I hope we come back recharged & raring to go as an industry: Pradeep Dwivedi
In today's edition of 'Beating All Odds', Pradeep Dwivedi, CEO- India, Eros International, speaks to Naziya Alvi Rahman, Editor, exchange4media
In our series 'Beating All Odds', we profile leaders who are standing tall and setting examples on how to keep the business going during these times of crisis.
In today's edition, we speak to Pradeep Dwivedi, CEO- India, Eros International, a leader who has not only kept his business going but who has also recently closed a very big merger with an international player while sitting at home during the lockdown.
Tell us more about the merger.
It's a very interesting partnership that we have built. When you look at Bollywood and the kind of businesses Bollywood has generated, we have largely been India focussed and South Asia focussed in terms of content and distribution. Even as a studio, we have been one of the pioneer studios that has taken Indian content worldwide, by setting up offices in the UAE, the UK, the US, Australia, etc, and making sure Bollywood film entertainment is available all across the world. The next ambition for us as a company was to build a global studio and digital media business which leverages our strengths, not only from an India perspective but adds the best of Hollywood into that as well. Today, if you look at the Indian businesses, there is no Indian studio that has really done any scale level partnership with US studios, and this is not just a partnership, it's a merger; we are actually going to become a single company called Eros STX Global Corporation as a result of this.
As with any merger, there are a lot of things that typically go into the rationale for the merger, we believe there are 3-4 pegs on which the entire strategy is resting. At the most fundamental level, is the culture, because if there is no cultural fit, there is no chemistry. So you can have the best financial reasons or the best strategic and cultural reasons, but if the culture is not fitting, the merger does not work well. In our case, the promoters, our Chairman Mr Kishore Lulla and the Chairman of STX Bob (Robert) Simonds have known each other for more than a decade, they are really close friends and they have been on certain joint boards, including UCLA's School of Films and Arts board, etc. So that friendship culminated in an opportunity to created a global studio in our business.
From a strategic rationale standpoint, we really looked at the content story. We look at large at India-based movie content, they typically look at US Hollywood based films and content. The idea was to amalgamate and take it to the world stage and create global film production, which is leveraging the best of strength, not just in acting talent, but also in direction, photography, music, choreography and so on. So all of these skills which typically go into the movie production business, we wanted to take them to the global level. The of course, post-that, there is a technical advantage of getting the best VFX, etc. This merger allows us to create a joint company that allows huge market access in India and the US and because we have built a large partnership in China as well, because of our film distribution and we did the distribution of quite a few movies, including 'Bajrangi Bhaijaan' and 'Adhadhun' which have done extremely well. 'Adhadhun' was our distribution in China and even movies that were distributed by others in China, 'Dangal' for example, did extremely well there. There is a demand for Indian movies there, duly subtitled, duly dubbed in Chinese as well.
STX, on the other hand, has been looking at co-production in China for a while now. So the two companies put together will create a strategy where we will not only address India and the US but will address the China market as well. Secondarily is the financial fit of the two companies. As part of the merger, we have a particular size and we've grown to a particular level and STX has its own business that is growing well and putting out good quality content wit marquee stars such as Matthew McConaughey, Jennifer Lopez, Amy Schumer, Anne Hathaway, etc, and what we want to do now is bring these talents together and create world-class cinema in a financially sound model. As part of this merger, we have raised US$125 million from several investors, including existing investors in STX and we have also negotiated a line of credit of US$350 million from JP Morgan for the combined entity. The result of all of this cash lying with us, plus the predictable revenue that we have over the next 2 years on the film that we have already produced gives us close to $600 million in cash, so translated at today's rate at about Rs 75 to US$, we are sitting on close Rs 4500 crore of cash that can be deployed effectively towards creating world-class content.
Now, imagine a scenario where you have traditional Indian stories, for example, if you look at the Hindu mythology side, like Ramayan and Mahabharat. Ramayan and Mahabharat tend to be seen in a very socio-cultural and religious context of India. No one has really looked at the universal appeal of those stories. However, imagine these stories of ambition, aspiration, jealousy within the family, competition, fights and harmony – all coming together, but being presented on a global stage in a completely new surreal world.
On our slate, we have looked at a lot of such content. This is just an example of the kind of stories we can do. There are Indian stories, there are American stories and Chinese stories; the Chinese have a very similar Asian ethos as Indians. So what we want to do is make sure we are taking that ethos and creating world cinema. For example, the Korean movie 'Parasite' which won the Best Film award at the Oscars. It's a Korean movie, with the Korean cultural context of a family that is economically challenged and trying to make their way in the world, yet the dark humour etc is such that it has universal appeal. We believe we can create such winning content from India, combined with the Hollywood studio, for the world. That's one of the core strategies driving our business.
How much has the COVID-19 lockdown slowed down your plans and processes?
If you look at the impact of the Coronavirus, it has been for the past 4 months. So I will divide it into two parts, one is specific to this merger we are doing and then the larger impact on the industry itself. The conversation of the merger has been going on for more than 3-4 months, but it was accelerated when I was brought on board along with the management team to work on this deal to make sure that our collective team is able to give their energies and the right amount of focus in making this deal happen. So not withstanding the Coronavirus, we would have gone ahead with this announcement. It's just a coincidence that we are announcing this in the middle of this crisis.
From an industry perspective, the challenge is that all the cinema theatres have been closed down. We believe in the worst-case scenario, the theatrical impact might be there for about a year. In a more aggressive scenario, we might have theatres opening in about 6 months or so. When you look at the film value chain, obviously theatrical distribution is one of the larger sources of revenue, which has now gone completely away. So we are looking for huge uptake in the OTT platforms in terms of new subscribers, new content coming into an extent that digital is actually replacing television as the second medium of choice for revenue monetisation as well as audience attractiveness. In the earlier legacy scenario after theatrical distribution, there were movie premieres, then it would trickle down to digital, then there is a long value chain like in-flight entertainment, CD/DVDs, local cable operators etc. But the whole revenue value chain of our business has completely transformed with digital suddenly coming to the forefront.
Our digital player which is Eros Now is an extremely successful one in Indian film entertainment. We have over 188 million subscribers and about 27 million paid subscribers, which is literally growing by the month. What is interesting is STX on their part does not have an OTT player right now, so all the content they are producing, we have an opportunity to bring some it to Eros Now. Some of it if we believe we can get better monetisation by marketing it to let's say, AppleTV or Netflix, we are not shying away from marketing it there as well. We would ideally like to keep it at Eros Now itself, but ultimately the call is going to be based on whether we can see better revenue realisation by way of new subscribers that we can add by placing the content on Eros Now versus monetising it well in advance by talking to other OTT players. We are a studio business which is its own profit centre, which will continue to make superior content, whether is it film entertainment and movies or web originals etc. While production is currently halted because of COVID, we believe in the next couple of months as the situation eases up and services improve, we will be able to get back to the production slate that we have already identified.
We also have an exciting range of movies which we had planned this year featuring actors such as Nawazuddin Siddiqui, Taapsee Pannu and Rana Daggubati. They are movies that are completed or near completion. So we believe as and when this is lifted, we will have some really exciting movies coming out in multiple genres which will appeal to the. With the Hollywood partnership, we believe we can create a premium tier of OTT, so Eros Now is our current OTT, by June we will also be launching something called Eros Now Prime which will be targetted towards the upper demographic. There, other than the STX content and premium content, we have also signed up a partnership with Comcast NBCUniversal and we will be taking their content.
There is an increase in consumption particularly on OTT, but there hasn't been anything new on the platforms because production has come to a halt. How are you managing this?
Fortunately for us, while we have had a series movies already there on the platform, we had content that was intended for theatrical distribution which is ready with us. We will soon be pacing some of that content direct to OTT which means the movies will not be released in the theatres, but straightaway on the OTT platform. Secondly, we are refreshing our content with international content, but yes, there is a challenge that beyond a point, your own fresh content inventory which is work in progress- will dry up and you may have to bank on older content.
So there are two very interesting indications coming there, one is we are seeing that the audience is going beyond the initial banner of movies placed on an OTT site to drive deeper into the site to layer 2 or 3 to discover various types of content that they were typically not discovering earlier. Our engagement level is high, up by 95-100% on our Eros Now platform. We believe that those engagement levels and increase in subscriptions will actually continue to prevail even going forward.
What is interesting is that there is an attempt to engage the OTT audience even in an SVOD format that had not been done before. For example, attempts at gamification, creating audience engagement by way of quizzes, etc, so there are a lot of ideas around what we can do with the audience which is stuck at home and keep them entertained and informed on the latest content available.
I agree it's a challenging phase, and it's not the most convenient to it because our technical teams are all spread out so everything is happening remotely, but it's been exciting as well because in such a bad situation, and my heart goes out to everyone impacted by COVID on a personal level, whether in terms of lockdown or health issues that people have had, it has also transformed the way people look at technology. It has transformed the way we use some of the tools we have at hand and also an efficient use of our time.
Earlier the amount of time we spent just commuting from one part of Bombay to another 1 and a half hours a day in just commuting, are we are far more effective. I know it's not sustainable in the long term, but at least it's a change, so you have to roll with the change.
We have also become more self-sufficient...
Fortunately for me, I've been brought up in a family where we are accustomed to doing everything on our own. Of course, at a certain stage in life, you do get accustomed to a certain level of support, but you have to make sure you are able to manage your home on your own. I think this situation has brought families together, there is a higher degree of bonding, better appreciation. It has also put some families into a stressful situation, but the stress is not a result of COVID itself, it is a result of stress that may have existed in the past but because of close confinement, these challenges are starting to come to the fore. I work very closely with the IAAA as well, and we have taken some of these social causes there also and we are promoting it aggressively, whether it is domestic violence, or the need to connect to your seniors or elders in lockdown in remote parts of the world. But we are all coping and we have to find the silver lining in any cloud.
How are you keeping the morale of your employees high at this time?
It is easy to do “employee engagement” activities in the office because you have all the resources at hand and the HR team can be put to the task. But it is not possible to do this in a situation where everybody is remotely placed. Firstly, the fundamentals of working with teams do not change, the fundamentals of reward, recognition and employee motivation do not change. You have to make sure employees are given as many tools as possible, whether technically, financially or through medical support etc. You have to make sure there is constant engagement and communication with employees and team members by way of talking to them.
How has this lockdown changed you as an individual in your personal life and professionally?
The most fundamental change which I have seen in this period is that I have perhaps gained a deeper sense of respect for the value of time in terms of just taking a breath and internalising some of the stressors or work issues that keep coming up because in a routine day job, commuting and working in the office, we tend to get very reactive and we respond to what is coming to us. Our ability to sit back, think and plan typically takes a backseat. More often than not in a workplace environment where you are trying to create large scale transformations, you get such time only on the weekends. So you either read a book or watch something that gives you entertaining content or think and do personal research that you want to do to figure out the direction of your company, industry or business. I think this has allowed us a larger share of time to pursue some of those passions. I have been fortunate to catch up on a lot of movies that I've wanted to see. I've read a few books and that has something that has always been a passion for me. I'm hoping on the other side of this we come back recharged, raring to go and conquer the world as an industry; a society and a community. And I hope and pray that we come out of this big challenge to humanity soon enough.
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