SVoD platform ALTBalaji aims to double rev in FY20

MUMBAI: Balaji Telefilms‘ subscription video on demand (SVoD) service ALTBalaji is eyeing Rs 80 crore revenue in FY20. The OTT platform’s revenue has been on an upswing. It posted Rs 7 crore revenue in FY18 which increased exponentially to Rs 42 crore in FY19.

“Our revenue numbers are Rs. 7 Crores for the first year and Rs. 42 Crores for the second year and the guidance that we gave is around Rs. 80 Crores for year three. So that loss is not there, we are nearly doubling,” Balaji Telefilms management said during Q2 earnings conference call.

ALTBalaji has an annual cost base anywhere between Rs. 160 crore and Rs. 180 crore including content, technology, marketing. The OTT platform has positioned itself as a preferred choice for urban mass Hindi content.

Pulling out its content from third pay apps, the platform has entered into an exclusive arrangement with ZEE5. It has co-produced five shows to date with ZEE5 taking the total library of shows to 48.

As part of this collaboration, all the co-created original content will only be available on ALTBalaji and ZEE5 behind the paywall and not be free to the consumer via distribution partner.

Also, the 43 shows produced prior to September 2019 are available exclusively on ALTBalaji. The management expects this library to be a big draw for the new OTT audiences which it is using to drive direct subscriptions. “Our current active subscriber base stands close to one million and we continue to see good traction on the direct subscription front.”

On the ZEE5 deal, the management said, “Our deal with ZEE5 will help us get committed revenues towards content creation while allowing us to grow our direct subscriber. The partnership allows us to conserve our cash burn by way of co-production and move towards becoming profitable and a valuable OTT. The full financial impact of this collaboration will be seen in the coming quarters.”

Queried about the company’s strategy to compete against global players like Netflix and Amazon Prime Video, the management said that the platform will breakeven and therefore there is no need to have deep pockets.

“We are right now inching towards breakeven like we have always promised, between 36 – 48 months of launching ALTBalaji we will see quarter where we will have breakeven, cash breakeven has already been achieved. We are a debt-free 250 Crores plus cash company. So, we are positioned much better than many companies that are loaded with debt. Plus our TV business contributes over Rs. 50 Crores cash each year,” the management said.

The management noted that the company’s OTT strategy is to produce enough content to sachetise content much like in the shampoo and soap markets. “If we can sell our content at Rs. 2 a day that will help us take our ARPU to Rs. 730 a year. So, currently, we are Rs. 300 a year. So first, we have to produce enough content and of course, enough hit content to be able to sachetize our pricing, two years from now.”

Secondly, the platform aims to cater to two major target groups. One is the under-served male viewing audience, which is under served on TV in terms of shows and secondly, in terms of individual female 20 to 40 viewerships is something that we have to target. “These are the two major target groups in terms of our audience and we have to develop a significant library there.”

Thirdly, the management believes that it will have the richest data in terms of numbers and analytics and therefore there is a need to build an efficient recommendation engine two years from now to be able to optimise retention.

“Right now, because of the massive inflow of the new Internet users, retention is not top priority also. We do not have more than 42 shows. Once we reach 100 shows, taking a recommendation engine, investing in more AI&ML to ensure that retention happens will bring down the cost of consumer acquisition and retention considerably. So, these three moves will take us into the next step. We will also evaluate one single regional language to go into.”

The biggest learning for ALTBalaji has been that sporadically launching single shows in languages cannot attract the audience. “So, we will probably explore a business plan of launching it in one south language.”