It is a great example of how bullish India-centric entertainment firms and their shareholders are on the potential of online. Some of the largest film and television firms in the country are starting to make serious bets on online.
In February this year the Rs 7,200-crore Star India launched hotstar, a mobile app. At 16 million downloads and 50 million unique users, hotstar has seen "the fastest adoption for any digital service in the world," claims Star. In 2012, the same year as ErosNow, the Rs 4,883-crore Zee Entertainment launched its over-the-top service Ditto TV. In 2013, Sony launched its Sony Liv.
Many of these forays are critical. Not just because they involve the big boys. Star and Zee are among the largest groups in the Rs 1,00,000-crore Indian media and entertainment industry, and own huge amounts of popular content. But also because their success or failure could set the tone, tenor and context of online entertainment's growth in India. More than three-fourth of YouTube's traffic and revenues come from professionally generated content - the stuff that firms such as Star, Zee, Eros are experts at understanding and creating. Most of these players know that a good marriage between distribution and content is what could help build a profitable online business, a la Netflix.
Last year, Star started to gradually move out of YouTube, where it has been among the top 10 for long. It is spending, say reports, close to Rs 1,200 crore over five years on the bet that hotstar will become the second, third or fourth screen in India's predominantly single-TV market. At 160 million homes or over 800 million people, India is the world's second-largest TV market, by volumes. But television watching has remained at about three hours a day, even going down in some parts, led largely by the young who are increasingly switching to online - a story publishers are familiar with.
Eros' trading model - picking up interesting projects from India's prolific film producers and distributing them - helped scale the business up fast. But further growth will come not just from releasing more films but by finding more ways of making money on them.
Enter digital. At Rs 4,350 crore in advertising and over 40 per cent growth rate, digital is hot. What has given it new impetus is the rise of digital video consumption and devices. India is among the world's largest markets for online video consumption (59 million, says an old comScore report) and has a fast-growing smartphone population (70 million and growing). The bad news - poor ad rates. Online content gets Rs 100-300 for a thousand people compared to Rs 150-Rs 1,000 on TV.
So while hotstar or ErosNow will get audiences, they will have to figure out how to make money on a business that their main businesses will continue to subsidise for years to come. If you factor in infrastructure, electricity and penetration, India will remain a TV market for long. The sheer numbers - 800 million versus 152 million online - are weighed heavily in favour of TV, for now.
Every major film studio in the world has a TV arm that is larger and more profitable. The Indian TV industry is four times the size of its film industry. When broadcasters cut their costs of acquisition in 2014, it turned out to be a bad year for Indian films. Since pay TV has taken off in India, Eros had decided that TV was a great way of monetising its 1,200-plus film library. In a market where the TV story is yet unfolding, it might have made sense to stay invested in both TV and digital. Maybe Eros' shareholders' will change their minds.
But the big online hustle in the world's most prolific and hair-splittingly difficult entertainment market is well under way.
Twitter: @vanitakohlik