Balaji Telefilms pushes ALTBalaji’s breakeven to FY22

The platform will enter into regional market after a year


KOLKATA: Balaji Telefilms’ direct-to-consumer business ALTBalaji has reported decent performance for the last two years. After seeing a very marginal dip in the second quarter, the mass-oriented OTT platform has seen massive growth in its Q3 revenue. The overall revenue for ALTBalaji has reached Rs 20.1 crore for the quarter ended December 2020, up from 14.7 crore in the last quarter. However, the parent company has pushed the breakeven target one or two quarters further, the management disclosed in an earnings call.

At the end of Q2, the company gave a guidance of breaking even at least within the last quarter of this financial year. Now, the company expects to break even in FY22. While it was asked if the company is looking at breaking even in the second half, the management answered it would happen earlier than that.

“Provided of course, there are a few factors. One is that we keep continuing to put out shows the same way that we are doing right now, which is definitely going to happen. Secondly, the internet continues to remain free in India or at very low rates. If operators start hiking their rates or something happens on that front, then you know, those consumer acquisitions might slow down because people want to watch the shows without paying anything for internet,” the management elaborated.

The company also added that the first factor is controllable as it will keep launching three shows per month. But the second factor of data price hike is environmental in nature which could also impact the targeted time.

After coming out of lockdown, ALTBalaji launched nine shows which increased marketing costs. But the company explained that consumer acquisition expenses went up rather than marketing expense. Currently, it is acquiring consumers at Rs 70 and gaining an ARPU of Rs 140. While the platform is operating at Rs 70 rupee plus per subscribers, it plans to accelerate this dovetailing with the number of shows launched.

The Ekta-Kapoor led over-the-top (OTT) platform has always targeted the mass market for its growth in the cluttered space. In the earnings call, the management again emphasised the importance of mass content and affordable pricing. Although other platforms were also making Hindi content, ALTBalaji produced content targeting tier-2, tier-3 audiences rather than tier-1, unlike other platforms.

“We are trying to find a price point that is affordable to smaller towns in India. And that price point is less than a rupee a day. I think that's where we are having the right combination of mass content and mass pricing,” it said.

Going beyond Hindi content, ALTBalaji may enter the regional language market after a year. It does not want to hurriedly make its foray into regional as the management is of the view it is still tough to even make Rs 100 ARPU in that segment, which could make its current model of Rs 140 ARPU unsustainable. The platform will venture into regional only about a year from now when it reaches about 100 shows; currently it has 74 shows.

ALTBalaji has a capital commitment of Rs 230 crores of content. The expense for the platform was over Rs 100 crores, which has come down to a bare minimum, the management claimed. Now, Rs 8-10 crore is being spent each month and even that is decreasing too.

“We have seen an accelerated acquisition of subscribers post-Covid, because throughout Covid, tier-2 and tier-3 towns got exposed to the internet, but we could not put out shows for them. Because obviously, production was all stopped. Now that production has started and we put out at a run rate of three shows a month, we are seeing a huge upswing in tier-2 and tier-3 audiences coming onto our platform and paying. We have recorded the highest revenue in December. It is not just that we are getting subscribers to sample us and go, and we are also getting them to pay and stick on for at least a period of the quarter that we have,” the management stated.

The streaming service’s churn out rate is anywhere between 60 and 65 per cent currently. But most of the churn happens after reaching the end of the subscription period, not due to cancelled orders.

“What we are planning to do is that we have anywhere between Rs 150-170 crore base every year. And if we start clocking Rs 14 crore revenue average every month, we are at least neutral on that and we'll break even. Right now, we are at an average of around Rs 10 crore. So that's the way for us to go to make this business successful on a very, very basic thumb rule level,” the company said.

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