Our focus has shifted towards real numbers, real metrics and quality users: Amit Goenka

Media conglomerate ZEEL has identified digital business as a key pillar of growth under its ZEE 4.0 strategy. As President – Digital Businesses & Platforms, Amit Goenka is responsible for spearheading the digital businesses of the company which include ZEE5 (Domestic AVOD+SVOD), ZEE5 Global, SugarBox and Digital Publishing. In an extensive interaction with exchange4media, Goenka spoke about ZEE5's new strategy on the product, content and technology side. He also shared his views on the emerging trends in the SVOD and AVOD businesses.

Edited excerpts:

How do you view ZEE5's performance in the last 3+ years that it has been operational?

It was exciting when we launched, the industry itself was going through a big shift with Jio coming in. The video boom really started off in the country with the entry of Jio and the data prices crashing. It was exciting as we did a lot of firsts like launching in 13 languages together. Being the last entrant among the broadcast OTTs, we wanted to differentiate ourselves. It was a good start, we ramped up quickly as we had a base from our earlier OTT platform which was OZEE. When we transitioned from OZEE to ZEE5, we started off with almost 7 million users on day 1 and we quickly grew to 50 million Monthly Active Users (MAUs) within the first six months of our launch. It’s been about eight months since I took over, and we have grown from about 4 million daily active viewers (DAUs) to now about 7 million (DAUs). Our MAUs are now 77 million which will translate to monthly active viewers of about 42-43 million.

This year, 'Radhe' was a big game-changer for us. It catapulted our brand in the market due to such a big launch directly on the OTT platform. I don’t think any big movie has taken that route on OTT yet. That was a game-changer and if you look at the journey from there, we have almost doubled our paid subscriber base in the last four months. We have had some great content and took some tactical initiatives like the 'Friends - The Reunion' episode. We continue to look out for these kind of opportunities, but at the end of the day we are selling content.

If I look at the product journey of the last six months, we have improved the product drastically due to which consumption has increased. So even though my user base has not grown dramatically in terms of overall MAUs, my app users, which used to be around 14 million in February-March, are today at 35 million. So we have grown our app user base drastically. Our focus strategically has shifted towards real numbers, real metrics and quality users. It is a big shift for us to not go for 80 or 100 million, but to go for quality users. That’s what we have done in the last six months. Earlier, my monthly users would come seven times on the platform, now they are coming 12 times on the platform. They were watching for 22-23 minutes earlier, now it is 40 minutes. So the quality of the user has gone up. My impressions per user have gone up for the AVOD advertisers. So there is one user who would give me 50 impressions in a month, now he is giving me 150 impressions. So those are the kind of shifts we have seen in strategy by undertaking several changes on the platform and on the content side.

What kind of changes have you made on the platform side?

On the AVOD journey, we earlier had four steps before you could watch your first video. Now as soon as you land on the app, you can immediately click on a video and play it. We have taken out all the steps in the middle, wherein people would probably drop out because of those steps. We have improved the app load time, the video start time, which used to be at 10-12 seconds, and now, depending on the platform, it starts at 2-5 seconds. All these improvements have helped at the back-end. We have reduced pre-rolls from two earlier to one now. People would drop out earlier because there were two ads playing before the video started. We have worked on all these changes in the last six months and we continue to work on more. There are a lot more changes yet to happen, the bigger changes on the platform like personalisation and recommendation will take bit longer. It’s a journey we are on.

How are you enhancing ZEE5's product offering?

We launched TVOD with ‘Radhe’ which was a big addition. We plan to do a lot more TVOD going forward since 'Radhe' was a huge success. We have Zee Live which is doing a lot of events virtually, so we are going to make them ticketed events on ZEE5. That is another strategy which will come in probably around Oct-Nov. We are working on that. There are a lot of platform- level changes in the background, but the big changes are in line with the ZEE 4.0 strategy. We need to control our own destiny, so we are building our own tech centre in Bengaluru. We roped in Nitin Mittal, who comes from various start-up backgrounds apart from working for UPI and Aadhaar. He is helping us build that entire system. Earlier we were dependent on third parties. Now we are building everything in-house which is a big shift for us. Recruiting 300+ techies is a big challenge especially in today’s market. Due to the consumer tech boom in the country, talent is not available.

In fact, RBI in March-end said that auto renewals have stopped, unless banks can get sign-offs from the end customer. That reduced our auto renewals completely, so we focused on annual packs. Now, 75-80% of our users are all annual pack users. They have to re-subscribe only after a year and till then I can get them engaged on our platform. We have a trial pack at Rs 299 for one quarter, and just Rs 499 for the whole year. We anyways were intending to do it. Right now, it’s discounted to Rs 499 since our third anniversary in February, as the pack is actually for Rs 999. That has given us a huge advantage, and like I said, in a short span of four months we almost doubled our B2C base and people are willing to pay Rs 499 upfront. Nearly 80% of our base is on that pack now.

What impact did the second Covid-19 wave have on your content plans?

Due to the lockdown, the shooting got delayed which impacted our content plans. Content deliveries for first quarter happened because they were already in post-production. Our second and third quarter content has been pushed back because of the restriction on shoots. That will definitely affect us in this quarter and the next one, but we will try to fill those gaps with acquired movies and more.

After 'Sunflower', we have not had a series launch. It is mostly movies that are releasing right now. We have 'Break Point' coming up at the end of September. It is a sports docudrama which is based on the lives of ace tennis players Mahesh Bhupathi and Leander Paes. It is again a first-of-its-kind in the Indian context which narrates the full story of their relationship. It is in a Hinglish format as they are narrating several bits of the story. They feature in the story, it’s not fully fictionalized it’s like a docu drama. That’s a first-of-its- kind format we have tried out.

So it’s probably more of urban content, it may not travel to tier 2 or tier 3 markets. Till now we have only focused on tier 2 and 3 markets, so we said let’s do something for urban users that we have acquired. When I acquire users on the back of ‘Radhe’, they are highly engaged and would come almost 15 times a month to watch some or the other content. But users acquired on the back of 'Friends' would come only seven times a month, because they don’t have enough to watch from their point of view. We do not carry that much English content.

You took a big bet by putting 'Radhe' first on digital. It is a high cost acquisition and the performance of a content asset is not always measured in terms of immediate returns. What are the three or four layers based on which you assess the value that a film delivers?

We track every asset of ours because they deliver subscribers across. For example, 'Uri: The Surgical Strike' was an acquired movie on ZEE5 which was released in theatres earlier. If we look at what the movie gave us in the first month of launch, it is a success. For ROI calculation, we look at a three-year period. You will never get ROI in the first month on any piece of content. In today’s context at least, for movies and series we acquire, we cannot get ROI for the first 30 days. The initial success of a content is measured by the fact that if 70% of the subscriber base or the viewers have completed 75% of the movie or the asset, then it is a successful show or movie. So it is not based on revenue, it is based entirely on viewership. On revenue, we calculate ROI over three years. For example, Uri is a three-year-old movie and was amongst the first to launch on our platform. It still gives me 500 people who are watching it on a daily basis.

What kind of content is working well for you from a customer acquisition point of view?

'Simmba' did very well for us as movies have a longer shelf life as compared to series. When we recently did the film 'State of Siege: Temple Attack' and, 'State of Siege: 26/11', which is a series, it picked up and it started delivering 1000-2000 subscribers. So season 2 will rejuvenate the first season, and that’s why we are looking at also building properties that can be seasonalized. We are building franchises, and we are focusing on the likes of 'Abhay', 'Rangbaaz' and 'Final Call' which did well for us. We have a couple of ALTBalaji shows, and we have now tied up with TVF to do subsequent seasons of their hit shows. 'Engineering Girls' season 2 is releasing this week. So we are focusing on building franchises because that’s where we see value. If the first season didn’t do well at all, then we won’t go for a season 2.

We also have Zindagi as a brand on ZEE5. We have all the old content from Zindagi and we have about eight originals from Pakistan. 'Churails' performed well, and we recently released 'Dhoop ki Deewar' which is a love story, featuring the story of an Indian boy and a Pakistani girl. It is a partition story where the father of the boy and girl died fighting in the war and these two characters fall in love. These are 100% shot in Pakistan by all Pakistani actors and technicians. In Bangladesh, we started creating originals last year which we do for the Bangladesh market only, since those stars are not very well known in West Bengal. So they don’t travel too well. Some of them travel, which we market here but mostly it is made for Bangladesh.

ZEE5 recently changed its strategy coinciding with the premiere of 'Radhe'. What prompted this move?

Our strategy, which we started off in March itself, is in line with the ZEE 4.0 vision. It’s a democratized world now, the consumer has choice. Just because ZEE is known doesn’t mean that ZEE5 is known as well. The ZEE brand obviously helps it a lot, but we have to build the ZEE5 brand and that’s why we have the users on our platform today. But now, we have to focus on building the ZEE5 brand and we need to build that in the consumers’ mind. We are seeing positive effects through a brand track we undertake every month. In the last few months, we have done two big campaigns, one on the AVOD side and the other on SVOD. Both have done fairly well which has helped our numbers as well. So brand is one big focus area, since we used to only market our content and not our brand. That has changed this year.

On the product and tech, we have everything in-house. There has been a big change in pricing, wherein instead of monthly packs we have only annual packs. We don’t advertise the quarterly packs. Users can discover it on the platform and there are about 20% subscribers who are opting for the quarterly pack. So there is a need for the trial pack and we have kept it. If you like the first three months, you can then graduate to the annual pack by paying an additional Rs 200. We are working on all these aspects. The consumer is basically on our mind and we keep getting a push from our sales team to allow advertising on the Rs 499 pack similar to what Hotstar has done for some of their content. We may introduce an ad-free pack at a lower price for AVOD users, at around Rs 150. But they don’t get access to premium content, they get access to AVOD content without advertising. We are researching and working on it, we haven’t decided if we will go ahead with it.

Definitely consumer-first is our strategy. The product and the journey itself is changing rapidly and there is a lot to do. We are building the team quite rapidly, we already have 80 people and we will end up being a 100-people team by December. That should give us enough strength. The consumer tech business is roping in people with very high offers. For example, one person working with me, getting 100 bucks is now getting 300 bucks in another company. It’s a good time to be in consumer tech from an employee perspective but not from an employer perspective.

You have been producing a lot of original content compared to other OTT platforms. In FY21 itself, ZEE5 had 75 added shows and movies. So will you continue with that volume strategy or will you shift to having a lot more big bang content like ‘Radhe’ and ‘Friends’?

Under the new strategy, we have definitely decided to focus on quality versus quantity. From an earlier 75 shows, we are now focusing on three-four big shows in each language in a year. We are focused on five main languages currently – Hindi, Tamil, Telugu, Kannada and Bengali. We have not added any other language as of now. We will see how it grows and definitely add as required. So we will have three-four big shows in each of these languages and along with movies and smaller shows, it will be 20 assets per language. Smaller shows will be on the lines of our partnership with TVF, ALTBalaji, and our own Zindagi shows from Pakistan. We don’t intend to do English content, nor acquire English content. We believe it is too expensive and if the total subscriber base in the country is 35-40 million, maximum audience that wants English content is around 3 million. This is my personal assessment.

To what extent will you increase your content investments and will this be split equally between acquired and commissioned content?

We will continue to invest in digital as it is one of our core businesses, given the large opportunity in front of us. Our approach has been further sharpened with the five-year business planning exercise we have implemented. Our aim is to continue to offer differentiated shows and blockbuster movies. These investments would drive our market share putting us in good stead going forward. In terms of content investments, 50% will go into original shows and 50% will go into acquisitions, primarily films and other shows.

OTT players are pumping in a lot of money into original content. On the one side you have big bang properties like 'Friends' and on the other hand you have local original shows. What is the ROI that you are getting from these content investments?

If you ask me about 'Friends', we broke even on the first day. We actually made a profit on the first day. The investments need to go in because eventually you have to become synonymous with great content. The user should feel that every time I go to ZEE5, I have something fresh to watch. That’s the only way we can continue to get the stickiness, and get the subscriber to keep coming back. The three-year journey has been great and tremendous competition came in at the same time, but before that who was doing original content? Before us, nobody was doing original content. We are waiting for that one piece of content, where the customer believes they can’t miss out on our subscription. Because if one has this great piece of content, it means the rest of the content is also great.

How do you see the economics of the OTT space changing in terms of content in the next three years?

Let’s break it into AVOD and SVOD. Original content is for the SVOD business. I am not putting any additional content in AVOD, so all of it goes in SVOD. Because of the price sensitivity of the market, SVOD will evolve for sure. Hotstar has already started doing it with their three-tier pricing. Based on the kind of user, you will have multiple tiered pricing. That will evolve so your ARPUs will go up. Obviously you need to reach a size and scale, so unless you cross the 20 million paid subscriber mark, you are not in the scale to start making money. So size and scale need to come in. That is SVOD economics, which is pretty simple because it’s not market driven too much beyond what the competition is doing and we are in the ballpark of most of our competition. The numbers don’t change too much in the SVOD business. As the market evolves, tiering will come in and we will see ARPUs going up. That is one aspect.

I think the AVOD side is where the real game will play out because brands and advertisers want curated content. They don’t want user generated content. Regional natives don’t care but the traditional brands do care. Our strategy is that it is completely data driven. Google and Facebook do this very effectively. We need to get to that level where we can give On Target Reach (OTR) of 85-90%. Then you command a premium in the market. Today, a Google is already commanding a premium in the market. A YouTube ad today costs me Rs 70 or CPM. I am already at 150, so I am more than double of YouTube on video. Once I am able to deliver the OTR of Google, then my premium will be much higher. And my OTR will only get better with time as we understand the consumer, and we are building data models to create that. The 500 manned tech centre in Bengaluru will be engaging in this aspect as well. It’s a matter of time. So while the investments are going up, the revenue parameters will also improve over the next three-five years.

Do you see the overall AVOD market significantly expanding from a size point of view?

We have not even scratched the surface as far as small and midsize business (SMB) advertisers are concerned. If I can give you a reach of a sweet shop in Matunga (Mumbai), then that will significantly expand the market. The market will expand when we go from 1000 to 10,000 advertisers. I don’t need Rs 20 lakh ROs, I need Rs 10,000, Rs 50,000 RO from 10,000 people. That is the market which is not tapped at all and that is the reach it can give them on the digital platform as long as we have the data. For example, the sweet shop in Matunga just wants the residents in Matunga to get his ads. So he will pay a premium for that reach.

The other segment is the digital native who want performance marketing. They want their cost of acquisition marketing to keep coming down by delivering better efficiencies. So once I get my OTR and my performance looks up, I can give him delivery. He says I want only female audiences, or mothers who have just had children. At that level, if I give him a 90% OTR, his cost of acquisition will be much lower. That area is more dynamic than the SVOD area which is more stable.

At what stage do you think you will reach a balance where you can turn around and say that now onwards the OTT platform is able to deliver bottom-line to the company?

See I can’t predict what the pricing or ARPUs will be. Today let’s say our ARPU sits at Rs 400-450, if I keep my ARPU flat, for us, it will end of four years or maybe fifth year from now. But if the ARPU goes up, it could be earlier. As much as 57% of our B2C subscribers consume content on Connected TV. So people who are paying are watching on the large screen.

ZEE5 doesn't have sports, how then are you planning to build scale in the next three-four years?

We don’t think sports as a genre is viable in this country. There are a handful of sports properties which make money, and IPL is probably the most profitable one. Apart from that, most sporting properties in this country have not made money in the longest time.

We have not done a Jio TV deal till now on the prepaid side. We have a deal with them on the STB side – Jio Fiber, which is a small number. If I do that deal, I know I can get the scale up pretty quickly because they will bundle it and the amount of content we have with originals and movies, I don’t see any reason why we can’t be at the same level as Hotstar in one year’s time. That’s one way to do it, it’s a much cheaper way to do it but will you create stickiness or loyalty? No. Because the loyalty is going to Jio not coming to you. The second is to do it yourself organically and take three years to do it. But then you will have a customer that will stay with you much longer. If I look at my telco growth, in the last three years, I have gone from a million to 2.5 million active base. This is active growth.

What is the status of your telcos deals and will you be taking the D2C route to grow the subscriber base?

That is the big question that we are debating ourselves. We will see how it goes. With Airtel, we had a deal but it’s not renewed. We had a deal for their Xtreme platform. We have a deal with Vodafone Idea on prepaid which just restarted in July. Other than that we don’t have prepaid deals with anybody. We have Set Top Box (STB) deals with both Jio and Airtel.

What are your international expansion plans and what kind of growth has ZEE5 seen in international markets so far?

Internationally, we are primarily focused on eight markets – US, UK, UAE, Saudi Arabia, Bangladesh, Australia, Singapore and Malaysia. We have launched in all markets, US was the last one which has recently launched. Our international subscriber is not that big compared to India but the ARPU is higher than India. In India, my average ARPU is Rs 450 but in international markets it is US$30 for the year. That’s the big difference. So revenue is pretty good. For example, in US, our annual pack sells for US$49.99 and almost 40% of our subscribers in US are on that pack. In US, we have a pure SVOD product and other markets we do AVOD as well as SVOD, it’s a mix. Only Bangladesh is purely AVOD.