See digital biz contributing a third of revenues: Balaji Tele

Viewers in India will be charged USD 1 per month for the content, while it will be USD 2 everywhere else, says Nair.

Nair is optimistic about having 4 million viewers by 2020, adding that the company is betting big on Azhar, a biopic based on the former Indian cricketer.Below is the verbatim transcript of Sameer Nair’s interview with Ekta Batra and Anuj Singhal on CNBC-TV18.Ekta: First wanted to start with the fund raising that you just recently concluded. It was around Rs 150 crore which was via preferential equity to multiple stake holders such as Vanderbilt University, etc. Tell us where is this money going and what is it going to be utilised for? A: We raised the money primarily to fund our new digital business, ALT Balaji; that is what is called. It is an over-the-top (OTT) subscription video on demand (SVOD) business that we hope to launch by June-July of this year. We have been working on this for the last -- about a year has passed now since we have been working on it. So, this is our new digital play. Balaji is historically been a B2B business, we make content for television companies and then they monetise it. So, this is going to be our first foray into a B2C business which is we are going to build a platform, we are going to create original premium content and we are going to reach out to consumers, Indians globally. Anuj: This will be along the lines of Netflix?A: Could be, that is the comparative space of OTT SVOD so Netflix is of course a gold standard globally so yes it would be nice to be compared. Anuj: Have you built in any kind of models in terms of what it will do to your revenues or add to your numbers?A: We have not build models in the sense that as we speak today, currently it is about 70:30 skewed in favour of television and movies and when we have a good movie year, when we release a lot of movies like which will be next year, the company revenue sort of becomes 50-50, 50 for TV and 50 for movies. I think in the outer years, once ALT grows to some scale, it should become a third each and really looking out into the future, we believe that ALT will do off the other two businesses. Ekta: Just about the Neflix part of it, it will be a similar concept if not the exact but would you then be selling your primary original content to Netflix or would you retain it separately only for ALT?A: All the content that is being made is made only for ALT. Ekta: Your existing content as well?A: The existing content we don’t own, the existing content is owned by the broadcaster. So, all the daily soaps and all the shows that we make, is currently owned by the broadcaster. So, that is the broadcaster’s model. What we own is the movies that we have which we already have licensed to Netflix. In fact our licensed to all digital platforms and they will also be available on ALT in the same basis or on exclusive basis. However, the new content that we create, will be exclusively for ALT and then as years pass, when we have build seasons of it and created a library, we may syndicate it in later years. However, for now, it will be exclusively on ALT. Anuj: A word on your movie business. Kya Kool Hain Hum 3 clearly didn’t live up to the expectations.A: Didn’t live up to the expectations but we sort of scrapped through. It was not too expensive a movie. Anuj: Does that alter sort of scenario going forward because you have Great Grand Masti now, Grand Masti had raised expectations in terms of the genre, clearly Kya Kool Hain Hum would have toned down those expectations? A: It is like a mixed bag, these things. We just got news today that Great Grand Masti got cleared by the tribunal that is overriding the Central Board of Film Certification (CBFC) sort of recommendations on cuts and stuff. However, we have got a very good lineup of movies coming up so next year apart from that we have got Azhar, A Flying Jatt, Udta Punjab, Half Girlfriend, so our movie portfolio has gone pretty much beyond just the sort of comedy, sex-comedy kind of portfolio. So, we are looking forward to next step because it is a good lineup. Ekta: Would there be any plans of possibly demerging your film business in order to monetise it?A: Nothing yet, we are talking to a few people. We always look to collaborate in the film business, we are always looking for partners in the film business either on a movie by movie basis or for the entire business completely. So, there is no real plans at this point in time but we always are looking for opportunities to de-risk the movie business. Anuj: Some more plans on your digital platform, what are the kind of plans that you will offer upfront, for example Netflix we know like Rs 500-700 per month, are you targeting something similar, are you targeting something lower to begin with?A: Netflix is obviously very different model. We are looking to be priced more at USD 1 per month for India and USD 2 per month globally. So, Rs 60 and Rs 120 and this is for a fantastic collection of original premium content. Anuj: This will have exclusive content?A: Exclusive content, original content, not available anywhere else, never seen before.Ekta: What would that do to your content costs as a whole because you would be creating so much content which will only be for your digital platform. So what would be the investment be like? A: That is why we have raised the money. We have raised the money primarily to fund this new ALT business and the investment will be driven about 80 percent goes towards content and marketing and 20 percent to tech and distribution, so, that is the sort of focus. So, we are spending money, because I think the time has come to create a new level and new kind of brand of content. I think the consumers are there out there. Anuj: How much subscriber base will you require to breakeven?A: We are looking at to getting to about 4 million subscribers by 2020. So, currently when we look at our market size, you want to sort of size the market, we think there are about a 100 million people out there who have smartphones who are connected to the internet, who have the ability to pay the kind of money we are talking about. Rs 60 is like a cup of coffee and you are talking about a month’s content for that. So, we think that the market is and this today – 100 million is the target size today, next year by 2020 it would be 200 million. Ekta: Just a quick word on Azhar, it is suppose to be a big awaited movie. How much have you already invested and what is the sort of partnership or distribution tie-up that you have? A: Azhar is a movie we are doing in partnership with Sony Pictures, MSM Pictures who are our partners on this. The movie is ready.Ekta: What has been the total investment and what might be the return that you are anticipating? A: I cannot tell you about return because that depends but I the total cost of the movie is going to be about Rs 40-42 crore by the time it is released and it is all set for release. In fact the promos should, the trailer should break by the end of the month. We have targeted that way and I think the release date is May 13. Anuj: Could we see a cameo from Azhar in Azhar, I know Emraan Hashmi is playing the role of Azhar. A: Yes Emraan is playing the role though Azhar has been really supportive and helpful and in fact he has been working with Emraan in all the training, all the styling and the walk. I am a big fan and I have spent watching Azhar play cricket all along so if nothing else I am personally looking forward to it. (Interview transcribed by Priyanka Deshpande)