ZEE5 user base will grow up to 100 million in next three quarters: Punit Goenka

Punit Goenka, MD and CEO, Zee Entertainment Enterprises Ltd (ZEEL), spoke about the company's robust performance in the October-December quarter, process to maintain growth momentum and outlook on subscription revenue among others. Edited excerpts:

What were the surprises in the December quarter?

There were several surprises. On the domestic side, we have grown in the Hindi genre. In addition, we have grown in West Bengal and Tamil Nadu and achieved a stellar growth in Karnataka, apart from other general growth. In addition, ZEE5 has started monetising through advertisement in the third quarter. Similarly, advertisement revenue from the international market, which was stagnant for a long time, has grown by 40%.

Will you be able to maintain this growth?

I always try to be above the industry growth and this is backed by the efforts of my team, which has always proved it. I expect the same in the next quarters too.

Are you going to maintain this growth momentum in the fourth quarter?

We will continue to grow. The industry is expecting low to mid-teens, and we will deliver a better growth in Q4 too, as the market share gains have not been completely monetised yet. There is still more scope of monetising it.

How is ZEE5 performing? What are your plans for it?

It has been performing well and I am quite pleased with its performance. Its monthly active users have gone up from 41.3 million in September to 56 million-plus in December. I feel the number will go up to 80-100 million in the next three quarters. Now, we move towards subscription and this shift will be supported by the content that has been tested on the platform. The test talks about the type of data that is being liked by consumers. We have plans to launch one web series in six different languages on a monthly basis. I feel consumers will be ready to pay if they are being provided with the quantum of content that they want.

You were talking about 40% growth in advertising revenue. Now, should we consider that you will be able to provide a double-digit growth (nearly 30%) in the fourth quarter?

International markets continue to be volatile, but we will continue to grow. It all depends on the market that will perform better for us.

What is your outlook on subscription revenue?

I feel that we will be able to deliver in the low to mid-teens, but the market will feel some disruptions due to new tariff order that will be implemented from February 1, 2019. The market will feel a short-time disruption. We have experienced the same in dish, in which the consumers don't exercise their choice until and unless the signal is not switched off. Thus, the market will feel a short-term disruption when the signals will be switched off, but we will be able to deliver the number by the end of the year. And going forward in the next year, we will try to deliver in the low teens.

Did Zee Keralam launch had any impact on the costs?

Three different reasons are responsible for the rise in content cost and they are Zee Keralam, which is a fresh unit and is not comparable to last quarter; Zee Film Library, where we went for aggressive investment in the last two years over films. It has started monetising. Now they are starting to pass through our P&L and the third is our investment in content for Zee5.

Can you quantify the additions in the cost?

I can't provide exact numbers, but can say that there is a growth of 18% in all these three.

You have talked about international business. Which markets can add to your growth?

Our growth will be seen from the Middle-East region, which went to a low base due to the economic environment in certain countries and it is returning. We can see growth over there. We are also growing in Africa. Apart from this, we also have a German language channel, named Zee One, in Europe and that is seeing good traction in advertising.

Any plan of expansion in terms of channels in the fourth quarter?

Yes, you will be able to see some additions in the next financial year as we have plans to launch a Punjabi channel and two movie channels in Kannada and Bhojpuri. And we are working on plans for the future.

There is a new trend in regional TV, and Gwalior TV is something that you have started. What kind of response are you expecting from it and what are the expansion plans in the segment?

If you look at the regional television, then you will find that 80% advertisements that are being served on the platform are of national advertisements in nature. This is something that is limiting the opportunities for the local level or city-specific advertisers to go for a video medium of advertisement. But if you look at the developed economies then you will find that retail advertising constitutes almost 40-50% of the advertising revenue. Thus, we have seen an opportunity and have started in Gwalior on a pilot basis, and then look forward to expand it in other markets.