"We want eyeballs at the end of every screen" - Punit Goenka, MD & CEO, ZEEL

Punit Goenka doesn't duck questions as he talks at length about Zee's 20-year progress from being a broadcaster to a content company.

How have the dynamics of the broadcasting business changed in the last five years?

A lot has changed in all the three aspects - the business, the content and the consumer. From the business point of view, competition has become intense. Broadcasting has moved from being a two-player race to a four-player one (Zee, Star, MSM, and Network 18), all neck and neck with one another. While there has been consolidation at one end, there has been fragmentation too.

Content is becoming more specialised and niche. We have seen genre-specific programming at the national level. Now, that's flowing on to the regional space as well, especially in the Hindi speaking markets. SAB TV is a great example. That's a way of finding a different genre of audiences which GECs (General Entertainment Channels) don't address.

In news, we moved from national to regional and general to niche. Now, we see that happening in the movie space as well. Thankfully, we were the first to launch a Marathi and a Bengali movie channel.

From the consumer perspective, there has been a sharp decline in attention span. Over the last five years if the number of shows launched per year has tripled, the success rate has fallen to a third. Today's consumer demands quality content and is more judgemental.

And looking ahead, what are the big changes you expect for Zee - and for the industry?

Several things are expected to happen. We will lead in some; in others, we will follow. It's not possible for one entity to do everything or to invent everything. In the new media initiative, Zee has taken the lead by launching the first over-the-top TV platform, Ditto TV, which is based on a subscription model. On the free content side, we have acquired a domain called India.com.

We now call ourselves a content company. We are not just broadcasters anymore. Since last year, we have shifted our objective from doing linear transmission to finding eyeballs at the end of every screen. That is one of the biggest changes that will happen in the industry and I think we are leading that.

Aren't the numbers very small on Ditto?

Yes, they are. We launched in February and the total number of application downloads is only 200,000, while the active paid subscriber base is only 35,000. This is tiny in comparison to the rest of our business. We will consider it a significant base only when we reach a million subscribers and it will take us a couple of years to get there.

It is not just about the technology; the consumer needs to evolve as well. There are only linear channels available on Ditto at present. In the next phase, there will be video on demand. Viewers will be able to buy a few episodes of a popular serial for a fixed amount of money. The third phase will be -Catch up' TV where in, if someone has missed an episode on regular television, he has this medium to catch up on it. On Ditto, we have consumption of TV taking place not only in the linear form but also via daily packs.

I was asked why we were launching Ditto TV when the Internet penetration is so low in the country. But I thought that if I wait for it to grow, it will be too late to get into the business.

As the head of an entertainment network, how do you think the internet will affect your business?

We always look at advertising revenue when we talk about online. But there is huge subscription revenue waiting to be tapped, too. Even Youtube is not doing that to its fullest. It's only now that Google has launched Google TV with a paid model. If one gives the consumer the convenience of consuming the content he wants to, on a convenient device, he will pay for it.

Isn't it true that people seem willing to pay for content on the mobile but not on the fixed internet?

Whatever little learning we have on Ditto, proves otherwise. We have more consumption on desktops and laptops compared to the mobile. However, that has to do with the kind of content we have. For entertainment, people want a slightly larger screen. While a score update works on the mobile, watching a cricket match on the device is a little difficult.

Is the tablet a big thing in your mind?

Absolutely. The tablet will become a big part of our business. The best part is that people are using it more on Wi-Fi than on 3G. It works pretty well especially for youngsters - in college canteens, coffee shops, airports or wherever Wi-Fi connections are accessible.

Why is the young crowd moving away from TV?

People consider content to be the culprit. The fact is that it's tough to make them sit anywhere, including in front of the TV screen. That is why youngsters will be the first to convert from TV to mobile or online. That is also why youngsters consume far more radio on mobile phones than in the car or at home.

When many broadcasting companies are struggling to sustain themselves, how has Zee managed to stay in the black even in bad times?

It's in our blood. We started the business with limited resources and didn't spend as lavishly as we do today. Every rupee had to count. This instilled a discipline in the company that everything has to be looked upon in terms of RoI (Return on Investment), whether it's in financial terms or brand terms. It has to give you some benefit and that's how we have been able to maintain our profitability at 27-28 per cent (EBIDTA), which is one of the highest around the globe.

How would you differentiate Zee from the other three large networks?

We don't depend on ratings at any cost. Everything must have a defined parameter and a financial guideline to it. This belief is followed by marketing as well as content teams. Sometimes the cost of that extra TVR is not justified by the cost it involves.

We are clear that we either want to be the No 1 in the genre or a strong No 2. In 2008-2009, when we knew it was recession time, we simply cut our original programming from 32 to 24 hours a week. We reduced eight hours of original content.

Are you less desperate for ratings because your dependence on advertising is lower than that of others?

We do have the benefits of a strong subscription base, both national and international.

You say that you have international ambitions. And yet you admitted in an interview that second-and third-generation Indians abroad don't connect as easily with your content as their parents did. Where does that leave Zee?

I agree. The only connect that the new gen has is with Bollywood. They have gone off the GEC space. Now, to fulfill our international ambitions, we have to look beyond the Indian diaspora.

Four years ago, we created an Arabic channel - Zee Aflam - with Bollywood films dubbed and subtitled in Arabic. Today, the channel is No 3 in South Arabia among females. It broke even last year and is making money now in its fourth year of operation. So, in a billion dollar advertising market, to have such a property is a big thing.

Learning from that, we launched an Arabic GEC channel, Zee Alwan, two weeks ago. Here, it was not as easy. It took about 18 months of research to find out more about that market. Out there, the content consumption is very different. They prefer 60-episode formats as compared to 300 episodes in India. We selected shows that could be crunched into a 60-episode format or a two-season, 120-episode format.

Research told us that the woman in West Asia has everything - money, clothes, house. The only thing she lacks in her life is romance. She goes to television to find it.

What is the kind of footprint you are looking at beyond India?

To start with, we have chosen the markets of West Asia and Russia. In Russia, we reach five million homes which is a good number considering that it is a completely analogue market.

The other markets we are contemplating entering are Malaysia and Indonesia. Though we don't have any product there as of now, research is on. We have taken an aggressive target: our global reach should increase from the existing 650 million viewers to 1 billion in the next three years. In next five years, it should hit 1.5-1.6 billion viewers. This can happen only if we look beyond the South Asian diaspora.

Will these markets be subscription driven?

West Asia and Russia are primarily ad revenue-based markets. Indonesia and Malaysia are both subscription- and ad-based.

Has Zee lost focus on the regional market within India in spite of having been a pioneer?

We made some mistakes in the Marathi and Bengali markets. In Bengal, we slipped from No 1 to No 3 but are back at No 2 now. We got complacent in these states and paid the price.

We were late entrants in the South but I am glad that we have still managed to create a space for ourselves in the last four years. We are either No 2 or No 3 in various south Indian states.

The market that we had to exit was Gujarat because it never developed. Hindi is very dominant and many of the Hindi shows have a Gujarati flavour to them.

If any genre of content doesn't become monetisable or profitable, there is no point in hanging on to it. Just because we have launched doesn't mean that we will have to keep suffering losses.

You are trying the franchisee model in the regional news segment? How does you maintain the sanctity of the brand?

As you know, the news business is complicated. But localisation of news is going to be big. If you take the case of newspapers, even they have launched city-specific editions.

In the franchisee model, you need the right partners because - at the end of the day - it is your brand that will be watched by people. We started the model some three years ago, but so far we have only one partner (in Chhattisgarh), as we are stringent about whom we select.

One still needs to keep control on editorial policy where a strict guideline is followed. We are involved in the recruitment process of the editorial team including some of the key journalists. However, we are not involved in the day-to-day news gathering process.

The franchisee just pays the fee for the brand. One cannot monitor every story the franchisee is doing. That is not the intent and as long as no policy is violated, it is smooth running for us.

How has the inconsistent performance - from No.1 to being out of the game and again bouncing back into consideration - affected brand Zee? Was audience retention becoming a problem?

Between 2001 and 2005 we were in the dumps. But the good part was that the audience did not give up on us.

These are phases of life. What happened was that when we started we were addressing around 20 million homes, which were the Super A and B class homes. The content was created accordingly. As cable penetrated further, the content too had to change. The teams at that point in time didn't see that evolution and that's how they went wrong with the content.

When things go wrong, people tend to go into denial mode unless someone comes and says -I want to build this back from scratch'. With so much of focus on Hindi GECs, we sometimes forget that this is a company that runs 23 other channels. While the Hindi general entertainment channel was not performing, our regional and movie channels were doing very well. That helped us maintain growth in those years too.

The other thing that helped us survive was the subscription revenue, which is decoupled from the ratings model. The channel was still going to many homes. The time spent might have reduced, but people were still buying it.

What was the big thing that really hit when you joined Zee?

I joined in 2004 and looked after only the sports part, reporting to Pradeep Guha, the chief executive of the company. Then the chairman (Subhash Chandra) felt that our flagship channel should be handled by someone who would take the big calls without worrying for his job.

On taking over, I learned from the existing team. I think the biggest surprise to me was that we were doing programming that we liked, without bothering what the viewer wanted.

This is the second time you have collaborated with the Star group. The last time was about 15 years back. What has changed?

The earlier collaboration was a larger one, where they owned 50 per cent of the company. This time it is an alliance that suits both of us. We each took a part of the business that was bleeding - that is, distribution - and came together to prevent anybody from playing us off against each other. If we get to earn more money and divide it equally amongst, it is beneficial to both.

Nevertheless, the alliance has had no impact on the competition as we still compete with each other for weekly ratings and advertising revenue.

How do you think impending digitisation will affect the DTH business?

It will only strengthen growth. Today, the reason DTH has not been able to drive prices up is because analog exists. My view is that the pricing of content, today, is ridiculous.

One is not saying that there will be an immediate increase in price. The price rise will happen gradually, during the next five to six years. DTH is expensive today because the broadcaster charges the service provider an X amount of money, then there is a tax it has to pay and then keep a margin for itself.

The same rules will now apply to digitised cable as well. In order to earn, it has to up its pricing. How can it still remain at Rs. 100 if the MSO has to pay Rs. 80 to the broadcaster? Of the rest, 35 per cent will go to the local cable operator while the MSO will keep the remaining 65 per cent - which is not sustainable.

Cable, in the long run, is a far superior technology compared to DTH. It has potential of two-way communication.

There seems to be a lack of faith in the Government's policies and a decline in the cheerful optimism that existed in the media industry. How much has it affected ZEE?

I blame much of this perception on us - the media. Sure, there are certain things that are not right, but the sentiment that is being created is so hyped that it turns negative. As we are content guys, any negative news for us is positive. Whatever may have happened, the government is trying to bring back the momentum.

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