For the first time in India, HBO Asia will be launching two premium movie channels based on the subscription model. The company, which expects to launch the channels — HBO Defined and HBO Hits — in two months, is betting big on the digitisation programme and wants to get the early-mover advantage in the premium segment.
The company has partnered Eros International for the content of the ad-free channels. Hindi movies (provided by Eros) would form 30 per cent of the content, the rest will be from Hollywood studios like Paramount and Time Warner. The channels will be available in standard definition and high-definition. Those will also have Hindi feed. There are plans to have multiple languages feed, too.
The alliance will also develop HBO’s existing formats for India, as well as create original content for domestic market and distribution abroad.
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While the launch date and pricing are to be finalised, Jonathan Spink, CEO, HBO Asia, said they were negotiating with direct-to-home (DTH) and digital cable players for carriage of the channels. “We would like to offer the channels in a bundle for around Rs 100 a month per home,” he said. When asked if the price was too steep, Spink said entertainment in India was very cheap. “The timing is perfect for these channels as conumers are getting rich and willing to pay for the right content. At the same time, what they are paying is ridiculously cheap. In some Asian markets, HBO channels are available at $10 a month. Even in Sri Lanka HBO we charge $4 a month per subscriber. So, I think Rs 100 is the right price,” Spink added.
In mature Asian pay-TV markets, HBO runs five international channels and one Asian channel. In India, HBO runs one movie channel, while Time Warner, the parent company, also runs a library channel WB.
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Spink refused to comment on WB, but said HBO would continue as an ad-supported channel. “Will we launch more channels in India? We have not decided as of yet,” he said.
Indian movie market, specially English, is a tough one with four major players — Star Movies, HBO, Movies Now and Pix. While Star Movies leads the genre by far, there is intense competition among the other three.
So, is this why HBO collaborated with Eros? Answers Kishore Lulla, executive chairman of Eros International, “This is a win-win game for both parties. The two channels will mainly premiere movies on television for the first time. We are creating an exclusive four-six week movie airing window between theatrical release and TV premiere. I am sure the consumer will like it.”
On revenue sharing, while Spinks declined to comment, Lulla said Eros would get 35-40 per cent of the profit margins.
“There is a huge upside for us and our Indian shareholders. While we produce 70 films a year (Hindi and other regional languages), we will give 10-20 to HBO on an exclusive basis for the limited window. Our total share from the channels’ net income will be close to 35-40 per cent,” Lulla explained.
Eros is expecting that in 2-3 years the total digital subscribers will be 175 million in India and out of which at least 10 per cent will opt fot the two channels. “The average in other Asian countries is 25 per cent, but even if we get 10 per cent of the digitalised subscribers, the upside is huge,” he said.
As per FICCI-KPMG report on Indian Media and Entertainment Industry, the subscription revenue for TV channels is poised to grow at a CAGR of 29 per cent between 2011-16. It is expected to fetch broadcasters Rs 17,600 crore by 2016.
While HBO has finally taken the step of following the same business model that it follows in US and other countries, it will still take some time for an Indian consumer, who is used to pay Rs 150-200 per month for over 120 channels, to pay Rs 100 for just two channels. The mind set is the main reason, why there are no players following just subscription model.
The only other channel which was completely subscription driven was BBC Worldwide run kids channel Cbeebies, which the company dicided to close last week (November 30), after not being able to make money.
Industry observers feel there is still time for such channels to succeed.