ALTBalaji to pull out content from telecom platforms beginning October due to ZEE5 deal
MUMBAI: The management of Balaji Telefilms has stated that its over the top (OTT) platform ALTBalaji’s content will be pulled out from telecom platforms from October 2019.
Following the deal with ZEEL-owned ZEE5, the fresh content that will be created by ALTBalaji will be behind the paywall and will only be available on these platforms. All the content that is produced in H2 of FY20 will be on a co-created basis.
The company’s plan is to move from a multi-platform environment to a single partner environment. The ZEE5 deal will more than compensate for the loss accruing from the loss of telco deals.
The two OTT platforms have collaborated to co-create 60+ Original content series (in Hindi) which will be available exclusively to SVOD subscribers of both platforms.
“Yes, there it is basically that it is a co-sharing model, share the content on ALT as well as on ZEE. Before the ZEE deal we used to share the content on about 6 to 7 partners we are whom were the big Telcos now all that will be taken away and everything will be behind the paywall for all production that will go on H2, second half of the year,” the company’s said during the Q1 earnings conference call.
The exit from telecom platforms will not impact ALTBalaji’s revenue as the deal with ZEE5 will result in guaranteed revenue in-flow. ALTBalaji had ended FY19 with a revenue of Rs 41.6 crore as against Rs 6.8 crore in FY18. Of the Rs 41.6 crore, roughly Rs 25 crore came from partners including telcos.
“Last year out of Rs. 40 Crores that we do, Rs. 25 Crores we did on the partners including Telcos and everybody else in 15 directly, but that is 25 and we will get a considerable chunk of money from Zee that will ensure that are losses go down considerably, so everything is going to always be behind the paywall remember both in the case of Zee and us so we are out of the free environment and our top line is likely to more than double from last year or just about double from last year that is the impact that this deal will have,” the management added.
The management also stated that the ZEE5 deal will ensure that there is no cash insufficiency. The company is looking to break-even on consolidated basis in FY20. “Well we have done a deal with ZEE5 which will ensure that we do not have this cash insufficiency because we are getting a percentage of our cost compensated through that deal, so our aim is to break even on both the cash as well as on a P&L level, the consolidated business by March 31, 2020.”
The company is eyeing 1.5-2X growth in revenue for ALTBalaji over the FY19 number. “We are also assured a certain sum for revenue and we will continue our growth for trajectory in year one it is Rs. 7 Crores, second year Rs. 42 Crores, third year, we are likely to did very, very, we are likely to continue on the trajectory and probably go 1.5 to 2x what we did last year.”
Balaji is also excited about the launch of Jio Fiber broadband service as it will provide high-speed internet access which will ultimately aid content consumption.
“We are looking upon this at a very positive development, it will help consumer’s access internet at a very high speed, we have seen previously when Jio was launched that Reliance has revolutionized this market and made internet accessible to the masses of India that fits very well with our strategy because our content has been historically mass content, so all steps and measures taken to spread internet out at high speed like the once that Jio Fiber will lead up doing, it is a very, very positive move and a very positive development for us,” the company stated.
Balaji has already invested Rs 75 crore in ALTBalaji. The company aims to invest Rs 150 crore on the OTT business. “Last year we invested on Rs. 150 crore we think we should be investing around another Rs. 150 crore out of which Rs. 75 crore we had already invested in Q1, so our proposed investment again in ALT will be around Rs. 75 crore and there we will see later if we need to increase more funds,” the management stated.
The management believe that 800 hours of annual content production should be reasonable bet for television. It also sees a marginal inflationary price hike in terms of realisation per hour.
“What will help us to achieve our profit is tighter cost control and better cost management. We are understanding that the economy as such is again like I mentioned in the speech facing headwinds, so this year we will be anywhere between Rs. 300 crore and Rs. 350 crore on the topline, but we have already demonstrated good and tight cost control in the first quarter which will be carried through in the other three quarters,” the management said.