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Eros Now crosses 1.1 mn paying subs in Q1, targets 5 mn subs by FY18
MUMBAI: Eros International’s over-the-top (OTT) service Eros Now has crossed over 1.1 million active subscribers who have paid for at least one month in the first quarter of the financial year 2017.
Eros Now’s target was to get a million paying subscribers in the fiscal year. Having achieved that target, the company now hopes to garner 2 million paying subscribers by the end of FY17 and 5 million paying subscribers by the end of FY18.
The OTT service has over 49.6 million registered users worldwide across app, WAP and web.
Eros Now has a five-year target of at least 15–20 million subscribers worldwide with a blended annual ARPU of $5 from India and $30 internationally, with 80% of the target subscribers from India and the remaining 20% from across the world.
Eros Now is in the process of acquiring 10,000 more films to add to its existing library of 5,000 films. It is also launching its original series in the second half of FY17.
During the quarter ended 30 June, the OTT player had struck a significant deal with Mukesh Ambani’s Reliance Jio, which is rolling out its 4G service across India. Subscribers as of 30 June do not include any contribution from the Reliance Jio deal, the company clarified.
Eros Now, which is following a platform-agnostic strategy, has already concluded deals with telecom operators and OEMs such as Airtel, Idea, LeEco, Micromax, Maxis and others. It is also available on Apple TV, Amazon Fire TV and pre-installed in Android TV around the world.
“Our digital platform Eros Now continues to hit important milestones by registering close to 50 million users across 135 countries of which over 1.1 million users are unique active paying subscribers. We have now set a new target of 2 million paying subscribers by the end of FY 2017. We are very excited about the prospects of Eros Now as we experience transformational growth within the opportunities presented by the digital explosion within India,” said Eros International MD and group CEO Jyoti Deshpande.
“We have recently signed a deal with Reliance Jio, which just launched India’s most advanced 4G network, with an ambition to cover approximately 80% of India’s population. Additionally we have signed partnerships with Idea Cellular, LeEco [leading Chinese international and technology provider] and Maxis [the only Indian OTT platform to penetrate growing Malaysian market].I want to reiterate our belief that in India the growth and customer acquisition will come from aligning with the telecom operators and the OEMs and not a pure business to consumer model like in the western world.”
Deshpande also said that the ARPU in India will be lower at $5 annually on a conservative basis, but converting 100 million plus subscribers is a realistic dream to be realised in the next decade.
“As a leading Indian film studio that has a dominant share in new film releases and also owns a massive content library, we are uniquely positioned to make this a game-changer for us,” she stated.
For the three months ended 30 June, Eros’ gross profit increased by 35.1% to $23.1 million, compared to $17.1 million in the three months ended 30 June 2015. The increase is primarily attributable to increased revenues from new releases and catalogues.
Adjusted EBITDA increased by 56% to $ 18.1 million compared to $11.6 million in the three months ended 30 June 2015. The increase reflects the profitability of the film slate and increased gross profit in the period.
During the quarter, revenue increased by 42.2% to $71.1 million, compared to $50 million for the three months ended 30 June 2015. ‘Housefull 3’ (Hindi), ‘Sardaar Gabbar Singh’ (Telugu), ’24’ (Tamil), ‘Ki & Ka’ (Hindi) and ‘Marudhu’ (Tamil) were the main revenue-contributing films during the quarter with strong performance across all revenue streams. Catalogue sales have also come off hold pattern and resumed.
The aggregate theatrical revenues increased by 11% to $37.4 million from $33.7 million for the three months ended 30 June 2015. Some of the company’s successful global releases were ‘Housefull 3’, ‘Ki & Ka’ and ‘Sardaar Gabbar Singh’.
The aggregate revenues from television syndication increased by 90.3% to $19.6 million from $10.3 million for the three months ended 30 June 2015, mainly due to increased catalogue revenues.
Aggregate revenues from digital and ancillary increased by 135% to $14.1 million from $6 million for the three months ended 30 June 2015, mainly driven by catalogue monetisation strategy and revenues from Eros Now/Techzone and increased contribution from other ancillary revenue streams.
Revenue from India increased 28.6% to $42.7 million in the three months ended 30 June 2016, compared to $33.2 million in the three months ended 30 June 2015.
Cost of sales increased by 45.5% to $48 million compared to $33 million. This increase was primarily due to an increase of $8.5 million in film amortisation costs associated with the company’s mix of films containing high-budget films for the three months ended 30 June 2016 compared to the three months ended 30 June 2015. There were also cumulative amortisation costs of its larger film library.
The rest of the increase was mainly due to corresponding increase in selling and distribution expenses associated with a stronger film mix.
Eros’ film slate comprised 14 films of which three were high-budget, two were medium-budget and nine were low-budget films, compared to very similar mix of 16 films of which two were high-budget, three were medium-budget and 11 were low-budget films.
The company’s slate of 14 films comprised five Hindi films, five Tamil/Telugu films and four other regional films as compared to a slate of 16 films comprising seven Hindi films, eight Tamil/Telugu films and one regional film during the same period last year.
“FY2017 is off to a solid start as we delivered our strongest first quarter performance in terms of revenue and EBTIDA since being listed on the NYSE over three years ago. Much of our success is attributable to our continued dominance in the box office and a well-balanced Hindi and regional film release strategy. Theatrical revenues during the quarter were driven by worldwide releases of ‘Housefull 3’, ‘Ki & Ka’, ‘Nil Battey Sannata’, ‘Sardaar Gabbar Singh’ (Telugu) and ’24’ (Tamil). In addition, ‘Housefull 3’ became the third-highest Bollywood grosser of the current calendar year. This year is also marked by strong pre-sales of the majority of our films to satellite channels. These included ‘Dishoom’, ‘Baar Baar Dekho’, ‘Rock on 2’, ‘Banjo’ as well as regional films, which exemplifies our de-risking strategy to ensure revenue and cash flow visibility,” Deshpande noted.
She added that ‘The Zookeeper’, a co-production between its franchise film label Trinity Pictures and Chinese studios Peacock Mountain Culture & Media, would be shot simultaneously in both Hindi and Mandarin and is scheduled for release in FY18. The film will be directed by Kabir Khan.
Another Indo–Chinese film, ‘Love in Beijing’, will be co-produced with Huaxia Film Distribution and directed by Siddharth Anand. It will be shot in both Hindi and Mandarin and is slated for release in FY18.
Additionally, two children’s franchises are being developed, ‘SNIFF’ and ‘Buddy Cop’, both of which are expected to be released in FY18.
“We continue to believe that China has tremendous growth potential. We will be releasing ‘Bajirao Mastani’, our FY16 magnum opus, in China in over 6,000 screens this October,” Deshpande added.