Rainshine Entertainment targets 3-6 investments in the coming year
MUMBAI: Rainshine Entertainment, a newly formed media, and entertainment (M&E) investment company, is targetting three to six investments in the coming year. The company is looking to raise $50-75 million to invest in companies.
Earlier this year, the company which is laser-focused on scaling up its presence in the digital content creation space had announced its first three investments through significant stakes in production house Culture Machine, Weirdass Comedy, and Kinsane Entertainment.
Rainshine Entertainment COO Anuraag Srivastava said that the company is targetting three to six more investments in the coming year. He said that the company is looking to raise $50-75 million which will be deployed into buying stakes in companies.
“There is no ticket size constraint. The criteria is that the company has to be innovative or large. It is not possible to be neither. Rainshine is fundamentally buying IP. We want to buy brands which have been present for a certain period of time. Wherever that is available we would like to buy. We target breakeven of one to two years. It takes around six months to close a deal,” Srivastava told TelevisionPost.com.
“We are not a fund that invests in startups. We look for long term operational control. We are not an investor. We are an operating company. Therefore long-term we want to operate the company. However, we do not have to do this upfront. Over time we would like to work with a company where we bring value.”
The aim for him is not to achieve valuation for the sake of an exit. “We do not look for exits. We are the final owner. We are the company that people come to when they want to exit a company that they have a stake in. We are not an investment company that looks at selling everything.”
Rainshine Entertainment’s USP for a company that it wants to buy a stake in is that it brings global sales into the picture. “Our sales are usually global. Most Indian companies that we look at usually do not have global sales capability. So most companies that partner with us immediately get a revenue and profit bump which is nice for them.
Rainshine, he said, is non-interfering when it comes to creativity. However, the company looks after the financial, projects and sales aspects. “So with creative control being left to the company and sales being added it is hard for a company to not want to work with us. We take great pains to not take creative control. We look after the financial, projects and sales aspects. If I have to look after the creative aspect as well then what is the point of buying the company?”
He goes on to add that the quality of the founders is probably the only thing that matters. “New businesses like digital media still depend on the culture being put in place by a few people. At some point in time founders become irrelevant but the companies that we look at are still small. Without the founder, the company has no basis. I am sure that a time will come when we will not need the founder but to begin with when you look at the size of the companies that we target the founders are critical.”
He said that Rainshine Entertainment needs a good company and a good founder before deciding on an investment. “We need to get along with them. We need to like them and more importantly, they need to like us.” He also clarifies that Rainshine Entertainment is not looking at traditional media. That space he noted does not need Rainshine Entertainment.
He further noted that digital content is being consumed a lot more in the country through OTT. He points out the need for content personalisation unlike in the past where the family watched everything together. However today viewing habits are splintering with the father, mother, son and daughter watching different things.
“They are fortunately or unfortunately watching it on their mobile phones. The same family watching one hour of content on TV at 8:30 pm are now watching five hours of content through different things.”
This, he said, is a real disruption and he noted that the last time a big disruption happened was when cable TV was launched. So Rainshine sees an opportunity to disrupt the media market. This is why Rainshine was formed to build content for digital distribution specifically for people who want high-quality content that is different and digitally available on demand wherever and whenever they want.
According to him, the big challenge in running a successful digital entertainment business in the country is the availability of talent. He said that since the digital part of the entertainment business is new it does not have many people who have done it before. While the TV industry has great talent it does not mean that people can move to digital automatically as the mindsets are different.
“If you ask me the single biggest issue that the industry has is the availability of not acting talent but production talent. The second challenge is around regulation. This business is self-regulated and at some point, it has to figure out how to regulate itself. This is a challenge that the government will probably take head-on at some point in time.”
When asked about TRAI’s proposal to regulate OTT players like what it does in telecom Srivastava noted that it is inevitable that some rules are put in place. He noted issues like fake news and said that one cannot say that it should all be unregulated. He also feels that if the issue of a single measurement currency for digital is not resolved then in the long-term revenues will get impacted.
In terms of the OTT business model of being advertising or subscription led, he said that today nobody has a clue on which route will work best. “People who do one want to do the other as well. We serve OTT platforms and they are our clients. I see most of them doing AVoD at this point in time. Of course, Netflix being Netflix has delivered high-quality content and has gotten people to pay for it but most platforms have not been successful in this regard. Indians are very reluctant to pay.”
He sees a lot of consolidation happening in the digital content space over the coming 24 months. “You will need either distribution muscle or scale to survive. I don’t think that anybody who is small will survive. Today do you see small TV production houses?”
He noted that Rainshine Entertainment has put in place teams that focus on two things. One is high volume sales and so it has senior sales people. The second thing that it has put in place is compliance. The aim is to take care of financial and other compliance requirements like HR. Another area where it does a huge amount of investment in is project management. This is something that he finds lacking in India’s media industry.
“If you want to do anything very large with any of your clients then it is impossible to do that without the ability of being sure. The client, for instance, wants to be sure that the movie will be delivered within the stipulated period of time.”
He noted that without a firm focus on project management chaos will ensue. Project delivery cannot depend on personal relationships. It has to be based on the commitment made.
Rainshine focusses on creating unique IPs by leveraging resources and partnerships and one of them is UltaFullta, which launched on 30 May 2019 to coincide with the cricket World Cup. This cricket digital game show is unique in that it celebrates both winners and losers. He noted that the aim is not to convert TV viewing to the mobile phones but to combine the power of digital through interactivity and bi-directionality. The goal is to be innovative through this medium.
The company creates content in various genres including animation through kids content, news, sports, short movies, games, web series. Bidirectionality is increasingly becoming another area of focus where the end can be changed.
He noted that with web series the company experiments with multiple endings. “I can ask the question of whether the user wants to see the person dead or alive. One could not do this earlier.”
He also said that it is not enough to just do fiction and non-fiction. It is important to get into sports, news. Rainshine Entertainment is also focussing increasingly on regional content and hardly creates content in English anymore.
Having said all of this he feels that kids content is the holy grail to be in when it comes to digital as there are no boundaries. The Kinsane deal helps in this regard. Kids content he noted travels globally more easily than adult content.
“The good thing about kids content is that it is usually not for a local country. A child is a child and will enjoy a show regardless of where he/she is sitting. Kids content is watched globally and can only be distributed digitally. It is difficult to take an Indian movie to Brazil but it is easy to take an Indian kids show to Brazil. Indian kids watch ‘Doremon’ which is Japanese and they do not complain. Kids do not care but adults do. There is no cultural barrier for kids content.”