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Investment in Zee5 needed to protect future of ZeeL: Punit Goenka

Zee5 has seen a marginal 4.2 per cent growth in revenue in Q2.

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KOLKATA: Zee Entertainment Enterprises Ltd’s (ZeeL) digital arm Zee5 has seen noticeable growth in users and engagement but revenue has gone up only marginally. Several factors like discontinuation of a telco deal, campaigns for Rs 365 pack, 25 original show launches have impacted cost structure leading to significantly higher losses. Although the road to profitability is not easy for a new business, the company is focused on breaking even at the end of FY24.

When Zee5 was launched in 2018, ZeeL CEO and MD Punit Goenka projected three-five years for the platform to break even. Asked in an earnings call after Q2 results if Zee5 would be able to maintain the timeline, Goenka said it is a “double-edged sword” as they are forecasting so much ahead in time. “In terms of our strategy, we are still focused that FY24 we exit the year with a break even kind of number but overall it may be delayed by over a year from the first forecast we gave in 2018,” he stated.

Talking about viewership growth, Goenka said a significant part of it is organic. While Zee5 is looking at international markets too, the revenue coming from the segment is not very significant. Goenka added that monetisation in international markets vary from market to market depending on ARPU level and consumption level.  Zee5 intends to monetize both on subscription and ad revenue for the international market. While monetisation strategy is currently being planned,  it will be executed later on. Goenka is of the belief that the strategy will help ZeeL’s expansion in the international market which has been stagnant for the last few years.

In Q2, Zee5 had 54.7 global million monthly active users, and 5.2 million global daily active users. Users spent 152 minutes per month on the platform. It recorded Rs 98.9 crore revenue, up by 4.2 per cent compared to Rs 94.9 crore in the last quarter. Losses stood at Rs 189.4 crore, an increase of 30.5 per cent quarter-on-quarter.

Answering on tepid revenue growth, Goenka mentioned that the platform did not renew one of the telco deals that came to an end. The platform had to make up that effect through b2c subscriptions. As Zee5’s revenue is tilted more towards subscription, the overall revenue suffered for the digital business despite growth in advertising revenue, another spokesperson of ZeeL commented.

Goenka reemphasised that investment in Zee5 needs to be made to protect the future of the company.  ZeeL will heavily invest in Zee5, and the platform has certainly not peaked. However, he stated that ZeeL will continue to focus on generating healthy EBIDTA margin in spite of all the investments.

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