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Viacom18 turns 10, eyes faster growth in next decade

Viacom18’s success during the next decade will depend on factors such as how well it monetises OTT, produces content and games that can hook millennials, the regional play of TV and its film production unit and TV viewers moving to HD

In the 10 years of its existence, Viacom18 has captured a significant pie of Indian television across genres. The company has grown up to be a Rs 3,100-crore strong media house with over three dozen channels in regional, national and international markets and many other businesses such as a film production house, a live events company, a restaurant business and an OTT platform.

The company that had over 80 per cent of its total revenues from Hindi GEC Colors five years ago, now has other platforms contributing significantly. Currently, only 50 per cent of Viacom18's total revenue comes from Colors.

Viacom18, which is a joint venture of Viacom Inc and Network18, manages to make almost 10 per cent of its annual total revenues (around Rs 30 crore) in profit. This is despite the fact that several business, such as the OTT platform, are still bleeding.

To ensure strong growth during the next decade of its journey, the media house has announced the expansion of the television vertical to the Tamil Nadu market with Colors Tamil in February 2018. The digital segment of the business will also see a huge leap as the media company is expected to introduce a paywall by mid-2018 for its digital VOD platform Voot.

To commemorate the 10th anniversary, Viacom18 launched a new brand film, conceptualised by Leo Burnett Orchard and produced by Offroad Films. Highlighting #OpenNewWorlds, the film explores how Viacom18 has been encouraging everyday Indians to explore possibilities, push their own boundaries, embrace opportunities and challenge norms.

BestMediaInfo.com captures the journey of the company and the future growth challenges it faces.

Journey so far

Television is Viacom18’s biggest business vertical, which stated with three channels in 2007 (MTV, Nick and VH1) and today operates 44 channels within Hindi entertainment and movies, English entertainment, music, youth, kids and regional genres in 80 countries. Launched in 2011, the film business of the media house has become profitable since the 2015 fiscal. The motion pictures vertical has tied up with a lot of companies to release their movies in India, the recent being Paramount Pictures and Lionsgate Movies.

Within the Live Entertainment segment, the company already has intellectual properties, including Supersonic and Chuckle Festival and others. The consumer durables and merchandising arm of the business, launched in 2009, is the second largest merchandising and licensing company in the country. Voot, the digital OTT platform by Viacom18, has emerged as a strong video streaming platform with over 50 minutes of watch time per user per day in a matter of 18 months, having 30 million monthly active subscribers. The company has also partnered with Google for the Progressive Web App (PWA) for Voot, which gives you an app-like experience on the browser.

Viacom18 recently launched VStep – a start-up engagement programme aimed at mentoring and providing test environments for start-ups working in the entertainment and media-tech spaces.

Sudhanshu Vats

“In my mind, we are a 10-year ‘young’ future-focused organisation that continuously challenges status quo. Unlike legacy players, we have often entered new areas much later and yet carved out a distinctive identity for ourselves. We have mushroomed into a profitable full-play Rs 3,100 crore media powerhouse," Sudhanshu Vats, Group CEO, Viacom18 explained.

Elaborating on the brand promise #OpenNewWorlds, he further said, “Our vision to be India’s most admired M&E company is reflected in our intent to open new worlds for our audiences. Through our shows, Voot Originals and movies, a strong undercurrent of social messaging drives a lot of our content.”

Vats also explained the five values that the company works on – Create tomorrow, Stay Curious and Stay Fearless, Listen Deeply, Learning from the humility and Executing with Excellence.

The way forward

One of the unique innovations of the company is the restaurant chain Flyp@MTV, which is operating in three cities, the first being in Delhi, then Mumbai and Chandigarh. “We will go to 10 cities in the country. If 100 was the breakeven point, it is running at 180,” said Vats, explaining the success of the venture.

The six pillars that pave the way forward for the media house are listed below. It also mentions the company’s targets in years to come.

Sharper segmentation and new content: Viacom18 will continue to look at further segmented markets. Vats added, “I am a firm believer that India has 1.3 billion people who are distinct but clustered and to identify those clusters and target them is important.”

Capture white spaces: Looking at white spaces and trying to expand the broadcast portfolio is the next step for the company. It also intends to aggressively up its regional movies production and will bring more digital content.

Go digital: Voot Live (PWA feed) and Voot Go are two highlights of the future plans of Viacom18. The company is in discussions with the public transport agency in Maharashtra for offering the commuters in the bus a dedicated service that doesn’t require internet, it works on intranet. “We are working with a technology company for this. Voot will go international soon and we will strengthen technology backend and analytics capabilities,” added Vats. Voot will also go behind paywall by middle of 2018.

Develop ecosystems: The company is trying and scaling IPs and launching newer ones. It will explore new business lines in merchandise while expanding existing ones. “We do merchandising outside Viacom18 characters as well like representing Peppa Pig and FC Barcelona in India,” explained Vats. With Be Viacom, the company wants to think ‘ecosystem’ for all brands.

Strengthening content and talent engine: The company wants to invest in digital content capabilities and develop talent.

Drive synergies and build capacities: Deepening the culture of innovation with platforms like Big Belly and the start-up engagement programme are some of the efforts in this direction, along with the AR and VR experiences. “We are looking at games like Monster Math. We have developed a data warehouse. We have brought digital asset management to increase operational efficiency. We are enabling better targeting and monetisation through Amagi and many more.”

The company has a scorecard approach to talent management and a young leaders’ programme.

Upcoming challenges and growth opportunities

Vats, in a discussion at the media roundtable, voiced his opinions on a lot of issues and prospective challenges and achievements of the network. Without divulging much information about the future plans, he explained a few things the network would want to look forward to.

Starting with the segmentation of audience and the challenge to target them, Vats explained how the leads from the Voot subscription and viewing patterns help gauge the demographical affinity towards a certain piece of content.

He explained, “Out of the 30 million subscribers that we have, 40 per cent sign in. We have a reasonable understanding on demographics and location. That juxtaposed with watching habits and movement from one programme/ genre to another enables us which content works, and we will have a similar strategy structure for television too. We are also going to start mounting the pilots. We might soon get into a crowdsourced storyline. You might crowdsource on ‘a’ medium and play that content on another platform.”

While the network is playing huge on digital, the fact that big daddies like Netflix and Amazon Prime have entered the Indian market cannot be ignored. The cost of content is high on digital and monetisation is still very low. While answering about how will it cope with the competition, Vats said, “Netflix was profitable majorly for four reasons – the cable bill was too much in the US (in India, TV remains the most inexpensive medium). Second is that almost all the content in the US and UK is owned by the production houses and studios, which makes it easier to tie up and aggregate it. India is difficult to aggregate since 80-90 per cent of the TV content is owned by the five big broadcasters. One of the chances that it will survive is to do 100-200 hours of original content. It is going to put pressure on costs. India will remain a hybrid country with both digital and TV co-existing. There will be a free ecosystem and there will be paid.”

The digital VOD platform is certain to increase the number of originals when the paywall is up and running. Vats is a firm believer of, ‘More money into the content does not guarantee more revenue from the content’.

Since a lot of youth and kids are moving to the digital screens, Vats said that Viacom18 is already putting in efforts to grab these audiences. “We are storytellers. We have to evolve business models for the streams that are monetisable. We are privileged as business leaders that India is a 'and' country - both TV and digital.”

Content game will change to a certain extent once the producers start putting in money, taking risks and claiming IPs. But Vats feels that there will always be a small town storyteller willing to do it for broadcasters in the foreseeable future for now. “Philosophy of ownership is something that we want to retain.”

About starting an in-house TV production house, Vats said, “Ownership of tangible physical things is less important. It is the idea that is important and someone can execute that for you. Maybe we can also have a digital studio. The model is becoming more idea-heavy and less asset-heavy.”

If the new tariff order comes in, the broadcasters will get a way to monetise the HD ecosystem. In any case, HD quality is needed for subscription-led streaming service and hence, Viacom18 shoots in HD. Vats is not happy with the kind of progress that HD channels have made and feels that more could have been done. “HD growth has been slow till now and I am surprised. Is it there are no HD-enabled TV sets, or boxes are not HD compliant or the packages are expensively priced. We will have to check. Our conventional TV platform owners may not be doing enough to promote HD.”

Out of the total 183 million TV homes, 30-40 million are Freedish homes (not paying anything), 10 million are HD homes, the remaining 130 million are being looked at with the same lens. “There should be about top 10 million homes paying at a differential rate, some of it has been done by Tata Sky in my opinion. There are another 30 per cent (30-40 million) homes who can pay extra for HD. We need to find them, understand them and build packages for them,” Vats added.

Digital VOD platforms are used mostly as a catch-up medium by the audience, who have probably missed the series on TV. Then how does new and original content help? Voot gets six per cent viewership from Originals, 15-20 per cent from exclusives (Unseen Undekha, Behind the Scenes) and the rest, about 75-80 per cent, from advertising-led VOD.

“Exclusives are important when there is an evolution from audience to being fans. In digital space, it is your ability to capture these fans. Also, as we go to subscription-led VOD, the exclusives and originals will go up to may be develop a 50-50 or 60-40 with Catchup as a major part. Plus paywall will also be about change in experience – ad-free or lesser ad.”

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