 "Twist in the plot: Balaji bets big on digital")
By June or so, India's largest TV content producer hopes to launch ALT Balaji (ALT being alternative), a subscription driven video-on-demand service, a la Netflix or Ditto TV.
By March 2020, Group CEO Sameer Nair expects ALT to have 4 million paying subscribers globally with an average revenue per user between Rs 60 and Rs 120. By then, he expects Balaji's revenues to be split equally between TV, films and digital. "And five years later, ALT should be bigger than TV and films," says he. At the moment, TV fetches 80 per cent of Balaji's revenue, and films the remaining 20 per cent.
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After several rough years, Balaji has just had a great couple of years. In 2014-15, revenues went up 60 per cent on the back of top-rated Hindi shows such as Kumkum Bhagya and Naagin and films such as Ek Villain. It hopes to close March 2016 with about Rs 270 crore in top line. Why diversify and spread your risks?
Mihir Shah, vice-president of Singapore-based consulting firm Media Partners Asia, disagrees. He points out that for too long the content industry has been bogged down in getting its legitimate share of value - whether it is from broadcasters or telecom firms.
Balaji, for instance, has a 20 per cent share of gross rating points (a measure of viewership) on leading general entertainment channels in India. But on market capitalisation it is 14 per cent of, say Network18, or less than 2 per cent of Zee Entertainment.
"Balaji is very well-placed. It knows the pulse of the audience and going on its own will give it complete creative and pricing freedom (online). As it establishes its digital platform, it will create value by redefining the terms of intellectual property (IP) ownership and exploiting new avenues of monetisation," says he.
Breaking the IP stranglehold
Globally, IP is a trigger for scale. In the UK, for instance, a 2004 change in trade regulations ensured that IP is retained by the firm that makes the shows, not the broadcaster. As a result, production companies such as FremantleMedia (Britain's Got Talent, American Idol) or Shine (Masterchef, Got to Dance) became aggressive about creating exportable formats and scaling up. This, in turn, has created the ecosystem that has made the UK the largest exporter of television show formats and a global force in drama and natural history programming.
"The day we own IP, the business will change. The idea (behind ALT) is to finance and build a direct-to-consumer model through the net," says Ekta Kapoor, creative brains and joint managing director of Balaji.
Television, she says, is for mass audiences, especially as growth comes from small towns. The net is about the youth or an urban mass that has got marginalised as shows such as Naagin take over prime time. ALT is about drama and programming for upmarket, urban audiences. The Indian fiction scene is exploding with ideas and writers, but TV, by its nature, limits the creative exploration possible.
"We can't explore affairs or fatigue in a marriage. As a producer I would like to explore human psychology and urban dilemmas," she says. While shows such as Bade Acche Lagte Hain or Ajeeb Dastaan Hai Yeh explore that through language and situations, there is scope for more. Especially if one sees the kind of films or edgy online videos that take off now.
The internet in India is on the cusp of big things - 319 million users, 100 million video consumers. The timing does seem right. But all the big daddies - Star (hotstar), Zee (Ditto TV), Eros (ErosNow), Netflix, Hooq (Singtel, Sony & Warner), Viacom18, among others - have already got into the game. Isn't it too late?
"Three years ago it would have been too early, two years later too late. The fact that everybody has got in further validates that it is the right thing to do," says Nair.
Much of what he is doing is to a plan.
Ektaa goes to school
Sometime in 2013, Kapoor attended an 18-day workshop at Harvard designed for owners/presidents of family-run businesses. It changed her world view and the idea of scale and institutionalising the business stayed on in her mind. The first thing she did on coming back was appoint an independent advisory board and ask it for an honest opinion.
"I got an hour's worth of walloping, on scalability, on costs," smiles Kapoor. To start with then, the board chose a group CEO in the former Star and NDTV honcho, Nair, in July 2014.
"One of the outcomes from the brainstorming was the need to unlock value. We are one of the top five production studios. Yet, our valuation is low, because we don't own IP, we are not a B2C (business to consumer) company, we are not the masters of our own destiny," says Nair.
So the focus is now on building a slate of 6-8 films a year and about 200-300 hours of original programming for ALT. That seems small when compared to the 1,200 hours that Balaji makes for TV every year, but remember it owns the IP for all the programming it will make for ALT. The whole focus is on monetising this across platforms and taking, "Balaji to the next level of Rs 500 crore," says Nair.