A decade into the game, and Viacom18 finds itself now taking calculated steps to have more segmented offerings and develop an ecosystem to be present across platforms,
From an unknown TV network housing a popular music channel MTV, Viacom18 has come a long way over the last 10 years to take a sizeable share in the Indian television space. Now with a 44 channel bouquet (14 overseas) and five businesses, the company has had to take some disrupting decisions, some of which have paid off.
“We have grown about 40 times in the last 10 years,” mentions Sudhanshu Vats, group CEO, Viacom18 Media. “We are highly dependent on advertising so its share tends to be around 80%.” As per the financial statement of subsidiaries disclosed by Network18, the holding company of TV18 (which owns 50% in Viacom18), Viacom18 had booked a net profit of Rs 30.6 crore in the financial year ended March 31, 2017, on a consolidated revenue of Rs 3,036.5 crore. While the revenue saw about 8% increase over the previous fiscal, gestation losses on the launch of OTT platform Voot, Hindi movie channel Rishtey Cineplex and Kannada GEC Colors Super pulled down the net profit, which was at Rs 141.5 crore in the previous year.
But the company has been a disruptor in some genres. At a time when Star Plus was ruling the Hindi GEC space for nine years, Colors came in with differentiated programming and earthy shows like Balika Vadhu alongside glitzy formats like Khatron ke Khiladi and Bigg Boss. It quickly climbed up the rating ladder within nine months.
Amidst the glories are also brickbats, and Viacom18 needs to up its game to compete with brands like Star India, Sony Pictures Networks and ZEEL. Rohit Dokania, SVP, research, IDFC Securities states, “There appears to be a gap in Viacom18’s margins versus peers as many of its initiatives have been recently launched and are in the investment phase. Media is a scale business and its TV broadcast portfolio has few gaps.”
As the network completes a decade, BrandWagon gets an insight into the company’s plans, its strategic pillars for growth and the challenges ahead.
Betting on segmentation
The magic word for Vats is segmentation. “We don’t look at India as 1.3 billion but a sub-set of many Indias in one. Thus, we will have more segmentation within a genre — the kids cluster being a classic example,” he says.
It has done the same with three distinct offerings in the music and youth space — MTV, MTV Beats and Vh1. While MTV is now clearly positioned as a youth channel with content synergies being driven with Colors too, the channel has undergone several revamps in the last few years to find the right mix of content and music. The plan now is to increase original hours of content and simultaneously build ancillary verticals — MTV Studios and MTV Music Project.
“But we also realise that ‘M’ is ‘Music’ in MTV, therefore we need to continue to play music. Thus, we brought in MTV Beats in September, 2016,” he says. MTV Beats replaced MTV Indies, launched in partnership with Pepsi, whose format failed to click with TV viewers. “TV was not a sustainable platform for Indies. We will look at it in digital as we go forward,” Vats adds.
Segmentation has been the strategy in Kannada as well. Apart from Colors Kannada, the network launched a sub-brand, Colors Super in July, 2016. “We felt there is room to further segment the market through another channel. Now our share between the two is around 41-42%,” states Vats.
The challenge is to balance and build the portfolio to reduce dependency on Colors. Vats highlights that five years ago when he took over the reins of the network, 80% of ad revenue came from Colors. That number has now come down to about 52%.
Viacom18’s TV journey has seen it entering newer genres, expanding into regional, building a portfolio in kids with four channels, a rural play in Hindi entertainment through Rishtey and a Hindi movie channel through Cineplex. However, its FTA (free-to-air) pieces — Rishtey and Cineplex — have not been able to grow as much as FTA channels of other networks, thus making it a big gap in a network that has been known to cater more to urban masses. But COO Raj Nayak states that this is an ongoing process. “The FTA space in television broadcasting calls for constant innovation, across content, marketing, sales and distribution. We are happy with how Rishtey has shaped up and it is in line with our business plans,” he says.
Plug white spaces
The second thrust is to plug white spaces, a recent example being the company’s entry into the Hindi movie channel space with Cineplex. “We need to take more calibrated steps as we do more with less,” says Vats.
Thus, it intends to drive regional entertainment by expanding its presence. Ravish Kumar, head of regional entertainment at Viacom18 reveals, “We are stepping up original programming slots in Gujarati and Odia, and will shortly be launching Colors Tamil.” The belief is that regional is highly under-indexed on every medium. The need is to drive regional films, and on Voot, work on regional originals and user experience.
Another genre where the network has visible gaps is the English cluster. While Comedy Central and Colors Infinity perform decently in a relative context, Viacom18 is missing an English movie channel in its portfolio. Vats admits that although the company did come very close to launching an English movie channel three-four years back, “that was one of our misses”.
The point now is, to have a sensible approach to English movie channels, be it a digital approach, a TV one or both. Viacom18 will also be looking at a second Hindi GEC, but there isn’t clarity on the timeline. Dokania adds, “The network does not have a mainstream (pay) Hindi movie channel and it may be hurting its monetisation capability for subscription revenues.”
Beyond the silver screen
Viacom18 Motion Pictures is an important piece of the network’s growth story. The movie production studio has seen a mixed bag of successes and flops wherein some films like Queen, Mary Kom, etc performed well while others like Rangoon and Manjhi — The Mountain Man failed to garner monies at the box office.
Ajit Andhare, COO of Viacom18 Motion Pictures says, “One can’t take risk out of this business. We maintain high standards of green-lighting by being selective about content through a combination of creative judgement and research.”
Take how Toilet: Ek Prem Katha delivered twice the topline and 10 times the profit which was planned for. In Q2, Viacom18 delivered double digit growth because of its play in films as advertising was under pressure due to the GST rollout. Viacom18 Motion Pictures contributes around 10-12% to the total revenues year-on-year.
But given that the Hindi movie genre is the second largest on TV after GECs, Cineplex is not too strong in the genre, leaving the network no option but to premiere its movies on Colors or competitor channels for a larger reach. Vats mentions that libraries today are locked up for longer periods of time.“But as we go forward, you will see more of our films on our platforms including the upcoming Padamavati,” he says. “We picked up movies at favourable costs and monetised them better because our ratings are among rural audiences.”
According to Abneesh Roy, SVP (Institutional Equities) and research analyst at Edelweiss Securities, if one looks at competition, Zee’s focus on entertainment and movie production is the right strategy.
“Its international revenue is also ahead of Star and Sony, which is where Viacom is weak,” he says. “It has to increase its international revenues and improve its subscription revenues
Besides this are two young businesses within the network — consumer products and live entertainment. Viacom18 has taken baby steps in live entertainment with events like Supersonic, Bollyland, etc but it needs to involve itself more in experiential entertainment as it goes forward. Currently, these businesses contribute around 3% to the total revenue share.
Going ahead, Vats expects at least one-third of its business coming outside of television. “We are storytellers and we have to be more screen and pipe-agnostic,” he asserts. The newest wheel in Viacom18’s ride is the Voot app, which allegedly has 45 million downloads and close to 30 million monthly active users. Gaurav Gandhi, COO, Viacom18 Digital Ventures says, “As we move into 2018, our focus will be to launch our subscription services and to take Voot international.” Additionally, Viacom will also aggregate more content for Voot Kids.
Priyanka Chaudhary, partner, Grant Thornton India LLP mentions, “As business models evolve, a few dominant trends seem to emerge. Among these are the increasing propensity of audiences for niche content, the expansion of regional markets and a ‘medium, time and place agnostic’ millennial consumer base.”
Milestones in Viacom18’s journey
1997 MTV India launches
2005 Viacom reintroduces Nickelodeon in India; MTV launches VH1
2007 Viacom Inc, Network18 Group ink JV
2008 Colors launched with 83 GRPs within week one; Colors ranks #1 within nine months of launch, beating Star Plus
2010 Films business Studio18 roped
2011 Launch of Comedy Central and Sonic
2012 Viacom18 forms IndiaCast Media Distribution; Nick Jr launches; Initiates acquisition of ETV Gujarati, ETV Marathi, ETV Kannada, ETV Oriya and ETV Bangla
2013 Integrated Network Solutions (INS) launches; Viacom18 records PAT for the first time
2014 FTA GEC Rishtey launches
2015 Colors Infinity launches
2016 Launch of Voot, Rishtey Cineplex, Colors Super and MTV Beats
2017 Announcement of Colors Tamil launch; Studio18 renamed Viacom18 Motion Pictures