Balaji Telefilms expects to maintain cash annual spends of Rs 100-Rs 150 crore for the next two-three years for ALTBalaji.
Balaji Telefilms began FY17-18 with three objectives, to launch digital B2C business ALTBalaji, continue its dominance in TV content market and restore profitability in movie business by making conservative investments and adopting a more de-risked approach to movie making. These views were shared by Balaji Telefilms Group COO Nachiket Pantvaidya in a letter to shareholders in its annual report.
The company's digital content business housed under ALT Digital Media Entertainment Limited released as many as 19 originals last year. There are around 30-40 shows in the pipeline for 2019.
"What was really the star performer in the year for us was the success of our OTT platform ALT which is following the concept of providing original content. We are No 1 player in terms of original content," Pantvaidya claimed.
The OTT platform surpassed a million paid users within a year of launch and has over 13 million viewers across 90 countries. It has a paid subscriber base of 1.2 million, which it aims to increase to 8 million by 2020. This will help the company break even by 2020.
Around 800 million minutes of video were consumed on ALTBalaji last year with an average view time of 120 minutes per user.
Balaji Telefilms expects to maintain cash spends at Rs 100-Rs 150 crore a year for the next two-three years on the OTT platform.
When asked what differentiates ALTBalaji from its peers, Pantvaidya replied, "Volume is a differentiator as 35-50 percent of original content is coming from us. In terms of the nature of content, there are three categories -- one is slight mainstream which is digital dramas, then high concept shows, and then male targeted thrillers. We also hold the edge in terms of having 30 original shows, by end-February."
ALT's pricing is a big differentiator as it offers subscription for 12 months at Rs 300 and for three months at Rs 100. Experts say that due to its cost effective pricing and significant amount of original content, it has emerged as a strong force in the race for subscribers competing against global giants Netflix, Amazon Prime and other platforms like Hotstar, Voot, Zee5 and Eros Now.
ALTBalaji has highest number of Hindi shows and has ventured in the regional space with shows in Tamil and Bengali. "We already have one Tamil and one Bengali show and by January 25, we will have a Bhojpuri show," Pantvaidya added.
Sharing his opinion on whether television and online video platforms can coexist, he noted, "Yes, definitely both can coexist. People usually draw Western parallels and say there will be cost cutting in India, but I think the function of mobile phone today is a screen to watch entertainment targeted at single viewing which performs the function of a second TV set in the house in the West. So, typically a large percentage of homes have two TV sets but in India that's not the case."
"There are 95 percent of single TV homes (in India). So, if one family member has the remote control the other members can watch their choice of shows on the mobile phone. That is why original content is a critical factor in deciding. In my opinion, family viewing is not going away from India for at least next five years."
This is one of the reasons, the TV business for Balaji Telefilms remains a stable, cash-generative business.
"We continue to have a dominant share of television viewing in the market. The top three shows on Indian TV come from the house of Balaji so that continues to be a successful story. So TV is our star performer," Pantvaidya continued.
The company reported 819 hours of programming in FY18, down from 960 hours in FY17. The highest was in FY16 with 1,002 hours of programming.
Overall, the TV production business was reasonably flat in 2018, with regards to the number of hours of content produced and revenue growth. However, the company's average revenue per hour witnessed a 14 percent growth.
Realisation per hour increased to 33 lakh in FY18, the highest in the last five years, from 28.9 lakh in FY17.
After a couple of years of incurring losses, Balaji Telefilms' movie business had a good 2018. It distributed Lipstick Under My Burkha, which did decent business at the Box Office. The production house released Veere Di Wedding, which turned out to be one of the profitable films of 2018.
The company is focusing on restoring the segment to profitability hence, is opting for pre-selling content to satellite and digital platforms.
"What is interesting that our movie business is doing well. We have a release called Mental Hai Kya with Kangana Ranaut coming up. And we have signed up some new films which we will be announced shortly," Pantvaidya shared.
It was a rough patch for the company when two big budget ventures Great Grand Masti and Kya Kool Hain Hum 3 tanked at the box office. So much so that the production house had decided to put its film business on hold.
Hence, the company decided to be judicious while deploying fresh capital and were looking to improve the financial health of its movie business by working on pre-sales and co-production models. Lastly, Pantvaidya shared that the slate for FY19 has already been pre-sold to a large broadcaster.
