Zee5 business will break even in 3-5 years: Punit Goenka, MD & CEO, ZEEL
Goenka talks about making more investments in Zee5, Morgan Stanley’s recent downgrade of ZEEL stock and their failed deal with Jio
India is witnessing a growth in digital media consumption and more and more viewers are taking to watching content on video over-the-top (OTT) platforms. This increase in the consumption on OTT platforms has fuelled talks of television viewing taking a hit. However, Punit Goenka, MD & CEO of ZEEL, is not worried. He says the television medium too has been witnessing growth.
Zee Entertainment Enterprises Ltd (ZEEL) operates in both the domain. Earlier this year, they launched their OTT platform Zee5. In a conversation with exchange4media, Goenka talks about the two mediums.
He said, “While we are seeing a lot of traction on OTT platforms, there is no worry yet on the television side of consumption. If you look at the growth in the TV segment, last year, we saw an increase in the number of TV households. Also, we have seen growth in the consumption time of a consumer on a daily basis.”
“But having said that, Zee5 is definitely going to be our next big bet when it comes to investment and cornering incremental and additional viewers. We will soon be making more investments in that business. We are very confident that we will be able to deliver upwards of 30 per cent margin for the company as a whole despite these investments.”
According to Goenka, Zee5 business will break even in 3-5 years. “It will be a journey of 3-5 years… may be towards the five year mark. We are seeing great traction on Zee5. It will definitely start adding to the advertising growth by this quarter itself. And within FY19 itself, it will add to the subscription growth of the company,” he said.
Goenka mentioned that ZEEL will be investing close to about 400 basis points of topline in Zee5 for the current year. It will then decrease. He shared, “The revenue that Zee5 is generating is ahead of our expectation. And this gives us more confidence to invest in Zee5.”
On the competition from international and national players such as Netflix and Amazon, Goenka said Zee5 is on the track to become the Number 1 entertainment app in India over the next 12 months. He, however, refused to give subscription numbers as Q2 results are just around the corner. But he said that Zee5 videos views are growing by 50 per cent month on month.
Brokerage firm Morgan Stanley recently downgraded ZEEL stock to 'underweight' from 'overweight'.
Talking about the report, Goenka said it is not very well researched. “On the television side itself, we are today delivering margins upwards of 36 per cent. And given the kind of investment we want to make on Zee5, we are confident that we will continue to deliver upward of 30 per cent margin even in FY21.”
Speaking about the trend of ad revenue shifting from television to OTT, Goenka said one cannot estimate when this will happen.
“I am pretty confident that TV itself is growing both on advertising and subscription sides. The Phase III of monetisation has started and we are seeing good traction coming on the subscription side as well. My own estimate is that Zee5 will positively contribute towards the entire company’s revenue as well as profitability in the long term.”
Goenka also talked about their deal with Jio not working out. “We had a deal with Jio and it was up for renewal, but our negotiation failed. So we had to pull out all our content. The conversation is still on and I am sure we will find some solution,” he concluded.
Zee Entertainment Enterprises Ltd (ZEEL) operates in both the domain. Earlier this year, they launched their OTT platform Zee5. In a conversation with exchange4media, Goenka talks about the two mediums.
He said, “While we are seeing a lot of traction on OTT platforms, there is no worry yet on the television side of consumption. If you look at the growth in the TV segment, last year, we saw an increase in the number of TV households. Also, we have seen growth in the consumption time of a consumer on a daily basis.”
“But having said that, Zee5 is definitely going to be our next big bet when it comes to investment and cornering incremental and additional viewers. We will soon be making more investments in that business. We are very confident that we will be able to deliver upwards of 30 per cent margin for the company as a whole despite these investments.”
According to Goenka, Zee5 business will break even in 3-5 years. “It will be a journey of 3-5 years… may be towards the five year mark. We are seeing great traction on Zee5. It will definitely start adding to the advertising growth by this quarter itself. And within FY19 itself, it will add to the subscription growth of the company,” he said.
Goenka mentioned that ZEEL will be investing close to about 400 basis points of topline in Zee5 for the current year. It will then decrease. He shared, “The revenue that Zee5 is generating is ahead of our expectation. And this gives us more confidence to invest in Zee5.”
On the competition from international and national players such as Netflix and Amazon, Goenka said Zee5 is on the track to become the Number 1 entertainment app in India over the next 12 months. He, however, refused to give subscription numbers as Q2 results are just around the corner. But he said that Zee5 videos views are growing by 50 per cent month on month.
Brokerage firm Morgan Stanley recently downgraded ZEEL stock to 'underweight' from 'overweight'.
Talking about the report, Goenka said it is not very well researched. “On the television side itself, we are today delivering margins upwards of 36 per cent. And given the kind of investment we want to make on Zee5, we are confident that we will continue to deliver upward of 30 per cent margin even in FY21.”
Speaking about the trend of ad revenue shifting from television to OTT, Goenka said one cannot estimate when this will happen.
“I am pretty confident that TV itself is growing both on advertising and subscription sides. The Phase III of monetisation has started and we are seeing good traction coming on the subscription side as well. My own estimate is that Zee5 will positively contribute towards the entire company’s revenue as well as profitability in the long term.”
Goenka also talked about their deal with Jio not working out. “We had a deal with Jio and it was up for renewal, but our negotiation failed. So we had to pull out all our content. The conversation is still on and I am sure we will find some solution,” he concluded.
