Last Updated : Nov 21, 2018 01:52 PM IST | Source:

Opinion | For Zee to become India's Netflix, promoters must learn to share control

Zee needs to evolve to capitalise on its strengths and be ahead of the curve. That’s where a strategic partnership in the areas where it doesn’t have core competencies would help

Sounak Mitra @sounakmitra

Sounak Mitra

Zee Entertainment Enterprises wants to become India’s Netflix. Twenty six years after the launch of Zee TV, one of India’s earliest private sector television channels, media baron Subhash Chandra wants  Zee to transform itself into a global media technology firm. Last week, Zee Entertainment Enterprises said it will divest 50 percent of promoter Essel Group's equity in the company to a global strategic partner.

Becoming a global player in the media industry will not happen overnight. Chandra probably realises that he can't do it alone. Zee needs a technology backbone and distribution clout worldwide. That, naturally, can't happen through television as a medium. Globally, cable and satellite companies have been suffering for many years. It is Netflix, an over-the-top (OTT) video content platform, which has redefined the rules of the game by reaching 137 million subscribers across 190 countries through the internet, anytime, on any screen.

The Netflix wave has encouraged many media companies, and even the likes of e-commerce giant Amazon to make advancements in the OTT space. Chandra, who has always been a visionary, wants to be part of the same wave, and even take it further.

Going by the company’s management, the target is to generate at least 30 percent of the firm’s revenues from Zee5, its over-the-top platform that was launched in February. While the company has not disclosed revenues from the OTT business yet, Zee5 had 41 million average active users as at the end of September. It is available in 190 countries, disseminates content in 12 languages, and already has digital rights for 3,000 movies.

But Chandra’s global dream is not restricted to OTT. He wants to take OTT to the next level: immersive entertainment. As a Mint report on October 23 suggested, Chandra wants Zee audiences to "touch, feel, smell" while they consume video content. If they want, they would be able to experience products shown in the videos and this would have seamless e-commerce transaction facilities (in case one wishes to make a purchase of a product shown in the video). Chandra wants these features to be made available on over-the-top (OTT) video streaming applications such as Zee5. Besides, the platform will be equipped to control the viewers’ home environment (lights, security solution, heating, ventilation, air conditioning, etc).

To offer this kind of immersive entertainment, Zee has been working on technology that blends 3D audio, augmented reality, virtual reality, digital scent, holograms and touch. Z5X, the company’s studio in the US, has already secured patents on the technology. But it would require fine tuning. The firm will also need to develop fresh content that would go with the newest technology.

For this immersive OTT experience, Zee’s target markets include the likes of US, UK, China, Japan, Latin American countries and some European countries. Many of these are also home to a large Indian diaspora. India is far behind because it does not have adequate infrastructure to support immersive entertainment.

Still, Zee will not find cracking these markets easy. Besides the fact that it will need to create original content for each of these markets, it would have to compete with a bunch of different players such as Netflix, Amazon and Hulu in each region.

Producing such content would also require enormous investment, part of which Zee can do on its own. In FY2018, the company had cash and cash equivalents of around Rs 1,610 crore.

But just investments would not be enough. Zee has so far been a content marketing (and development) company. It has seen success for decades in India, and lately in markets with Indian diaspora, in the television medium. OTT is a different ball game where the lines between media, content, telecom, technology and manufacturing are blurring fast. Zee needs to evolve to capitalise on its strengths and be ahead of the curve.

That’s where a strategic partnership in the areas where Zee doesn’t have core competencies would help. However, the firm is known for not having a good record of partnering with outside CEOs or joint venture partners. Zee’s success has always come from the father-son combo – Chandra’s vision and son Punit Goenka’s execution skills – during the past 12 years.

However, with promoters lowering their equity holding, Zee should learn to share power to outsiders. That ultimately, could prove the key to how much it develops the adaptability to become a global media-tech player.
First Published on Nov 21, 2018 01:52 pm
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