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Shemaroo projects 25-30% digital business growth in FY 2020

ShemarooMe is built on a low capex model

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MUMBAI: Content powerhouse Shemaroo started its initiatives for digital business comparatively earlier than many other traditional media companies in India. The company has now stepped up its new media segment which is almost 30 per cent of the overall business with the launch of ShemarooMe. Shemaroo is taking a slow but steady approach and does not intend to go head-to-head with giants like Amazon and Netflix.

Talking to investors in a conference call after posting Q3 results, Shemaroo Entertainment Ltd CEO Hiren Gada said that the new OTT business has been built at a significantly low capex model making it sustainable. According to him, India being a highly heterogeneous market leaves the opportunity for even late entrants. Despite some segments being covered by existing players, a significant chunk of potential segments are still open.

“We looked into our own content pie and saw that there are few segments where we have a significant offering and strong market position in terms of either being number one, two or three in terms of content or share of viewership etc., and we looked at actually how we can leverage those opportunities to create the connect. ShemarooMe is the short consumer connect bit that we are looking to do,” Gada said. The core strategy is to establish the new OTT platform as the best option for consumers in its core categories.

However, it won’t get into web series since Shemaroo holds a steady ground in nonfiction content like classic films, devotional etc., which it believes is a better value add to its core.

Moreover, Shemaroo Entertainment Ltd COO Kranti Gada expects TV-friendly content catalogue to see good consumption since initial tests on YouTube proved favourable. ShemarooMe has a large number of popular Bollywood movies on the platform and Hiren Gada thinks digital will have movies as a significant consuming category.

Although Shemaroo is witnessing significant growth in YouTube channels viewership, the revenue from the segment has been flattish due to several reasons. But the management is optimistic as digital ad spend is headed up and expected to keep growing at a certain rate. Shemaroo CEO thinks YouTube being the largest video platform will capture a good share of that growth.

“What is heartening more than anything else is the fact that there are core consumption and viewer habit formation of coming to the platform, consuming, interacting, seeking out content and engaging with it,” he added.

Hiren Gada projects that the overall digital pie of the company will see a 25 to 30 per cent growth in FY 2020 as the industry level growth is between 20-25 per cent. Shemaroo has always aspired 5 per cent higher than the sector. Hence if the industry grows at a higher pace, he seems confident that Shemaroo’s digital business will grow faster.

On being asked about the company’s debt reduction plan, Hiren Gada said, “We are hoping that now with ShemarooMe and hopefully with a better YouTube growth, those trends should continue in the direction that we all are expecting and overall on the debt front even this quarter there has been a slight marginal reduction. So the debt is at a broad level the content requirement for on a so content acquisition versus monetisation so all the acquisition is being funded by internal accruals from monetisation at this point in time.”

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