Digitising revenue

Q&A/ Sunil Lulla

Digital business is a key focus area for players in the telephony as well as television business. Sony Entertainment Television (SET) India has become the first broadcaster to form a separate business division to cash in on this segment.

On day two of taking over as executive vice president - digital and licensing business, Sunil Lulla briefly outlines his mandate for the business and its potential in conversation with Business Standard.

Why is there a need to have a separate division for the digital and licensing business?

Entertainment is altering from a shared space to a more personalised one. Mobile phones are used for a range of applications and in several markets people are using broadband services that are largely personalised services delivered through the internet.

Simultaneously, the view on entertainment is changing from passive to interactive. We are looking at interactive involvement that carves out a more personalised entertainment space.

Some degree of the shared, interactive entertainment segment exists through downloads. But what is interesting and happening in Asia, the US and Europe and will also happen in India is that people will intrinsically look for services they can subscribe to, through their telephones.

Like, mobisodes are being created in the US; networks in Japan have interactive services like forecasts, receipts or rock music, depending on the network and the needs it services.

The other aspect of the business is migrating from a conventional to a digital platform. Creating and storing content in digital formats is more efficient since it obliterates the need to constantly clean and dehumidify it.

Once content is digitised, it can be multi-purposed. The same content can be used for making DVDs or videogames or for telephony and wireless. Re-purposing and re-packaging our content will earn us more revenue.

We believe the entertainment world is progressing in this direction of digitising and monetising content.

Also, syndication of content to other channels becomes an obvious choice. The purpose of creating a separate division leads to focus for what we believe is an important part of our future.

Currently, what percentage of revenue comes from digital? Is this the right time to enter this business?

Revenues are in single digits currently. However, the timing is right. We operate almost like any other global company in the entertainment space though we may have our own idiom.

And we're as good as any other country in the wireless or mobile world, although penetration is higher and handsets more advanced in Japan and Korea. Due to progress being made towards digitisation, we believe we won't be far behind on the learning curve.

In mobiles, India is a captive market after we've popularised our own service through existing shows. Though, there are some challenges with that business today.

Revenues shared with telephone operators are adverse to the broadcaster now, but that will change. If mobile services want to offer value additions to consumers, they need content and have to offer better prices to broadcasters.

How will the revenue model and pricing change?

The revenue sharing ratio needs to change. Currently it averages between 25-40 per cent for the broadcaster or content owner depending on who holds the copyright and the service.

For many telephone operators, value added services are a way to grow revenue, so pricepoints will only go upwards. It will require content creators to make content very smart, different and compelling for people to download.

What will the key components and revenue earners be?

The investment towards digitisation, which is a long term process, would be significant. But, clearly, syndication and the telephony and wireless business will be the key components and revenue earners.