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Shaurya Mehta on Zeel's English cluster, TRAI tariff order & growth strategy

Zeel's &flix is completing a successful year of operations

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MUMBAI: The recent Q4 results brought a lot of cheer to Zee Entertainment Enterprise Ltd (Zeel) as it reported impressive advertising and subscription revenues. Industry experts suggest Zeel's performance, despite industry-wide challenges, may help the media and entertainment giant in its bid to derive the right evaluation for its stake sale, which could be concluded in July. That's not all. The company has more reasons to pat itself on the back with &flix completing one year of operations in style. Zeel claims that &flix’s viewers in December 2018 saw a growth of over 50% as compared to that of Zee Studio’s in December 2017, while &flix HD grew by close to 250% in the same time

In the first year of launch, &flix premiered over 40 films, with another 25-30 expected in the coming year. Likewise, &PrivéHD is likely to feature 25 premieres in the coming year. While the growth numbers for Zeel's English cluster seem positive, the English entertainment terrain continues to remain a tricky terrain to tackle. The implementation of the new tariff order has added to the challenge. In order to understand the lay of the land, the challenges ahead and the growth strategy for business, Indiantelevision.com interacted with Zeel head premium channels Shaurya Mehta.

Can you give us a brief overview of Zee's English cluster? How have your channels been performing?

I'll focus on &flix since it is completing one year. We have done largely very well across the board. One key objective was to uplift the overall positioning of the brand within the genre. From Zee Studio to &flix, it has been a remarkable journey where overall positioning and the strength of the brand have improved dramatically. The premium positioning has been sharply defined largely due to a big improvement in the content line up. The significant number of premiers we’ve had on the channel over this past year has been ahead of the competition. A premiere every week has played a large role in terms of establishing the brand in the market. 

Let's look at numbers. I will just leave out the last two months because the numbers are in a bit of flux due to the TRAI regime. I will look in something pre to set up a baseline first. Between December 2017 and December 2018, the English movie genre would’ve grown at low single digits in the two or three per cent range but &flix has grown over 50 per cent on SD. Similarly, on &flix HD, the story is even better where the growth is over 200 per cent. The overall contribution that &flix HD has now, within the overall consumption of SD and HD, is much higher now and HD is playing a very significant role in the brand &flix. Relatively speaking as well, &flix HD has been at the number two position in the English movie genre most part of last year and continues to be even now even during the MRP regime. Broadly speaking, all the checkboxes have been ticked and it’s been a phenomenal year for &flix. 

In terms of the overall English cluster, in the past one and a half or two years we’ve had two launches within the &family and the direction which we had for the &family was to establish ourselves as a premium destination for English entertainment. While &PrivéHD is focused very sharply towards nuanced cinema, &flix is focused more towards Hollywood blockbusters and each position is very complimentary to the other and together they have solidified and taken us ahead as far as the offering that we have on the premium positioning.  Zee Cafe is a legacy brand and a channel that has existed for a long time. So, it continues to hold a solid position as far as English general entertainment is concerned from brand equity and brand perception perspective.

Are there any gaps that you have identified? Any areas that need more attention or focus of your team?

If you look at the current scenario, we are in the midst of the MRP regime and the changes that are implemented on ground. The journey ahead this year is as much as a challenge as it is an opportunity. What this change has done is the need for brands to reach out to consumers directly and engage with them is more than ever before. That's something that will continue to build on versus any of the previous years. The initiatives that we take on as far as consumer engagement, be it marketing initiatives or new content initiatives, have a large focus on how we are reaching out to those consumers and how we are adding on subscribers. This is something which may not have been a priority or a big requirement in the past.  I think that definitely is a large change which we will be tackling through this year. We’ve already done quite a bit in that regard in the early part of this year. We’ve had a large MRP change campaign for the English cluster to raise the consumer awareness level for this change and then further funnel that consumer choice in selecting Zee's Prime English pack. We will continue to have a consumer insight driven communication.

How big is your movie library at the moment?

We have over 550 English movie titles in the library.

Has the cost of movie acquisition gone up especially since streaming services have been big spenders on that front?

I would say it has not gone up any more than it would have in the past five years. Nothing in the recent past, whether it is digital rights or OTT rights, have impacted the cost of acquisition for these movies. There is obviously an increase in the cost which happens year-on-year. It’s no more than it’s been in the past, to be honest. One of the foundations of the &flix brand has been to bring the best of Hollywood and bring the newest and the best content to the consumers. That's not going to change, so we will continue to bring the latest content and biggest movies. So, fresh acquisition and new movie titles are something you can expect from &flix going ahead as well.

There has been a perception that FMCG companies are hesitant in advertising on English GECs. Is that true? Also, have you been able to broaden the base of your advertisers?

I think the operative word here is perception. Let me give you some actual anecdotal data. So, in the past one year at &flix we’ve brought more than 130 brands on the platform. These brands are an even spread of FMCG companies, auto companies, BFSI and digital consumer companies. Since you asked about FMCG, for example, we have the likes of ITC, HUL, P&G, Amul on board as well. In addition to the likes of Apple, Google, Amazon and Netflix, which are obviously a large part of our advertising base. In less than one year, we’ve been very successful in bringing quite a few of these brands on board and they are a significant part of our advertiser base.

What is the English cluster's contribution to the Zeel advertising revenue? Going forward, how much would you want it to be?

We have a broader aspiration in terms of how we want to grow the entire revenue base. I would like the growth in the English space to be higher than the overall network growth, so that we keep increasing our contribution to it. It’s very difficult to say what percent of the overall revenue because everybody has their own growth rates.

You've obviously grown well in the last one or two year. Do you sustain and scale this now?

What the new regime has done is that it’s put the power of choice in the consumer’s hand. This has clearly established a need for brands now to differentiate and stand out in the crowd or the competition. So the consumer picks you. The growth is going to come obviously via a multi-pronged strategy. Some of the key elements would be that we would continue to invest in our brand and invest in our brand equity. We will continue to bring the newest titles and a large number of premieres to our viewers. We will satisfy the consumer's need for latest Hollywood content. A lot of consumer data research that we have done has shown that more than 60-70 per cent of the audience continues to seek fresh content and latest content and strong characters in the content that they are consuming. 

So it’s a clear consumer need which we need to satisfy and so the content will clearly play a large role in getting that growth. Our marketing strategy approach and the communication that we have for the consumer will clearly need to be differentiated and disruptive. We are finding ways to engage the consumer directly and grow our subscriber base. There is no better way to now increase consumption than increasing its subscriber pool. Increasing the subscriber base will have a direct relation to the channel ratings and the relative growth for the channel.

Did the implementation of the new tariff order have a bigger impact on niche channels?

The impact is across the board and not necessarily only on English or niche channels. You can argue that for niche channels the impact can be a little more accentuated and a little more exaggerated. But, I think that’s a transitory thing. When there is a large change such as this, there is a resistance and awareness needs to be raised. Niche channels or channels which are discretionary will take a little longer in terms of stabilisation. I think you can say that the impact may be larger in the transitory phase but long term I strongly believe that we stand to gain over a period of time because the strongest brands would emerge even stronger.

We have seen some networks pulling the plug on some of their premium channels. Is there more pressure now on niche channels under the new tariff regime?

What the regime does is it puts pressure from a transitory perspective or short-term perspective. The Zee network is not in it only for six months or one year. We launched &flix a year ago and &Prive a year and a half ago. We have a long-term view with these things and the network strength that we have allows us to persist and navigate through this transitory phase. We will continue to invest in the brand and while there is some consolidation in the industry, we will only stand to gain and benefit from that. Broadcasters that do the best and navigate the transitory phase and will benefit at the end of it.

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