Piracy-resistant technology is in play in distribution system: Sushilkumar Agrawal, Ultra Media CMD

Over the past few decades, the media and entertainment industry has seen far-reaching technological changes—both in terms of creation and distribution. Ultra Media and Entertainment, one of the oldest and largest players, has always viewed technology as a tool rather than a threat in its journey. Sushilkumar Agrawal, CMD of the company discusses how the industry has evolved and how Ultra plans to use technological trends to grow, in a chat with R N Bhaskar and Pankaj Joshi.

Edited excerpts:

How has the industry evolved in technology terms in your business tenure? What is your position today as a content library?
Ultra Media was established in 1982, at a time when the VHS content format was prevalent. We started with buying copyrights for home video distribution, then started buying rights for distribution to cable television operators.

Beyond that, we progressed to buying negative rights (all-inclusive rights which essentially make the owner as good as the content producer), and today electronic media rights are the bulk of our offering. Today we have negative rights of all Guru Dutt movies, among others.

Technology-wise, we have been alert about emerging trends. For instance in 1994-95, we realised that some disk-based format would evolve. Hence in 1996-97, we launched India’s first video CD, a compilation album of songs featuring Shah Rukh Khan. At that point of time, ownership of CD players was negligible and this was a serious constraint for us. The CD generally had to be played and viewed through a computer. Our traditional sales channels were reluctant to stock and push this product. We therefore contacted computer hardware distributors and they did a good job — that is how our digital product line started.

Among content aggregators, Ultra would be in the top three today. Digital today is a big component of our library — we hold rights to 1,500 movies which would add up to more than 3,500 hours of content. Our television library has around 2,500 episodes and in terms of animation content we have around 5,000 minutes. Other content with us include cookery, yoga, travel and so on. We have consciously avoided building a sports-content library. Our experience is that procedures there are tedious and contentious issues with the authorities can emerge anytime.

Today, in our library revenue, 80 per cent consists of movies and movie-based content. We think this trend will sustain for the foreseeable future.

How do you define the process of rights acquisitions?
The rights acquisitions are a flexible area. In television serials, you could have a price of Rs 10,000 per episode or even Rs 10 lakh. Then again, we would acquire the entire rights — say 150 episodes — but a channel would then take only 20-25 episodes and check out the response from viewers and sponsors before deciding to take it further.

Acquisition is a competitive process, it is the key area of competition more than the marketing of content. In terms of our approach, we would say that our acquisitions today are largely done on gut feel, rather than any data-driven methods. Earlier, in the home video times, we used to have a formula based on which content was a good-seller in that circuit because there was a reasonable proposition that it would do well in the cable circuits and so on. Today, however, the home video concept does not exist. Channels do have their databases and formula, but we do not work on those. For us, gut feel works the best.

How does Ultra look at digital today?
Demand for digital content is very high. Ultra, therefore, through Ultra Digital Studio, has invested gradually in building a proper studio facility of 15,000 sq feet. There we offer digitisation, colourisation, restoration, colour grading and other services. The investment in studio till date is around Rs 70 crore and every year we invest an additional Rs 5-6 crore. This year we are looking at opening another facility in Mumbai itself, which would be around 9,000 sq feet. We are looking at creation of our own animation content which is one of our prime focus.

Mostly movie distribution is done through Ultra Digital Cinemas. We have evolved a system of distribution which we hope would be piracy-resistant. We put our servers in theatres, transfer movie content to them through the cloud and screen the same. Right now we have done a soft launch in five theatres and we plan to scale it up to 500 this year.

In this context, broadband penetration and speed are factors aiding our growth. We are already offering our products on Netflix, Hotstar, Amazon and other platforms. On YouTube we have more than ten million subscribers across different channels.

Do you believe that new players like Netflix and Amazon are a threat?
It is not correct in any way to assume that Netflix or Amazon would be a threat. It is just a new form of media, of accessing the market. When home video came, the talk was that theatres would shut down. Later, the cable television was seen as the death-knell for both theatres and home videos. The advent of satellite was a cause of panic for all. Digital likewise is threatening to make every other medium obsolete. The reality is that there is space for all.

Time is of the essence — you need time to establish a new product offering or avenue or segment. The advent of new innovation provide new options for revenue generation to the content producer. When you go through the history of different formats, it is home video that was impacted hugely, and that because it was a physical format. People today do not prefer physical, their preferences for entertainment are buy and use. Thus, theatres were not impacted; and satellite television and now mobiles are preferred options for content. Wherever people do not have to take process efforts, those formats will sustain.

What is your take on the problem of piracy?
Piracy has always been there. However in the digital age, we are leveraging on cost of media and enhanced availability options for our customer universe. If you will see, the first major hit on piracy was when Moser Baer launched blank CDs at Rs 30 and therefore content distribution was made so much more affordable.

In the digital space, piracy percentage is quite high, mainly because there is no control and check mechanism on the digital format. Reputed platforms of course do not see piracy, because the image cost is much beyond whatever financial benefits they can manage.

However, otherwise it is active, more so in cross-border terms which could be a big factor. Today you have Indian content being pirated in Russia and Israel and shown there commercially, and vice versa. How is anyone going to monitor, check and control in cross-border markets? Geographically first it is not possible to know what is happening where. Second is the question of enforcement. In Sri Lanka, a channel broadcast— Malgudi Days, the rights of which happen to be with us. We filed a case, wrote to the embassy, followed up but till date nothing has happened. Enforcement is too expensive and on-the-ground coverage is inadequate. Even our YouTube content is pirated and uploaded by others, which we can only take as a testimony to the quality of our content.