October The Newsreel. A newsletter for the media and entertainment sector

Transcription

1 October 2013 The Newsreel A newsletter for the media and entertainment sector

2 Foreword Welcome to the October 2013 edition of The Newsreel, EY s newsletter on the media and entertainment (M&E) industry. India s M&E industry saw increased activity in the TV broadcasting space, with TV distributors launching niche channels to capitalize on the increased channel-carrying capacity enabled by digitization. This has led to Zee Entertainment Enterprises Limited (ZEEL), Zee Media, Star India and the Times Group launching new general entertainment channels (GECs) and niche channels. The TV broadcast and TV rating measurement segments are witnessing significant activity on the regulatory front. Implementation of the Telecom Regulatory Authority of India s (TRAI s) 12- minute ad cap has been put on hold till November 2013 by the Telecom Dispute Settlement and Appellate Tribunal (TDSAT). The Information and Broadcasting (I&B) Ministry has asked TRAI to reconsider the ad cap on news channels, suggesting that its implementation could be made synchronous with the Government s digitization drive. Furthermore, various companies are undertaking cost-cutting measures due to challenging economic conditions. In the TV broadcasting segment, Bloomberg TV and NDTV Good Times have reduced and realigned their staff to cut costs. In the publishing segment, Outlook Publishing has reduced the frequency of its magazine Outlook Money from a monthly to a fortnightly publication. ABP has sold its Business World magazine, while the Future Group is looking to divest its 65% stake in comic book company ACK Media. With today s youth and working professionals being hard-pressed for time, they prefer their entertainment on the go. Keeping this in mind, broadcasters are becoming innovative in the content they present in their entertainment channels and are focusing on finding novel ways in which they can monetize their digital offerings. This month, we explore the digital entertainment segment, its rapidly growing popularity and the key challenges broadcasters and content distributors of digital entertainment face. This edition of Newsreel includes features on TV game shows in India and over-the-top strategies for television broadcasters. We also present the views of Nitesh Kripalani of Sony Liv, Sony s premier digital entertainment brand, on evolving trends in the TV industry s digital space. I hope you enjoy reading this edition of The Newsreel. We look forward to your valuable feedback and suggestions, which will enable us to make this newsletter even more interesting and useful for you. With kind regards, Farokh T. Balsara Partner and Sector Leader Media & Entertainment

3 In this edition Industry news: Latest news in the media and entertainment space across various sectors In-focus: TV game shows in India In-focus: OTT for television broadcasters 16 Point of view: Interview with Mr. Nitesh Kripalani, Executive Vice-President, New Media, Business Development and Digital/Syndication, at Sony Entertainment Network

4 The Newsreel 4 Industry news Television Zee Media acquires Maurya TV Zee Media has acquired Maurya TV, a regional news and current affairs channel launched by film-maker Prakash Jha. The financial details of the deal were not disclosed. It is subject to various regulatory approvals. 1 Turner ties up with Reliance MediaWorks for postproduction Turner International India has entered a partnership with Reliance MediaWorks for post-production work for its entertainment channels, including Cartoon Network, Pogo and WB. Reliance MediaWorks (RMW) will provide complete post-production services, including video editing, voice-over recording, animation-based graphics and visual effects for Turner International India s on-air promotions of its channels. 2 Ortel Communications to expand its operations in regional markets Ortel Communications Limited, an Odisha-based multisystem operator, is looking at investing in expanding its existing network to new locations in the state. The cable TV provider plans to launch various new product lines, including High Definition (HD) services, to its subscribers. Going forward, it is eyeing acquisition of MSOs and LCOs, apart from increasing its broadband subscriber base and penetration of digital services, to expand its services further. The company is exploring various fund-raising options, including raising equity of around INR1 billion, to fund its growth. 3 TRAI issues consultation paper on DTH extension licence TRAI has released a consultation paper on extension of the DTH licence. The Ministry of Information and Broadcasting had sent a reference letter to TRAI on 30 September 2013, in which it enquired about the terms and conditions for extension of the DTH licence on its expiry after the mandated 10-year period. The key issues discussed in the consultation paper pertain to entry fees, bank guarantees and licence fees. 4 Homeshop18 raises US$14 million; transaction valued at US$360 million HomeShop18, India s leading virtual commerce business, has announced that it has closed a US$14 million followon funding round with GS Home Shopping (GS). The funds are being managed by OCP Asia Ltd. (OCP Asia) and Network18. GS will invest US$11 million and OCP Asia and Network18 the remaining amount. The transaction values HomeShop18 at US$360 million. Network18 will be the majority shareholder (with a share of 51%) in HomeShop18. SAIF Partners, GS Home Shopping and OCP Asia are the other investors in HomeShop18. GS is the third-largest Home Shopping company in the world and the market leader in Korea. 5 TV channels oppose the Home Ministry s new security clearance policy Owners and top executives of leading television broadcasting companies want the Government to review its recent ruling, which requires channels to get their directors credentials verified every three years. They also want the Government to change another regulation, which requires them to obtain fresh security clearance from the Home Ministry every time their companies launch new channels Zee Media acquires Maurya TV, ZeeBiz, 3 October 2013, via Factiva. 2. Turner ties up with Reliance MediaWorks for post-production, The Economic Times, 30 September 2013, via Factiva. 3. Ortel Communications to expand in regional markets, Indiantelevision, 9 October 2013, via Factiva. 4. TRAI issues consultation paper on DTH extension licence, Exchange4media, 3 October 2013, via Factiva. 5. HomeShop18 raises USD 14 million; valued at USD 360 million, Moneycontrol, 23 October 2013, via Factiva 6. TV Channels Oppose New Security Clearance Policy, The Economic Times, 25 October 2013, via Factiva

5 Radio External monitors to be appointed for FM Phase III auctions The I&B Ministry has sought the Central Vigilance Commission s approval for appointment of independent external monitors to keep oversee auctioning of FM Phase III radio. The Ministry wants to conduct the auctions at the earliest. This auction will cover cities (with a population of 100, 000 and above) that have private FM radio channels. The Government expects to earn around INR15 billion from auction of the Phase III FM radio licence to provide services in 227 cities, in addition to the 86 cities covered currently. 7 SC to examine curbs on news broadcast on private FM radio The Supreme Court, hearing a PIL filed by an NGO, indicated that it will scrutinize the rules that bar private FM radio channels and community radios from broadcasting news and current affairs. Prashant Bhushan, appearing for the NGO Common Cause, raised the question of how the Government can restrict private FM radio channels from broadcasting news, seeing that community radio channels are accessible to all. 8 Publishing HT Media concludes stake sale in HT Burda Media Ltd. HT Media Ltd. has sold its entire 51% stake in its JV HT Burda Media Ltd. to its partner Burda Druck Gmbh for INR600 million. In February 2013, HT Media indicated that its board has given its in-principle approval to sell the company s 51% equity shareholding in HT Burda Media Ltd. to Burda Druck GmbH, which is part of the Hubert Burda Media Group. 9 Rajul Maheshwari buys Ashok Agarwal and family s 14% stake in Amar Ujala Rajul Maheshwari, founder of Amar Ujala Publications, along with his family, will purchase Ashok Agarwal and his family s 14% stake (of INR1.5 billion) in the publishing house. This will consolidate its ownership in one family. The deal will be funded through the promoters internal accruals and personal debt. The agreement is part of Amar Ujala Publications settlement with Ashok Agarwal and his family, who had filed a complaint against the former at the Company Law Board (CLB), alleging its operational mismanagement of the operations of the publishing house. 10 Advertising Publicis Groupe acquires Beehive Communications Publicis Groupe has announced its acquisition of Beehive Communications, an independent Indian integrated communications agency specializing in marketing and communications services for clients in South Asia. This marks Publicis Groupe s seventh acquisition since mid and Publicis Worldwide s third in India. Beehive will be rebranded as Publicis Beehive and will operate as a unit within Publicis Worldwide s global network. 11 Filmed entertainment Excel Entertainment forms JV with Dubai-based Riva Group Excel Entertainment, a production house promoted by Farhan Akhtar, has joined hands with the Dubai-based Riva Group of Companies to launch Excel Media. The JV will develop and launch original content including games, webisodes and animation for TV. While Riva Games will provide the technology for the products, the creative and marketing aspects of the business will be taken care of by Excel External monitors to be appointed for FM Phase III auctions, Press Trust of India, 15 October 2013, via Factiva 8. SC to examine curbs on news on private FM radio, Indo-Asian News Service, 17 October 2013, via Factiva 9. HT Media concludes stake sale in HT Burda Media Ltd., The Economic Times, 30 September 2013, via Factiva. 10. Rajul Maheshwari buys Ashok Agarwal andfamily s 14% stake in Amar Ujala, The Economic Times, 14 October 2013, via Factiva. 11. Publicis Groupe acquires Beehive Communications, Mint, 22 October 2013, via Factiva 12. Excel Entertainment forms JV with Dubai-based Riva Group, Business Standard, 15 October 2013, via Factiva. 5 The Newsreel

6 The Newsreel 6 PVR Cinemas to complete Cinemax merger by February 2014 Multiplex chain PVR Cinemas plans to complete its acquisition of Cinemax by February PVR Cinemas acquired 135 of Cinemax India Ltd. s movie screens for INR3.95 billion in This fiscal, the company is planning an investment of around INR1 billion to add 50 new movie screens with an estimated investment of INR20 million per screen. Most of the new screens will be in tier-ii and tier-iii towns. 13 Film and Television Producers Guild signs two-year MoU with Spain-based Casa de la India Foundation The Film and Television Producers Guild of India (FTPGI) has entered a a two-year MoU with Casa de la India Foundation in Spain to share ideas and practices to promote domestic and international film production and promotion. Furthermore, this relationship is aimed at increasing mutual understanding of the organizations film production markets and boost bilateral cultural ties. This is expected to enable seamless and cost-effective use of local services and facilities with regard to securing agreements for films across agencies and authorities (including organizations and government authorities) in the two countries. 14 New media Google in talks with DTH providers to bring YouTube to TV screens Google is going all out to boost use of YouTube in India and is in talks with DTH providers to bring the service to TV screens. India is among the fastest-growing markets for YouTube. The video platform has more than 55 million unique monthly users from India (from 15 million in 2011). This number is set to grow with the rise in internet and mobile penetration in the country. YouTube already has partnerships with TV manufacturers, including Samsung, LG and Sony, to make the video- sharing site available on their smart TVs. 15 Times Internet inks partnership with Ziff Davis to launch IGN & Askmen in India Times Internet (TIL) has entered a a strategic partnership with Ziff Davis, a leading all-digital media company specializing in the technology, games and men s lifestyle markets. As part of the collaboration, Times Internet will manage and drive local Indian destinations for IGN (IGN. com) and AskMen (AskMen.com), the premium gaming and men s lifestyle sites. It will have exclusive rights to the IGN and AskMen brands and their content in India PVR Cinemas to complete Cinemax merger by February, Business Line, 17 October 2013, via Factiva 14. Film and Television Producers Guild signs 2-year MoU with Spain based Casa de la India Foundation, Tellychakkar, 30 October Google in talks with DTH cable providers to bring YouTube to TV screens, The Economic Times, 8 October 2013, via Factiva. 16. Times Internet inks partnership with Ziff Davis to launch IGN & Askmen in India, The Economic Times, 9 October 2013, via Factiva.

7 Gaon Connection to launch audio newspaper Gaon Connection, a UP-based weekly newspaper catering to the rural populace, is set to launch an audio newspaper on the mobile platform, to reach out to those who cannot read newspapers. This audio newspaper will broadcast voice stories filed by reporters, voice columns by experts and voice editorials by the editor. Gaon Connection has tied up with OnMobile, a value-added services company, to take the audio newspaper to mobile phone platforms and is now in discussion with telecom service providers. The company plans to offer it for a monthly subscription of INR25 INR Cisco in talks with cable TV companies for broadband technology US technology major Cisco is in talks with Indian cable TV operators to help them offer broadband services by upgrading their existing networks. Cisco is offering a technology that will enable cable TV players to start offering two-way communications required for Internet services. The company has roped in its venture capital fund unit Cisco Capital to finance the technology upgrade. 18 People movement Zee Entertainment Enterprises Limited (ZEEL) has appointed Mihir Modi its Chief Finance and Strategy Officer in place of Hitesh Vakil, who is now its CEO, Service Excellence. 19 Sriram Kilambi has resigned from his position as President, Bloomberg TV, after one year and seven months with the company. 20 Former Viacom executive Eric Sherman has been appointed Chief Executive of Veria Living, Zee Group s US-based media unit, which focuses on health and wellness. 21 Siddharth Roy Kapur, Managing Director of Disney UTV s studio business, will take over as Walt Disney Company s Managing Director, replacing Ronnie Screwvala, its current MD. Roy Kapur will step into his new role on 1 January Screwvala will assist in the transition process till 30 June Arvind Sharma, Chairman and CEO of Leo Burnett India, will step down from his position after a long and successful tenure of 30 years. Saurabh Varma, who is currently the Regional Chief Strategy Officer of Leo Burnett Asia Pacific, will take over as Leo Burnett India s Chairman and CEO Gaon Connection to launch audio newspaper, afaqs!, 8 October 2013, via Factiva. 18. Cisco in talks with cable TV firms for broadband tech, Business Line (The Hindu), 31 October 2013, via Factiva 19. ZEEL appoints Mihir Modi; elevates Hitesh Vakil, Exchange4media, 4 October 2013, via Factiva. 20. Sriram Kilambi steps down as President of Bloomberg TV, Exchange4media, 10 October 2013, via Factiva 21. Eric Sherman Appointed CEO of Veria Living; Sherman has logged years at MTV Networks as a general manager, Daily Variety, 21 October 2013, via Factiva 22. Disney India announces Siddharth Roy Kapur to replace Ronnie Screwvala, Indiantelevision, 24 October, 2013, via Factiva 23. Arvind Sharma to quit Leo Burnett India; Saurabh Varma appointed CEO, Exchange4media, 29 October 2013, via Factiva 7 The Newsreel

8 The Newsreel 8 In-focus: TV game shows in India Game shows form a part of our lives. When realism started vanishing from our daily fiction shows, the demand for game shows (non-fiction shows) went up. Hindi GECs were the first to jump on the bandwagon, but regional GECs are fast catching up with regionalization of existing TV game show formats. EY has been fortunate to have been associated with more than 20 different game shows across conceptualization, customization of processes for the Indian audience and validating the winner/participant-selection process. We now present our analysis around this exciting aspect of the TV industry. Types of game shows Game show covers a variety of different types of shows. These can be classified into three broad categories: quiz, talent and reality based game shows. Different target groups are attracted by different types of game shows. A quiz-based game show would normally attract a fair and unbiased audience across all socioeconomic classes, but skewed towards young people. A reality-based game show is popular with the high socioeconomic classes among young to middle-aged people. And talent-based game shows appeal to different socioeconomic classes and age groups. Large screen stars on the small screen The future of game shows changed rapidly after Star introduced a Big Bollywood personality on a smaller screen in KBC. The success of this move ensured that others would follow. It was the start of a new trend on TV and game shows brought these stars closer to the audience. They got to see the real side of these stars. Quiz based game shows KBC Bingo Panchvi pass Bournvita Quiz Contest Talent based game shows TV game shows Reality based shows Bigg Boss Iss Jungle Se Mujhe Bacchao The Bachelorette India s Got Talent Indian Idol X Factor Jhalak Dikhla Ja Dance India Dance

9 How much is too much? We analyzed the quantum of game show content played on the five Hindi GECs, and Colors was the clear leader followed by Life OK and Sony, while Zee and Star continue to focus on fiction. Average hours allotted to Game Shows over last 2 months (Aug-Oct'13) Life OK, 5 Star Plus, 2 Colors, 7 Delivering on the promise The most common objectives of any game show are: To attract a specified Target Group (TG) to a channel (marketing) Retention of viewers over a period of time, which helps build viewership, and To build the image of the channel This was true when Kaun Banega Crorepati (KBC) was launched on Star over a decade ago, and remains the same today. Channels have successfully used reality TV to gain a lead over their well-established rivals or differentiate their offerings in the solidly established market to earn a larger than proportionate share of advertising revenues vis-à-vis their ratings. Sony, 4.5 Zee TV, 2 Source: TAM ratings Show names Average TVT Jhalak Dikhhla Jaa 6622 KBC Bigg Boss Indian Idol Junior 5060 DID Super Moms 4989 DID Dance Ka Tashan 3939 Junior Master Chef 2295 The Bachelorette Junior Master Chef Total TVT Jhalak Dikhhla Jaa Bigg Boss 7 DID Super Moms Average TVT DID Dance Ka Tashan KBC 7 Indian Idol Junior The Bachelorette Source: TAM ratings 9 The Newsreel

10 The Newsreel 10 Often, game shows enable success from the word go! Game shows manage to attract viewers right from the opening episode. Opening Episodes' TVR - Game Shows (Jan'12-Sep'13) Indian Idol-6 Kaun Banega Crorepati Indian Idol Jr. KBC-7 Jhalak Dikhhla Jaa - 12 Sur Kshetra Indias Got Talent 4 Bigg Boss Season 6 Jhalak Dikhhla Jaa - 13 Survivor India Jo Jeeta Wohi Super Star-2 Nach Baliye 5 Nach Baliye Shriman Vs Shrimati India's Dancing SuperStar Junior MasterChef Dance India Dance-3 Maruti Suzuki-dance India Dance-3 Did Lil Master 2 Did Dance Ke Super Kids Hero Saregamapa 2012 Indias Best Dramebaaz DID SuperMoms Sony Colors Star Plus Zee Source: TAM ratings Also delivering 360 degree interactivity Interactivity can be classified as interaction through participation and voting. It is high in a quiz-based game show. Sony launched its home viewer game show, Ghar Baithe Jeeto Jack Pot, and enticed viewers to participate by offering prize money and the opportunity to speak to the host. From this season, Sony has also launched a play along app for users to play with the participant. In reality-based game shows, interaction is mainly by voting, since viewers vote for their favorite participant on various platforms such as telephony, web and app. Talent-based game shows are also highly interactive when they are open to public participation. Shows such as India s Got Talent and Indian Idol attract a large number of participants across audition venues.

11 Regional and national platforms Game shows often work well on both national and regional platforms. SaReGaMa, KBC and dance shows are examples of formats that work well across languages. There is a need to adapt each format to meet local tastes, though, by providing relevant cultural twists, voice tone, local host / anchor, etc. Benefits of game shows Following are the key benefits of game shows for broadcasters: TV game shows can be a quick fix. If a channel wants to raise its ratings quickly, this can be done through game shows Additional sources of revenue can be explored and generated via SMS/IVR /Online and apps (participation and voting). Game shows enable channels to position their brands differently and their shock value is high, as is their novelty factor. The celebrity host/judges/participants connecting with each other can significantly increase viewership as well as stickiness of a game show. It can also bring in sponsors associated with the above. Live episodes can have a high recall value and increase viewership TV game shows also attract sponsors through associated sponsorships, product placements, etc. Key risks in game shows Game shows may generate large revenues, but they also expose channels to risks. There are significant risks in every show format. These need to be managed, and those who think that the shows are formatted and need to be produced by following a successful international mantra, are mistaken: Cost per episode for game shows is normally very high compared to cost per episode for fiction Replication of successful game show formats is rampant across different channels. And, due to this, audience burnout is also on the rise. Creators of game shows need to make these shows as real as possible or there is the possibility that they alienate their TG, who would then seek other formats. A high participation effort (along with the difficulty of the registration process) or extremely difficult participation processes can reduce viewers participation in contests and game shows. Unfair rules of participation, elimination or winnerdetermination process, which is seen as unfair or not transparent, can also reduce interest levels and viewership If the show timing does not match the TV viewing habits of the TG, it can also reduce viewership. Lack of credibility (such as not knowing how a particular participant was selected or disqualified) can also decrease viewership Numerous show cause notices from the Ministry of Information and Broadcasting, consumer bodies, etc. for claims on unfair processes, public interest litigation 11 The Newsreel

12 The Newsreel 12 entered by viewers/consumer groups, and criminal cases filed by participants for not being shortlisted for subsequent rounds reduce the credibility of a show. A seemingly biased jury or not-so-interesting participants can also have an impact on a game show. Many content-production houses and broadcasters have learnt the hard way that a single poorly managed factor (e.g., the attitude of the host, language used, the relevance of the concept or the perceived bias of the process) can significantly reduce viewership. We use the following model to evaluate each game show format and to customize it. Contestants Jury Credibility Relevance Benefit of viewership/ participation Objective Attraction points (induce trial viewership and participation) TG Connect/ Sales/ Viewership, etc. Emotion: pride, humour, empathy, fear, happiness, etc. Timing Hygiene factors (repeat viewers once trial is induced) Participation effort Hype/ peer acceptance Rules and regulations Concept Process Credibility, once lost, is difficult to rebuild. Not just for a show, but for the entire channel. This is probably why more and more broadcasters ensure that risks relating to the credibility of their shows are well managed, usually by: Defining a winner-determination process (for the studios and viewer participants), which is fair and transparent Having an independent entity validate, at all levels, the count of the jury s scores and the public s votes, so that audiences feel that their votes have not been given in vain Therefore, only, and only if, all the risks mentioned above are addressed, can we say that real-life drama wins over makebelieve drama! Engaging an independent third party to validate that the defined process is followed

13 Ashish Pherwani Ashish Pherwani is a Partner with EY s Advisory practice. He has served clients in the media and entertainment sector for over 12 years, helping them to identify business and operating risks and develop systems to mitigate risks, including improving the efficiency and effectiveness of their key business processes. Ashish is the segment champion for print, outdoor media, radio and events at EY. Tel: ashish.pherwani@in.ey.com 13 The Newsreel

14 The Newsreel 14 OTT for television broadcasters OTT includes non-traditional methods of delivering entertainment content, primarily through internet and mobile networks. To establish a successful OTT business, it is essential to enter and maintain several partnerships throughout the value chain with paying consumers, content-owning companies, connectivity networks, devices and technology platforms. The world over, television companies have been at the forefront of distributing their TV shows on OTT platforms. Initially, broadcasters had their own online portals, but the coming together of some networks led to the formation of the first scalable TV platform HULU, which aggregates content across participating networks and has evolved to accept content from a variety of sources other than its parent companies. This has led to a consistent growth in the number of HULU s unique users and its revenue model has evolved from ad-only to premium subscriptions sent on tablets and mobile devices. This leads us to a second important enabler for the growth of OTT the high penetration of devices, especially of smartphones, tablets and internet-enabled gaming consoles. Drivers of consumption of OTT in India need to scale up faster in terms of their reach and backend infrastructure to handle streaming audio and video content. From a mobile perspective, uptake has been encouraging with an increasing number of consumers using mobile data in the past few months more than one-third of Youtube viewers in India watch video on their mobile phones. Furthermore, the growing penetration of smartphones (currently 14% of India s population) has led to telecom companies emerging as an important gateway for OTT companies to reach their consumers. One of the most important drivers of a successful OTT platform is an in-depth understanding of the OTT consumer profile in India. The key questions to be answered What is the target consumer profile (TG)? What are the types of content and formats that are popular with consumers? What is the consumers appetite for subscription and transaction (downloads) services? What is the content-consumption lifecycle of the Indian consumer? Answers to these and related questions will help OTT companies construct sustainable business models. In the recent past, some Indian players have begun providing pure-play OTT services. Most of these companies are already established in the media and entertainment space, and the list includes large broadcasters. As mentioned above, pooling together content TV shows and movies is a proven way of scaling up a consumer base, and Indian companies need to explore this route further. Netflix is an example of another model that has worked well in the OTT space. It aggregates content across TV shows and movies from almost all networks and studios and delivers them over the internet to subscriptionpaying customers. Netflix s core competencies include a deep understanding of customers, to whom it provides a superior customer experience so that they do not need to look elsewhere for either variety of content or an enhanced user experience. However, there is no similar company in India, and it remains to be seen who will occupy this space an existing company or an aggressive new start-up. It is worth mentioning that Netflix initially started off as a DVDby-post rental company before moving successfully to the OTT space. In summary, there is little doubt that OTT will be a significant platform on which entertainment content will be consumed in the future. Gauged by the experience of global markets, the essential first steps to be taken toward establishment of a successful OTT platform include focused consumer research, innovative business models and a transparent and audited revenue-sharing framework.

15 Raghav Anand Raghav is a Manager in the Business Advisory Services practice at EY. He has assisted both traditional and new media companies in market entry strategy, feasibility studies, operational developments, technology design and techno-commercial due diligences. Raghav is the segment champion for gaming and mobile entertainment at EY. Tel: raghav.anand@in.ey.com 15 The Newsreel

16 The Newsreel 16 Interview with Mr. Nitesh Kripalani, Executive Vice-President, New Media, Business Development and Digital/ Syndication, at Sony Entertainment Network 1. Typically, what are the non-fct modes of monetizing Indian game and fiction shows? There are many avenues for monetizing Indian game and fiction shows. These include: Adopting a traditional interactivity, voting and engagement model SMS and IVR-based revenues Monetizing videos via the telecom operators based on video clips using a subscription or PPV method Generating advertising revenues through a video-on-demand brand and enabling personalized social engagement through a second screen Digitally distributing content through third-party aggregators such as YouTube, itunes, Hulu and Netflix 2. How much of a show s total revenue (in percentage) can be generated by digital media? This percentage can vary, depending on the scale and popularity of a particular show. Over the last one year, we have managed to generate close to 15% of a show s revenue by using all the methods given above. One of the key drivers of this growth is India s digital advertising market. Customers are avidly consuming digital content, and this is attracting a large number of advertisers. Internet streaming is actually complementary to broadcasting and adds significant value to programming.

17 3. What are the key trends you are observing in interactivity and digital consumption? Today, consumers are hard pressed for time and like their entertainment in byte sizes on the go. The following are some of the key trends in consumer s digital consumption behavior, based on data from our Premier Digital Entertainment brand, Sony LIV. The bulk of video content is consumed on mobile phones. Over 50% of viewers watch videos on their phones and smart phones, 35% online and 15% on their tablets. This data is derived from Sony LIV s user data. Another important insight pertains to the demographics of the viewing audience. LIV s content witnesses higher consumption among women, as compared to overall Internet video consumption in India. On Sony LIV, video consumption trends indicate 47% of women viewers and 53% male viewers; whereas the overall internet audience is skewed and includes 70% male viewers. Youth and working professionals are a key target segment around 45% of viewers are from the 15 to 24 year age group and 35% from the age bracket of 25 to 34 years. In terms of genres, our analysis reveals that comedies, thrillers and daily dramas have a high viewership on digital platforms, since today s viewers increasingly prefer short content formats on these platforms. They opt for formats such as catch-up and short crunch episodes, and quickisodes. 4. What s the target audience for digital interactivity/ content consumption in India and abroad? Our key objective is to target and mold consumers thinking in the digital entertainment industry. We are focused on establishing Sony LIV as the most innovative video-on-demand brand that offers a worldclass viewing experience to its users all over the world across devices. We want to be available where the consumer is. Our proposition is very clear a premium video service with content from the Sony stable (from over the last 18 years). Our key goal is user engagement. We want fans to be immersed when they use LIV. Users can use the Mood Wheel on Sony LIV to watch their favorite videos based on their mood or choice of genre, they can create playlists of their favorite shows through My Q and be rewarded as a LIV Guru by consuming Sony LIV content multiple platforms be it a tablet, a PC or a mobile phone. All this, with a single sign-on experience across all devices! 5. What next for Sony LIV? Our aim is to be the leader in the digital video entertainment space. We will continue to grow and scale. We will continue to innovate and engage our users by establishing our marquee properties in the new media space. 17 The Newsreel

18 Our M&E publications For more information, please contact Radhika Pradhan at or Roadmap for single window clearance for film production in India This report was released in association with LA India Film council. The report looks at existing Indian regulations, co-production agreements with other countries and the clearances required, and in the process, highlights some development areas. In the decade of the customer, knowing your customer means owning your data The report presents innovative solutions to help our clients stay competitive in this decade of the customer domain-name consolidation across multiple online properties and its benefits, and the lessons learned and challenges faced. Film industry in India: New Horizons This report was released in association with the LA India Film Council. The report highlights how the Indian film industry will benefit by partnering with Hollywood. Spotlight on China: Building a roadmap for success in media and entertainment This report was released at the inaugural M&E Emerging Markets Executive Forum in Shanghai and focuses on the Chinese media and entertainment landscape. Poised for growth: FM radio in India This publication was released in association with the CII and provides an analysis of the FM radio industry in India. Purchase-to-Pay strategies for the Media & Entertainment industry This report discusses the challenges of creating an effective procurement organization and presents strategies for optimizing the purchase to pay cycle. With continued pressures from an increasingly competitive marketplace and changing consumer demands, M&E organizations strive to better align cost structures to achieve operating targets. Monetizing your content in a digital world This publication offers perspective on the changing nature of media and entertainment consumption and how M&E companies are tailoring their offerings to suit the same. Poised for digital growth: Preserving profitability in today s digital world This report contains insights from seventy five media and entertainment company CFOs on the digital landscape and how changing business models are shaping the future of the industry. The business of experiences: The Indian events and activation industry This report was released in association with EEMA at Eemagine The first report on the events and activation industry, this report captures the emerging trends and challenges that this nascent sector faces. Digital agility now! This report describes how digital leaders are showing the M&E path forward by using new technology not only to deliver new media products and services, but to build more agile organizations capable of sensing and responding far faster to technology-induced shifting customer attitudes and marketplace opportunities and risks. The report also describes how Other respondents have been slower to change.

19 Our M&E practice Industry is the cornerstone of EY s approach to professional services. M&E is one such significant focus area. The firm s M&E practice has more than 2,000 professionals across more than 100 countries, who focus on various issues and challenges the industry faces. Globally, EY leads the audit market share in the overall M&E industry on the 2008 Fortune 100 list. The firm is also the leader among the Big Four in the overall M&E space on the 2007 Russell 3000 Index. Whether it is the traditional press and broadcast media or the multitude of new media options, audiences now have more choice than ever before. For M&E companies, integration and adaptability are becoming critical success factors. EY s Global Media & Entertainment Center brings together a global team of professionals with in-depth technical experience in assurance, tax, transaction and advisory services to help you achieve your potential. The center works to anticipate market trends, identify the implications and develop points of view on relevant industry issues. Ultimately, it enables us to help you meet your goals and compete more effectively. This is how we make a difference. EY India has a dedicated M&E practice of more than 160 professionals across 15 key segments of the industry. We provide services to many of the country s leading M&E companies as well as to global media giants operating in the country. We have developed a wide range of services, such as entry strategy, private equity placement, due diligence, IT security review, organization structure, performance improvement and tax structuring, to name a few. This has enabled us to establish a strong presence in each segment of the industry. As your advisors, we can help you respond quickly and effectively to the challenges the entertainment industry faces today. For further information on EY s services for the media and entertainment industry, please contact: Farokh T. Balsara Partner and Sector Leader Media & Entertainment Ernst & Young LLP The Ruby, 29 Senapati Bapat Marg, Dadar (W) Mumbai Tel: Fax: farokh.balsara@in.ey.com Ajay Shah : TV Broadcasting Devendra Parulekar : TV distribution Rakesh Jariwala : Ashish Pherwani : Raghav Anand : Filmed entertainment; Sports Print; Radio; Out-of-home; Events, Marketing agencies New Media

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