Neeraj Vyas, SVP & Business Head, Sony Max & Sony MIX talks about positive growth in advertising this year, digitisation woes, spiralling costs, disproportionate ad and distribution revenues and the road so far for MAX 2
What were the key highlights for the broadcast industry in 2014?
For the broadcast Industry the distribution part of it has seen significant strides very clearly. Digitization has been something that we were all waiting for. Unfortunately it has not really panned out the way we envisioned it. By the end of this year it should have been over as everybody knows, it has been delayed. But the good part is that the first two phases of digitization created a platform for a lot of small channels to operate. Had it not been for digitization, Max 2 would have not succeeded. Digitization gave us strength to launch a Max 2 kind of a channel because it created more bandwidth for smaller channels. But my sense is that somewhere digitization needs to be fulfilled and completed and the sooner the better. Regulators will always have their own point of view and we will have to abide by all of that, I don’t think anybody has a choice. We can obviously give our point of view but the regulators have their own way of working. Yes it has been a little painful and we have One Alliance which is our distribution partner and we had certain alliances which had to go away thanks to all the mess but I think we will learn and live with that.
What are the challenges that the industry has been facing during the year?
The challenge is in terms of monetization. For us the good part is that advertising has looked fairly good this year and we have another quarter to go before the end of this year. A lot of new categories have been added. Ecommerce is a very large giant which has come on board. Some categories have also fizzled out. By and large it has been a much better year compared to last year in terms of advertising which is positive. Cost is something that all of us have to control. Unfortunately it is spiralling out of control. Plus it is the movie acquisition bit which has gone through the roof, for the GECs it is content and talent, etc. So cost is the other reality that all of us have to control very clearly because at the end of the day what matters is your PNL. If your PNL is in the red then there is no point being in the business. That is a huge concern. We are making investments right now hoping the future will give us returns, hoping that digitization happens, hoping we have tiered rate cards going out to consumers and consumers willing to pay that kind of price and get those ARPUs going. All of the investment we have made today whether it is sports, films, GECs, launching new channels, all of this is being made for the future. That future needs to happen sooner. The future is distribution revenue, ad sales is going to plateau out. Ad sales grow by 10-12% every year, it is going to plateau out. When you buy cricket for billions of dollars you don’t expect ad sales to make the money for you. Ad sales is again governed by CPRPs and the ad cap and things like that. So you are fighting with both your hands tied up. Distribution revenue is the real driver around the world. It is almost 25:75 (Ad revenue: Distribution Revenue) in terms of the split. Ours is the only country where it is 50:50 even till today. So this has to change.
What were the key highlights for the channels in the year 2014?
The year has been good for us from a Sony Max perspective. We have constantly been a No.1 or 2 channel despite the fact that we didn’t have big ticket items, despite that we have managed to hold the fort with the library that we have at our disposal. What has probably taken us through is our pretty keen understanding of the market place, viewers, and the data that we get. All of this has helped us schedule better and market better and has helped us sustain over a period of time and make (Sony) Max a destination that movie lovers frequent.
Sony Max is a very strong brand. It is one of the biggest brands on television and has been around for the last 14 years. So it one of the older channels in the stable so to speak. We have been fortunate with having lots of cricket on the channel since many years. We started in 2002, we have had the Champions Trophy, 2 World Cups and 7 IPLs, so that is a lot of cricket. This is probably the only channel of its kind in India which has successfully been able to handle both the avatars. So when IPL happens Max is seen as an IPL channel, when it goes away it becomes a movie channel. It is unique in its way we have managed to straddle both the properties very well and luckily there is an acceptance in the viewers mind about the bi-polar combination of the channel. If you try doing it today I don’t think it is going to work.
How has the year been for Sony Max 2 since its inception this year?
Sony Max 2 is a very young channel, it is less than six months old and the objective of Max 2 was essentially to fill a need gap and the need gap was basically to address a large section of the viewing audience which wasn’t really being addressed by anybody and those are audiences which want to see the big large films of the 60s, 70s and the 80s. What we call the celebration of cinema, when Hindi cinema really started becoming big. What Bollywood today is essentially what happened in the 60s and 70s where larger-than-life stars came up. So that was the need gap that we identified where a large society of people who were not getting to see this anywhere because everybody was showing only the new films. So Max 2 is an attempt to pay tribute to cinema of 60s, 70s and 80s which we basically feel set the platform for what Bollywood is today. It is probably targeted at a slightly older audience compared to what the other channels do including Max, but when I say old I don’t mean the 60 and 70 year olds, I mean the 30 year olds and plus or maybe 25 year olds. Max 2 doesn’t compete with anybody it’s in a space of its own. It is the only channel which has films which are very different and not repeated anywhere and not seen anywhere. The easiest for us would have been to replicate Max in some other form, call it something else and show the same films like everybody else is doing. So everybody else has a second channel but most of content is common to both the channels.
What were the key highlights in your category or genre during 2014?
We (the genre) have not de-grown but we haven’t grown exponentially. As more new channels are getting added the worrying part is that most of them are eating into the same share but that is bound to happen because the content is not new. A GEC comes with the promise of new content every day, which is where you entice people to come and watch you every day and make an appointment. A movie channel or any library catalog channel essentially works on a repeat reality which is why the time spent is also half of what a GEC has. So that is been worrying, but despite all that, the good part is the reach levels across the viewing universe is on par with GECs. That is a huge reality and that comes into play when you make a media plan, the movie channel genre becomes the second most important property in India today. The reach levels have been great and everybody has been rock steady.
In the Hindi movie genre there have been shorter time periods from the theatrical release to the premiere on TV, why is that and has it increased investment costs of channels?
The theatre window now is limited to two weeks and only if you have a large production, otherwise the game is about the first weekend. Because you flood the theatres with X amount of prints with a calculation that is supposed to get you X amount of revenue. So if you are doing 12 shows a day, there are chances that you might have touched a lot of your universe in the first week itself. Unless the film is a very large hit it does not go into the second weekend. So if it goes into the second week it is a blockbuster in any case. So after 4 or 6 weeks there are no takers in the theatres which is why you see a lot of premieres happening within six months to six weeks. I think the producers also understand the recency of the film lets you market it better. In the mind of the viewer it remains a newer film. The recall value is also fairly sharper.