 "Saregama changes its tune")
With growing digitisation of media and entertainment, Saregama India Ltd. is now putting greater focus on the digital channel. For the century-old record company, one of India's best known music labels, the need to change track is dictated by technological changes that have made traditional modes of distribution redundant and a shift in consumption pattern where over-the-top (OTT) service providers are competing with telecom companies and content creators.
Sanjiv Goenka, chairman of Saregama's parent company RP-Sanjiv Goenka Group, says, "Digital will become a focus area for Saregama. We're going to produce films for digital, we are going to reinterpret our music for digital and we are going to do music videos for digital."
Saregama is producing 14 films - each with a duration between 90 and 120 minutes. Goenka says they would be low-budget but powerful films across genres, to be directed by people who have assisted eminent directors. "We do believe that with Netflix, Amazon and Jio coming in, there is going to be a market for these kinds of products. And we believe if we have content we could monetise it very easily."
As a music label and content producer for television, Saregama boasts a library of over 117,000 tracks in 14 languages and daily and weekly TV shows on air across regions in India. While the company is not willing to share any figures in terms of sales targets, Goenka adds they are aggressively pursuing the films, many of which are under production. Saregama reported a turnover of Rs 214 crore for 2015-16, and a net profit of Rs 7.5 crore. At a time of few takers for CDs and DVDs, songs under Saregama's label can also be purchased online at Rs 2 (MP3) and Rs 10 each (HD).
Goenka denies plans to compete with the likes of video streaming service Netflix, which also produces original content. He says, "We are a content company. We've also started doing a daily now on Zee TV. It's a primetime show. It's a question of reinventing. And we are refocusing towards wherever the consumption of content is now."
According to a report published by consulting firm Deloitte India last year, the digital music industry in the country is expected to cross Rs 3,100 crore in revenue by 2020, while the number of online music listeners is expected to reach 273 million. "The digital video subscription market is estimated to be around Rs 35-40 billion by 2020 at a monthly ARPU (average revenue per user) of Rs 60 with 10 per cent paid penetration among online video users," the report said.
Experts look at factors like availability of 4G data and slashing of rates by telcos after Reliance Jio's aggressive entry last month as critical developments.
| Quality content creators well placed: Jehil Thakkar |
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There are opportunities for two or three segments of players in the digital space. One is the OTT platforms. They are promoting services hoping to earn advertising and subscription revenue or hold on to the audiences they are losing from TV, providing a second screen. Now every major broadcaster has an OTT platform. Then there are telcos. The market will consolidate over a period of time and there will continue to be entry of foreign players. So that ecosystem will remain fairly effervescent for the next few years. Then there is also a big opportunity for content owners and creators. That is almost a more revenue-focused opportunity at this time, because monetisation through an OTT platform today is difficult. If you are an owner of quality content or creator of quality content you are very well placed today. |
Jehil Thakkar
Partner and head, media & entertainment, KPMG India
Jehil Thakkar, partner and head, media and entertainment, KPMG India, points out that online audience is increasing significantly. "Now with the anticipated drop in cost of data, subscription hasn't fully taken off yet. But Indians evaluate the cost of subscription and also the cost of data, as the streaming is going to consume a lot of data. Now, if some of these data in the last two months have become significantly cheaper - because of Jio and everybody else dropping their prices - and if that pricing level holds we will see a significant uptick in usage and therefore an expansion of these markets," he says.
Ashesh Jani, partner, Deloitte Haskins and Sells LLP, says that with diminishing physical sales, the content has to be refreshed every time and models have to be rethought of. He says, "The bandwagon of OTT, wherein even TV content companies want to test the market and have premium digital content, is streaming content online or for downloads. The music industry is also doing the same thing. To what extent that will be a success is anybody's guess. However, if the 4G platforms stabilise and you have sufficient bandwidth to do the download, I think this will pick up."
He explains the creation of video content by different players follows the need to earn profits. "If you keep something on premium content, similar to the satellite television broadcasters having some premium channels that's the only way you will be able to monetise in this world of piracy and technology. The first guy who sells the song will earn, the others will not."
In terms of selection of revenue models, too, companies need to be innovative, he says, adding that the challenge is "how to keep generating revenue". Also, a company could monetise on existing libraries as well as by releasing premium content online. But, like films, life is short for online content.
Jani cautions that companies cannot depend only on streaming digital content for earning money, as it's going to be a "volume game". "If you don't get the required volume in a few years' time you have to innovate. For that matter, even handset companies and telcos are having a bank of libraries which they lease out from companies which have bigger libraries (like Saregama) and they do their own streaming. So, one has to be prepared for competition from unique areas and different platforms."
While Goenka sees "a fairly large opportunity" in the digital industry he feels it is evolving. "We do believe that at the end of the day there is a value in content and people do get paid for content. The way content gets consumed and the way it gets monetised is different to the past, but you do get paid for it. So today, we get paid by multiple channels for using our content which is the audio content. We believe it would be the same for video content."
