India is a country of immense diversity which means the content offerings continue to be even more diverse. Despite the popularity of vernacular content, Hindi has continued to lead the content popularity. OTT platforms have resorted to expanding their library with content from different languages and different geographies in order to attract more consumers. While expanding the content library has become important, OTT platforms have resorted to multiple ways of reaching consumers including collaboration with telecom companies.
Shemaroo Entertainment posted a 4.25% increase in revenue from operations to Rs 155.92 crore in Q3, FY24 from Rs 149.56 crore during the same quarter in the corresponding year. The company posted a net loss of Rs 30.43 crore in Q3, FY24 while it posted a net profit of Rs 1.026 crore in Q3, FY23. In a conversation with BrandWagon Online, Anuja Trivedi, CMO and Saurabh Srivastava, COO-digital business, Shemaroo Entertainment, talk about the company’s expansion and marketing strategies. (Edited Excerpts)
Shemaroo as of late has expanded its OTT presence through telecom collaborations. How has the move worked out for the company? What has been the increase in the number of users through telecom collaborations?
Saurabh: Shemaroo has a subscription video-on-demand (SVOD) OTT (over-the-top) product, and a significant level of consumer traction. The next step for the company is to expand it using partnerships. We have expanded both domestic and international presence. We’ve also entered Southeast Asia, West Asia and South Asia while remaining relevant in the countries we are present in. Within two years, we have doubled the number of operators to 30. We intend to increase consumption and increase revenue from the time a user moves into our eco-system. We want every partnership to mature to a certain level as we do not want to spread ourselves too thin. We want to go deeper into every market. Hence, we will acquire a certain threshold of subscribers in these markets and a certain parameter of success before we expand again to the next 15 operators.
Shemaroo Entertainment recorded a total income of Rs 158.1 crore in Q3, FY23, an increase of 0.66% from Rs 150.97 crore in Q3, FY22 while the net loss amounted to Rs 30.43 crore in Q3, FY23. The company had a net profit of Rs 1.026 crore in Q3, FY22. What has resulted in the substantial loss amount?
Saurabh: We have analysed that the advertising market has witnessed a slowdown when compared with numbers projected. We have witnessed a tougher advertising market as compared to the estimates which were made at the beginning of the year. The second thing is a chunk of live sports events were either free or were available on advertising video-on-demand (AVOD), which adversely impacted the business. While the subscription money was not available, platforms gained several impressions and reach increased.
Many sectors have faced adverse regulatory environments like online gaming or education and as a result, ad spends has gone down. This is one of the reasons why we have faced difficulty on the demand side. As an organisation, we have invested a lot in content and talent. We are going as per our plan.
What strategies have been adopted by the company to compete against more established players in the linear TV and OTT space? How is Shemaroo creating a niche for itself in the entertainment space?
Saurabh: There is an enormous amount of headroom in the overall market. We have roughly five crore households on OTT. However, if you look at the number of smartphones in India, the smartphone penetration is expected to be 65 crore while going up to 100 crore in the next three to five years despite a slowdown in growth. A lot of factors are expected to drive the growth. Firstly, the rollout of 5G technology will be a big boost. Secondly, women would make up a significant chunk of the demographic with smartphones and Internet connections as they continue to remain a major audience for OTT businesses.
The market is big enough for a lot of players to coexist. India has no shortage of diversity of stories, local narratives or dialects. Storytelling can be done from various formats and various points of view. The company intends to find the right space and tell those stories. We will not limit ourselves to vernacular OTT or regional OTT. We are going to be sharply positioned in terms of identifying spaces where we can narrate interesting stories and find enough consumers.
Anuja: Be it broadcast or OTT, we are not trying to be something for everyone. We intend to find a niche and truly own consumers and become their brand of choice. This has been one of the reasons why we have taken Gujarat as the first market where we are trying to become relevant to a particular set of consumers and the platform of choice. While the narrative is that linear TV’s growth has slowed down, I believe the next set of growth on television will come from the Free Dish and the households which have never had televisions, but we’ll be the first-generation TV buyers because the economics work better, and that’s where our channels are building their play. We plan to implement a far more targeted approach to consumers, both in our digital as well as our broadcast businesses. The company’s reach to its consumers is not just limited to these two platforms. We have platforms when it comes to both YouTube and Facebook. Our reach on YouTube is more where the content reaches out to many more individuals, and where we have old IP content as well.
There are about two YouTube channels with 15 million subscribers, each being placed among the top channels globally. We’re just at the start of the whole inflexion in terms of the explosion of content and penetration of content. The market will exist for various models and various kinds of formats like linear television and OTT in India. These two formats also collaborate a lot, consumers don’t see them as competing spaces. Consumers see these platforms as first screens and second screens since they just want to be entertained.
Is the company also assessing the options to expand into more languages and newer geographies in India? How is the company planning to diversify its content?
Anuja: Shemaroo has been a Hindi-speaking market (HSM) player. As a brand, we’ve entered the consumer psyche through Hindi and the big chunk of content on ShemarooMe has been in Gujarati. We also have a lot of content in Marathi and we have a Marathi channel as well which is Shemaroo Marathi and Hindi free-to-air (FTA) channels. Our focus is on the same languages that we are working on and perhaps expanding into some more music creation in Bengali, and Marathi, among other languages. Within the HSM space, we are looking at other languages we could expand into.
Saurabh: We largely operate within the Hindi-speaking market or non-South markets in India. It comes from what we are rooted in first as an organisation, where we have gone and seen consumer traction, where we have identified spaces or gaps. The company intends to deepen its play in these markets which is within HSM.
What are the number of downloads and monthly active users for ShemarooMe?
Saurabh: We are constantly looking at the number of downloads. We are not limited to Gujarat, but we are seen by the outside world as Gujarat-focused. While we are very focused, we are not limited there. The company’s monthly users are paid because there is SVOD and AVOD content, but we are more focused on SVOD. The digital business is at two crore downloads and one million monthly active users (MAUs).
What are the marketing strategies for the company in the next fiscal year?
Anuja: The organisation is 61 years old and started as a B2C (business-to-consumer) platform like distributors of VCDs, and DVDs. At a point in time, the company became a full B2B (business-to-business) player. We are a new consumer brand in the broadcast space, we have been present for five years compared to Star or ZEE which have been present for more than 25-30 years. Even in the OTT space, ShemarooME has captured a niche in Gujarat. We will continue to focus on the awareness that we need to build for Sheamroo among B2C consumers, be it broadcast or ShemarooME. We are going to continue to find the right consumer. FY25 is going to be a year of brand-building.
What are the plans of the company?
Saurabh: We will keep investing in the content and people and we will also be taking measured risks otherwise we will not be able to grow. What I see as change across industries is that there has to be a level of rationalisation. Digital businesses, be it OTT, music or Bollywood content, are at different stages of evolution. There is a lot of overheating when it comes to supply or pricing.
There will be rationalisation in the price of content as well as in consumer acquisition costs that people will want to pay. YouTube may not be growing like it was during the pandemic but with the tailwinds of smartphones and 5G technology, there is still scope for doubling its user base in monthly active users. YouTube and Meta will keep growing so we will partner with them. We will measure all investments carefully.
Anuja: We remain committed to television. We have four channels right now, three in the Hindi space, Shemaroo TV, Shemaroo Umang and Chumbak, and one in the Marathi space, Shemaroo Marathibana. These four channels will continue. We are a challenger brand when it comes to broadcast so the idea is to continue to understand how consumers and how to serve the right kind of content to them and ensure we become the channel of choice to a larger set of consumers than we have today.
There will be one more channel that we will launch in the next year. We will try to get new consumers on the platform and the channels but it would not be unbridled growth without a look at the bottom line. It is going to be a tough ad monetisation market.