but
also other markets. As of today, our estimates are that
we have penetrated over 10 million homes and we expect
to do over 15 million by the middle of this year. By
year-end, we should be touching 25 million homes. And,
don't forget, it's only four weeks since we launched.
We realise it will take minumum 3-4 months before we
start getting visible across all markets.
What are the distribution deals you with stitched with the MSOs and the DTH operators?
We are in talks with the direct-to-home operators. As far as cable goes, we
are available in some Hathway Cable & Datacom networks. We have also signed
up other cable operators, particularly for their digital viewers. Distribution
is a gradual build-up.
Spacetoon Kids TV will have to jostle with seven existing channels to tap into
360 million kids in India. How do you find space in this tough market?
one of us has a different style, programming methodologies, and formats. Our channel
will be focusing a lot on moral and social values, packaged with lots of entertainment
What is the different positioning you are taking?
Spacetoon will divide
the day into 10 planets. Unlike running half-hour episodes back to back, we will
be giving the kids a mix of several things. There will be fillers which are moral
based, messages, ads, packaging, promos, etc. This will ensure a different look
during the whole day.
Do we also get to see localised content as part of
the programming mix?
We definitely are looking towards creating localised
programming very soon. This will be mostly live action-based
programming. There are discussions going on with various
producers to this effect.
are your other marketing plans and spends for the channel?
We will be creating a touch base by tapping thousands
of schools in India. We realise that if we have to
tap the minds of the kids, there is no better place
than their learning ground - school. We are creating
a very good value-based school-contact programme,
a key area where most of our energy is going to be
focused in the first year.
We will also
be having events from April onwards in high public areas like malls.
What is the
revenue Spacetoon is projecting and how does it break up in terms of the channel
and other verticals?
I would not want to put across numbers now. Nobody
can predict the forthcoming financials in today's
market. But our major revenue driver will be merchandising,
which is in full throttle. Following that are our
publishing and licensing activities. As for TV revenue,
we are expecting it to start from the later part of
the year. It will take us some time to penetrate the
market and grab space in the minds of the kids.
are your expansion plans in terms of licensing and merchandising?
tapped over 69 licensees in the last 14 months. These are translating into products
that will get into the market during the course of this year. We already represent
some top companies in the world for licensing and there are few more coming our
way in the next few months to make our portfolio more robust and meaningful.
We observed that
our portfolio was tilted more towards the boy category. But now with Hello Kitty
and Garfield coming our way, I think we have one of the best characters in the
are your plans with Rajasthan Royals?
We are in hot pursuit to come out with products
before the first week of April when the IPL kicks
off. We have already worked out our strategies to
tap the right licensees who will be able to add value
to this fantastic brand on the ground level through
have a three-year deal with Emerging Media and are
targeting Rs 200 million of retail business in the
first year. Since the time is very short, we are channelising
all our resources towards this.
are also in discussions with few more goliaths from other sports, especially big
international clubs. We hope to stitch deals with some of them soon.
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