Eros plans $250 mn Capex on studio, digital biz in FY19

MUMBAI: Eros International plans to spend a Capex of $250 million in FY19 on the studio and digital over the top (OTT) business Eros Now. In FY18, the company had spent $187 million including $50 million on Eros Now and the rest on the studio business.

The company will spend $75 million on OTT business Eros Now while the studio business will consume $175 million. The Capex includes the 50% share of the investment that the company will make in joint venture (JV) with Reliance Industries.

In February, Eros and Reliance had formed a $150 million JV to produce movie and digital content. The IP will be jointly owned by Eros and Reliance.

The digital rights will be jointly exploited by Reliance Jio and Eros Now while Reliance-owned Viacom18 will have the first right to the satellite rights of the movies produced by the JV.

“This year, the Capex guidance is around $250 million. So roughly $75 million could be on Eros Now and $175 million could be on the studio business,” Eros International executive chairman and CEO Kishore Lulla told analysts during an earnings calls conference.

Including the Reliance’s share of investment, the total Capex will be $325 million. “The $250 million includes our $75 million share. So if you look at –it would be $325 million but our share is to $250 million,” Lulla added.

Eros has a slate of over 30 films which will release in FY19-20. Some of these movies will be part of the JV with Reliance.

The movies produced by the JV will be first offered to Viacom18 in which Reliance-owned TV18 owns 51% stake. “The television syndication we have the first option for Viacom because Reliance owns Viacom 51%. So whatever is the arm’s length base rate, they will have the first option to acquire the satellite, pay television rights for those movies into the joint production,” Lulla stated.

Lulla is also confident that Eros Now will be able to double its paid subscriber base to 16 million in FY19. As of 31 March, the subscriber base was 7.9 million. “We’re very confident. We’ve got lot of minimum guarantees from the telcos. We are working with and as well as the various platform,” he stated.

The OTT space has great potential due to the upsurge in consumption on mobile. Lulla feels that Eros Now can get 50 to 75 million subscribers in the next 3 to 5 years.

Eros is looking at average revenue per user (ARPU) of $4-4.5 per year in India from the telcos on the B2B2C model and around $7-8 on the B2C model. Internationally, it is eyeing an ARPU of about $30 ARPU per year.

Eros Now, which has a library of around 11,000 movies, will have 50 to 75 digital premieres and about 10 to 12 big shows, and also about 20 average shows.

Lulla also revealed that the ARPU for Eros Now in FY18 was $4. The revenue was between $30 million and $35 million. “And way going forward we are looking at about $70 million to $80 million roughly revenue on the platform,” he averred.

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