Punit Goenka, CEO of Zee Entertainment, also announced the new lower price of Zee5’s annual subscription and commented on the streaming platform’s pay-per-view experiment with Salman Khan’s film Radhe.
Due to the pandemic, Zee will reduce its investment in hyper-local content delivery network company Margo Networks, which operates under the SugarBox brand. The liquidation was announced by Punit Goenka, Managing Director and CEO of Zee Entertainment Enterprises Limited, in the company’s fourth quarter Call for Merit for the 2021 financial year.
“Given the opportunities our two core businesses are facing, we are prioritizing content investments in digital and television. In addition, the ongoing uncertainty due to the pandemic has made the operating environment quite volatile. Given these factors, we are rethinking our investment in SugarBox and will reduce it in the foreseeable future, ”said Goenka in his opening speech.
Zee had announced an investment of Rs 522 crore in SugarBox in April 2020; De-prioritizing the subsidiary means a clear setback for the company. The service was positioned as an Edge CDN, which means that content is cached near the edges of a network, closer to where users are, in order to stream content to them faster than would be possible with a traditional CDN.
ZEE5 continues losses in customer acquisition
The international launch of ZEE5 doesn’t seem to be bearing fruit yet, considering how recently it happened. “ZEE5 has only just started in international markets and the numbers are small. I would say it started well and it was well received, but the numbers are pretty small to take in, ”said Goenka.
- Inexpensive ZEE5 for more user base: Goenka said the price of Zee5’s annual plan was lowered to 499 rupees in an effort to gain more market share. The service is currently in deficit. He also admitted that the Zee5 product isn’t all that top-notch at the moment: “This approach will help us reduce customer churn and is in line with our long-term strategy to increase the proportion of B2C subscribers. The second aspect is too are working on improving the user experience of where we were behind the curve. We have created a technology and product roadmap to take this digital platform to the next level. I believe ZEE5 is sure to see an overall increase in performance over the next few quarters, ”he said. (Emphasis provided)
- Inflation in prices for digital rights is not a problem: Goenka said that while digital content prices skyrocketed, Zee’s internal co-production strategy meant it didn’t have to spend any more money compared to before. “Given our presence in multiple formats and regions, we acquire most of the rights to one film. Our strategy of co-producing films with renowned filmmakers allows us to build a strong film catalog that can be monetized across the various lines of business I just mentioned. This strategy enables us to forego bidding wars for film rights on multiple fronts, ”he said.
- Radhe and pay-per-view: In response to a question from Edelweiss analyst Abneesh Roy, Goenka replied that the company had placed great emphasis on Salman Khan’s film Radhe – he was offering it for free with an annual subscription – because it was a new experiment. “Radhe did what we wanted for us expected him, ”said Goenka. “The bundling we did because this was the first experiment with pay-per-view in this country was an innovation we did and it was pretty successful.” As for Zee5’s declining revenue, like this Goenka, a pending renewal of the telecommunications operator has not yet taken place.
- Most AVOD Subscriptions in India: ZEE5 in other countries is mostly only available by subscription, said Goenka. “First, because of the way India works with an AVOD and SVOD strategy, the international markets are independently tailored for each market. I can tell you that other than Asia Pacific or the SAARC region and parts of the Middle East, we do not have an AVOD service independent of SVOD. There are only a few selected markets where AVOD is also available. In markets like Europe, UK and US where we don’t have to launch ZEE5 yet, we will only offer an SVOD service as we are a paid service in those countries. Once we leave the linear platforms, we will only be available on ZEE5. Therefore we will only operate one SVOD service. Our majority of AVOD customers today are based in India rather than mainly international markets. I would say 90% plus is India and the rest will be out, ”he said.
Zee5 performance – Q4GJ21
- Revenue: Rs 110 crores
- EBITDA loss: Rs 160 crores
- Daily active users: 6.1 million
- Monthly active users: 72.6 million (mostly from ad-supported viewers)