While in Part 1 of the report (which appeared on February 24, 2012) STAR India CEO Uday Shankar traces the media group’s growth graph, in Part 2, he cites the reasons for the spectacular performance.
Ring fencing the Hindi offer
Much as the decline in STAR Plus meant decline for STAR India, the comeback of the channel was perceived as the comeback of the network. But STAR had not forgotten the lessons of darker times. “The next unfinished business was STAR Gold, which had not been in a formidable leadership position in a long time,” says Uday Shankar, CEO, STAR India. In 2011, STAR invested in STAR Gold’s rebranding. Two important disruptors here were to drop inventory by 33 per cent and to premier as many big ticket films on STAR Gold as possible. Shankar says, “So far it has been a good strategy. You will see a lot of big ticket launches on STAR Gold, but it is difficult to say whether all movies will be premiered only on Gold.” The channel delivered some of the highest numbers in the year with movies such as ‘Singham’ (8+ TVR), ‘Bodyguard’ (13 TVR) and even ‘Ra.One’ (7 TVR) giving the channel more GRPs than some of the first-tier Hindi GECs.
The biggest risk, however, was the relaunch of STAR One. For starters, the network did not bring in the STAR brand name for the channel and renamed it Life OK. “The name itself suggests a position and philosophy,” explains Shankar, “The STAR brand name is a phenomenal advantage, but we had the courage to go and offer something without that advantage. We wanted to create a counter offering, and from the initial response, it has turned out to be a good idea. It is early days to talk about Life OK’s performance but as a concept, it is very different.”
Life OK experimented not only with its positioning but also its programming and advertising. There are shorter programming formats to accommodate three shows in an hour, which run seven days a week. The channel has the shortest ad breaks but this is for the launch stage. STAR India is expected to announce an ad sales strategy for the channel later this year, and Shankar states that it would be as disruptive as everything else about the channel.
Innovation in ad sales
STAR India’s innovation in ad sales became limited to its decision to ration ad inventories. Not only STAR Gold, but the music and youth channel, Channel [V], and the English movie channels also saw inventory control. Some other channels have also followed this. In April 2011, STAR India even announced an ad rate hike of 20% at an average across its channels. The big question is whether this is sustainable.
“We have consistently reduced ad inventory across the network in the last few years. Too much advertising is like a steroid shot. It is powerful in the short term but detrimental in the long run. It reduces viewership, annoys viewers and creates oversupply of inventory, which is an encouragement for cheap buying, so it is bad for the business. The broadcasters, under pressure from agencies and advertisers, have been very short-sighted while allowing this to happen. The worst is that it dents your social equity with the viewer, because the viewer comes to you for content. I am personally in favour of creating an optimal mix of advertising and content,” observes Shankar.
Despite all conversations on the subject, STAR India has not yet done anything striking on branded content. Even now, the best form seen is product placement or mention of a product here and there in a show. Shankar says, “Branded content is an interesting idea but brand heads and marketers have to get realistic. I have seen too often that we discuss a brand idea and just because an advertiser is paying for it, their expectations become unrealistic. The idea is to push the communication and impact the consumer, and who better to do that than us? If we are good enough to create an impactful 25 minutes of content, why don’t you listen to us, when you have to create 15 seconds of content? We are very clear that we will not do branded content at the cost of compromising viewer experience. A few crore rupees is not worth it. If the branding seamlessly merges with the content, only then will we do it, and advertisers are not ready for that yet.”
Diversity in leadership, setting of trends
For Shankar, 2011 was an important year. He says, “I don’t like to view any performance in annual terms, but we are happy because we have seen continued growth in the last three years, and we would like to believe our leadership today is a lot more broad-based than it ever was. We have achieved the target of becoming STAR 2.0, where we have built a very robust leadership, not limited to Hindi. It is diverse – be it Hindi, regional, English or our youth channels – all are in leadership positions in their respective spaces. We have managed to reduce our dependence on one flagship channel, and this has not happened by weakening that channel, which continues to be very strong. Other channels have become stronger, and hence the dependence on one channel has gone down.”
The year also saw STAR India take some unprecedented moves. The distribution JV with arch rival Zee Entertainment Enterprises Limited (ZEEL) was one such step. The JV experience, which Shankar describes as “remarkably smooth” despite the usual initial glitches, will come to the test when the digitization agenda rolls out. Shankar, however, is more conservative in thinking how digitization will help the channel. “For the next one year, digitization is limited to four metros, where one was already digital and two were halfway to it. So only half of each city has to be digitized. I don’t think there would be much change on that in the short term, but in the medium to long term, yes - under declaration and revenue leakages would be plugged. But how that will pan out is difficult for anyone to predict right now. I don’t think any broadcaster is immediately making a revenue upside strategy from digital.”
Another area that STAR has invested in is technology. Apart from high-definition (HD), STAR India has also invested significantly in its digital presence. From bringing STAR Plus online to taking the content on mobile handsets and tablets, STAR is allowing the viewer to consume its content on the move. Shankar says, “The way we see it, there is content and there is the consumer. We must ensure that we are available in every way that the viewer today is consuming television content. It is sometimes frustrating that our measurement system cannot gauge the incremental viewership from digital platforms, but things will change when initiatives like the Broadcast Audience Research Council (BARC) come in place.”
Investment into the Next Generation
To complete its leadership in Hindi, Life OK is prime on the company’s 2012 agenda. “How many channels are really trying to create a channel philosophy? STAR Plus has done it by its new position and tagline that articulates that position, but in the case of Life OK, the channel name itself is the channel philosophy. We understand the risk we have taken with this channel, and our efforts in 2012 would be directed to make Life OK a strong offering too,” states Shankar.
Ever since the relaunch, Life OK numbers have doubled from 30 odd GRPs to 80-100 GRPs. It still remains to be seen whether Life OK can sustain these numbers when advertising on the channel opens up fully and whether it will have a bouquet of shows doing well.
Channel [V] has done well for the network too. Shankar sees this as an area to focus on because the channel connects with the young audience. “Youth is an important target audience and they consume media in many ways. We should have a deeper relation with the youth and Channel [V] is the right way to do that,” he says. Channel [V] has opened its strategy and reduced music. It started doing dramas around campus stories, and has also gone out of the screen to hold events such as IndiaFest. It has also created cafes called V Spot. Shankar elaborates, “The idea is to mingle with the life of the youth of this country in a far more diverse and tangible manner. But I think Channel [V] is still below its potential. Our focus for 2012 is to reinvent this category. Right now, it is too small to be worth playing in.”
In the South, the Kannada market is likely to see more attention since STAR’s intention is to bring its performance to leadership position in that space. Shankar is optimistic about the South this year as he believes that the market has seen some correction already. He says, “Our Malayalam channel is doing very well, and it exited 2011 much stronger than it had entered. Vijay has done its best performance till date. The work in progress continues to be our Kannada channel Suvarna, where we would like to be in a clear leadership position, and hopefully that will happen this year.”
Another key area of focus for 2012 is English Entertainment. The FX channels are expected to be taken to the analogue medium, and have more digital presence as well. Shankar says, “NatGeo is doing very well right now. It has beaten one of its older competitors. I am bullish on English because I believe that when a demography graduates, it triggers a desire in the constituents for English content. The STAR network has a lot to offer. We will have to create a multi-tiered English content delivery system.”
Content, Consumer & Competition
At the centre of STAR’s belief system is the fact that every media company has a social obligation towards consumers. Whether it is content, marketing, advertising or distribution, for STAR India, its social equity will be important in 2012 as well. STAR has even been at the forefront of leading industry initiatives like self-regulation and enhancing the viewing experience. Shankar explains, “We have a social contract with the viewers, and we must be very careful that we are able to deliver and build on that trust and deepen the channel and viewer bond.”
And on the other end of the conversation is competition. But STAR India believes that this is one challenge they expect. Shankar summarizes, “When you have such a widespread portfolio, in such a hyper-competitive market and the nature of the business is dependent on a remote control, anything can happen. Our vulnerability to ambushes or disruption in one market or one segment is much less than before because we are prepared that we would be challenged in some part of the business or the other very regularly and that is the way it should be. It is always these challenges due to which we emerge stronger.”
STAR 2.0: A STAR is Reborn – Part 1