MUMBAI: The popularity of digital content has got traditional media scrambling to understand and shift to newer mediums. Leading production house Eros International’s digital arm is gradually emerging as the driving factor for the company’s growth given its Q1 result while its theatrical business revenue declined. Eros Now has not only seen a huge subscriber jump but also largely contributed to the record revenue digital and ancillary business. After gaining momentum in India, the company is seeing an influx of B2C subscribers from international markets boosting the platform’s overall growth.
“International is starting to track in line, we just started with some independent state campaigns in the US and the UK over summer. So we are going to start seeing a lot more action from international,” Eros Digital CEO Rishika Lulla said in an earnings call. Along with international, India’s B2C conversions are happening earlier than expected since B2B2C was targetted first.
Eros Now stands with 10.1 million paying subscribers as of 30 June. Initially, it did not opt for advertising so that people get accustomed to subscription. However, the company is also very confident about reaching its target of 16 million subscribers by the end of FY 2019.
It is now looking at nonintrusive brand integration. Lulla said that though it has not integrated with any brand yet, the initial conversations with several brands are on. “We'd probably see something being rolled out within the next quarter and hopefully we will start seeing a bit more revenue recognition from that post one quarter,” she said.
To scale up the digital business, the company is looking at a robust library including movies and originals. The target is to premiere minimum one to two movies in each week of a month leading to a total of 50 to 100 movies a year. In terms of originals, it is looking at 18 to 20 flagship originals, which is minimum one a month, and then two in some months. Other than flagship shows, the platform will have ‘normal originals’ also.
While the number of originals will be increased, the cost will be adjusted from the allocated $250 million capex. The content production powerhouse is looking at a mix between the movie and digital content production. Since Eros Now is helping margins to build the scales may be tiled in favour of more original shows.
“[For] the big tenfold movies, the cost has doubled and the box office of those movies are going down and thereby the other movies, the good script and the star cast, which are not being paid more are performing well and hence you have seen increase in the margins for those movies and less capex. That’s the reason [for] the less capex for those movies. Between that Rs 250 million allocated, we could allocate the capex for the originals,” Eros international executive chairman and CEO Kishore Lulla explained the strategy.
Eros International is looking at spending $750 million for all its businesses in the next three years. Though the amount may seem huge but cash flow from the studio business, Eros Now, gives the company the confidence that it won’t enter negative cash flow in the average of three years.
