I can give you an opportune answer and say we have been observing the market. The fact of the matter is that our initial rounds of the strategy (on digital) did not work. We went back to the drawing board and now have taken the learnings of all our peers in the industry for the Indian market. We’ve also learnt from the international majors as to how they’ve done it. We’ve factored all that into our launch plan (for our digital product, Z5).
You recently launched Z5 Weyyak in the Middle East. Was that a test launch or a different digital product for that region?
It’s not a totally different entity. It’s part of the same company. It’s a different product, however, as each market has its own dynamic on what type of products it will accept. That’s where (the Middle East) it was easy to be done and, so, it was done earlier. The product for the rest of the world is much more complex because it spans business models that are advertising-driven and subscription video on demand and transactional video on demand. Given the complexities, it (the launch) will happen in a phased manner.
For India, what model will Z5 follow?
We’ll be launching Z5 in India a few weeks from now and shall reveal the details then.
Where do you see scope to expand your TV channel portfolio?
On television, we see two markets in India that we’ll work on in the coming financial year, Kerala and Punjab. Apart from these two, we’ll have genre expansions within the existing portfolio. I won’t be able to give timelines on this.
Punjab has emerged as a strong and big market, which might not have been the case five years ago. If none of the majors invest in that market, it will not grow further. Punjab has seen the movie and music business grow over the past few years but there are no companies
to buy movie rights for broadcast. For rights rates to appreciate, there has to be competition. So, it makes sense for a company like Zee to take the lead. We’ve done it before in Odia and Bhojpuri through acquisitions of (the channels) Sarthak and BIG Ganga.
I think a hybrid of a movie and music channel will be a good way to enter a market like Punjab. I don’t think that industry is ripe or mature enough to produce enough GEC (general entertainment channel) content yet. Until that local industry is mature enough to do so, it is not possible for anyone to launch a GEC in that market.
Does that mean you’ll follow the acquisition route in these markets as well?
In Kerala, I don’t see any entity that I would like to look at (for acquisition). Punjab, I haven’t studied so well yet from an acquisition perspective.
Zee Music Company is one of the newest music labels in the country. How did you adapt your strategy to the current situation of the music industry?
We don’t make any physical assets; no CD’s or cassettes. Since the launch of the label, we’ve been focused on digital (distribution) and it’s worked very well for us. Our revenue streams and business model are focused on apps and platforms like YouTube. We don’t intend to get into producing physical assets in music because physicals' sales are dwindling anyway. Music has moved to digital.
As I said, if there’s competition, prices will go up. We could not have achieved the number two position in three years without being competitive (while buying music rights). If that meant costs would go up for us, we took it in our stride. One has to break the circle somewhere. We expect to break even in the music business next year, which would be four years since the launch, and we’re very happy with that.