It’s been few months since Disney India ventured into the distribution space; internalizing the distribution for the bouquet of its channels which include Disney Channel, Disney XD, Disney Junior, Hungama TV, Bindass, Bindass PLAY, UTV Movies and UTV Action. Nikhil Gandhi, VP and Head - Revenue, Media Networks, Disney India, shares how the strategy has worked in their favour.
Excerpts from the interview:
What made you take the decision to internalize the distribution in the first place?
When you get distributed by third party as part of another bouquet you don’t really get the real value of your product in terms of the relative share you are supposed to command in the market. Even if we were, we didn’t know what we were getting. Once we took a holistic view of what’s going on in the market and how markets are maturing, we thought it was the right time (around last August) to take the business on our own. The kind of content and channels that we have are in the leadership state and with a sizeable bouquet of eight channels we command a 6% viewership share.
Also what made the timing more perfect was the markets getting digitised and to a certain extent the regulatory framework not allowing consolidation of content providers. We needed to start monetising the business on our own and getting the real value that we command in terms of viewership share.
If you look at the brands like Disney, Hungama and Bindass, we are a premium brand entertainment network. All these command a huge premium, whether it’s the advertiser or the distribution platform. Strategy was to cost correct the whole value that we should be getting and to build in the growth. On the other side we were looking at the reduction in the carriage that we were paying and this is a big move forward for us.
Tell us more about the new strategy that you are adopting.
We are an ad sales and distribution subscription driven business on revenue front and we want to change that equation. We want subscription to become the primary revenue source of the business. The equation is 60-40 right now which we want to grow into reverse equation. We want to make it a subscription business with ad sales sitting on top of it and that will be our strategy going forward.
How do you plan to reverse this equation in the coming time?
We are getting into long-term deals with our partners like MSO and DTH to drive in a certain amount of growth overtime. We are also signing multi-year deals which will provide leverage to both of us. The whole strategy has to go hand in hand with the movement on the ground, which we are anticipating to happen in next few months. The movement on the ground means the digitisation process starts paying off across the value chain and RPOs start going up. The subscription business is going to move into a new direction than what it currently looks like in the coming time.
What kind of challenges did you face during the internalizing of your distribution strategy?
The only challenge is the way the progress on the ground has been. Digitisation has happened but we haven’t really seen its effects. RPOs haven’t gone up at all. The subscription business in phase I and II markets is yet to witness a significant upside (not more than 5 or 10 per cent). Overall challenge in the growth remains a big hindrance to our strategy.
But there are movements happening in the right direction at slow and steady pace. There are positive equations changing whether it’s addressability or packaging. Certain pockets have witnessed positive movements in that direction. Secondly, the regulator has been extremely pro business in enforcing digitisation with strict deadlines, whether its phase III, and it’s a matter of time before it will all come together.
What are the benefits that you have reaped since the new distribution move?
The biggest element was reduction in carriage to 30-35 per cent, increase in subscription to the tune of 15 odd percent. We have been able to increase our connectivity on ground over the last six months. Earlier we were connected to over 2,000 operators while today we are serving more than 3,000 operators. This has given us access to new territories like Phase III towns and Phase IV rural areas. Slowly and steadily we are strengthening our connectivity. From revenue, carriage reduction and connectivity standpoint we have seen significant movement as compared to last year.
We are happy with the progress that we have made in the last six months and platforms have understood the value proposition that Disney brings.
What is your content strategy for 2016 going to be?
As Disney, we are the premiere destination for kids. We believe we command a premium as far as our content, price, revenue and distribution is concerned and we will continue to invest in superior content. We have invested in local animation like ‘Arjun’ --a show we launched last year and is currently undergoing third season. So three such properties are coming up which will see a lot of effect next fiscal. That’s not just on Disney channel but also on Hungama. On Bindass we continue to remain invested on high quality shows where you will see new formats of reality shows this year.
What’s working for the network overall?
Genre wise, we are no. 1 in kids’ channel and no. 1 in youth. We are also amongst the significant movie player and all the three genres are doing extremely well. Our ad sales have grown over by 24 per cent since last year and the BARC scenario has given us a huge boost.
The whole network is sitting very uniquely poised. For the first time the market has seen us as one united network and our business partners have taken that element in the right context and are able to assign the right amount of value to us per say.
On the digital forefront what is your strategy going to be for this year?
Our digital strategy is about driving the key demographics on digital which is youth followed by kids. From Bindass point of view the strategy is about putting good and exclusive content out on YouTube. In the kids’ genre, we are taking it to a new dimension with-- Disney.in. Our social media strategy is about creating a huge fan base, with Bindass alone having a fan base of 10 million. We plan to strengthen our portfolio with unique content which we are known for.