Over the past seven years, Viacom18 has grown to be one of the bigger conglomerates in India. The JV which started off as a partnership between Viacom International and Network18’s subsidiary TV18 and is now a JV between Viacom and Reliance Industries which has taken over Network18 has grown out of just a broadcasting business into a film and live events business.
At the helm of it is Viacom18 group CEO Sudhanshu Vats who joined the company nearly three years ago after a double decade long stint at Hindustan Unilever Limited (HUL). Energetic and dynamic, Vats has a belief of uniting the entire Viacom18 channels and departments into ‘one Viacom18’.
Spending much of his career at HUL, Vats still thinks from a consumer perspective. Speak to him now of content and he will first think of what the consumer is doing. On the occasion of the completion of seven years of the company, he speaks to indiantelevision.com’s Meghna Sharma and Vishaka Chakrapani about the growth of the company and where it is headed.
Tell us about the seven year journey.
When Viacom18 was formed seven years ago, there were only three channels MTV, Vh1 and Nick, and now we have 10 channels. That is an expansion in our broadcast business. We have also entered the film entertainment business through Viacom18 Motion Pictures in 2011. About a year and half ago, we got into experiential/live entertainment business. So now we have broadcast, films and live entertainment under our wings. We began our journey at about Rs 100 crore. In the last seven years we have grown 20 times.
A significant milestone is that we have turned PAT profitable in FY-14. That was our first year of PAT profitability at Viacom18. It’s important to not only grow exponentially but also profitably. Profitable growth is sustainable and gives you fuel for investment.
What’s your growth strategy?
I am a strong advocate of sharper segmentation. The more I think about it, the more I am convinced. Let us start from a consumer point of view. What is happening in India is that the country is urbanising at a very fast pace, income levels are growing, people are becoming more aware. Urbanisation is happening more rapidly than we see because it goes beyond the tangible phenomenon of growth in cities / urban habitats, attitudinally India is urbanising at a rapid pace.
Prime Minister Shri Narendra Modiji’s campaign is all about tapping in to the mindset of urban Indian youth who may not stay in urban India but has a mindset of aspiration, opportunity, development, fair play, which is universal. From the point of view of content, we see that when we move from rural to urban we move from a “We to I” mindset and develop a stronger individual identity. So we want to customise content for every Indian. In the utopian sense 1.2 billion people want 1.2 billion packages. Are there screens available to consume content? Yes 900 million. Is there capacity to carry content? Yes, with the digitisation of cable network and planned growth in broadband and 3G/4G we are building sufficient capacity in the content pipes. With consumer desiring more and more content it can’t be the same/similar content being churned out. So sharper segmentation is needed.
In each of the genres we exist, we will segment further and deepen our presence. We will continue to look at adjacent genres. We have Colors and Rishtey in Hindi GEC. Post legal and regulatory clearances, we will have a strong presence of Viacom18 in regional GEC genre as well.
Within Colors, a few years ago we didn’t have comedy sub-genre and we now have Comedy Nights with Kapil – and that’s a hit. We are also looking at other sub-genres. It’s about providing a spectrum of options to viewers within the channel.
Was moving into movies an alternative to launching a movie channel?
When we look at movies, we look at whether there is a consumer case, and also a commercial case. Movies have about a 13-14 per cent viewership according to TAM. So there is a consumer case. However a movie channel isn’t differentiated enough. We aren’t so sure if there is a commercial case for us, given the rising acquisition rights for films.
What about a sports channel?
Sports is a genre that we aren’t looking at in the short- to medium-term. If you look at the consumer case again people are watching a lot of cricket. But even in that, it’s a 0-1 situation. When India is playing international cricket or it is a short form game, viewership is huge but the moment India isn’t playing, or it is test cricket, viewership drops. At the same time viewership for domestic cricket is very poor. For other games, viewership will take time to develop.
It is a genre which has promise in the future. But it is a long gestation game. It needs deep investment and commitment.
Leagues are increasing in number. Where do you see them going?
Leagues are an interesting development where players are finding a sweet spot between sports and entertainment. Is it a promising place in the future? Perhaps yes. All this depends on the journey of the company. For Viacom18, I think there is enough and more to be done in deepening our current genres or entering identified adjacent genres. Our focus should be to strengthen the same. Having said that, we will continue to evaluate all opportunities from time to time.
How is the business of Live Viacom18 doing? A few months ago it was bringing in 2 per cent of your revenue. What is it now?
This year we should be at about 4 per cent of our total revenue. Live entertainment is the place where we start getting straight into the wallet of the consumer. It broadens our revenue streams – first is advertising, second is subscription and third is direct share of the wallet. In urban India, this phenomenon will grow rapidly. Particularly in certain genres like music, there is nothing to beat live entertainment. Other forms of entertainment are passive. So if you see in EDM or Bollywood dance music, we have two properties – Vh1Supersonic and MTV Bollyland. I am equally keen on the kids genre. The entire piece on experiential entertainment is a good space. We want to surely reach 10 per cent in future.
Are you expanding the number of events that you have?
Last year Vh1Supersonic was a standalone property. This year we are doing arcades and mini events in big towns- Bengaluru, Mumbai, Delhi with three artists. We have taken Vh1 Supersonic gigs to 50+ clubs and hundreds of colleges. With MTV Bollyland, we went deeper to mini-metros and towns with 1 million + populations – in fact it’s going to be 12 towns this year. We are also taking the IP outside India with the first event soon to be held in Dubai.
Will there be any more additions to the list?
I am a firm believer of deepening and strengthening what we have already started. For Colors, we will evaluate as we move forward, because we do a lot of non-fiction shows and the genre lends itself very well to live events.
How has your ad inventory grown due to the 12 minute ad cap rule?
A 12-minute ad cap for pay TV is a step in the right direction – it improves viewer experience. The viewer wants quality content and while he or she may want to watch some advertising, the problem lies in the fact, that there are cases when advertising outweighs the content duration. In future good content will command a premium on the 12-minute ad inventory. In India ad rates are under-indexed, possibly amongst the cheapest in the world, so there is a lot of room for growth. Colors, MTV, Nick, Vh1 and Comedy Central have successfully improved ERs. Across our genres our attempt will be to get good content that leads to higher viewership and better rates.
What is the network’s take on geo targeting?
The pilot has been conducted in the kids’ cluster. It’s a clear win-win situation for both broadcaster and advertiser, therefore it gives us confidence to scale it up across genres. While the FMCG sector will derive a lot of value, other sectors also stand to benefit from this. In addition geo-targeting will help us tap newer clients and local advertisers in future.
What is the state of carriage fees? Has it come down or is it still on an upward swing?
Overall carriage has come down in the past two years. The broad understanding was that with digitisation there would be no carriage at all. So it hasn’t come down as much as we would have liked it to. This is due to the lack of addressability of the consumer/viewer. No wonder then, that carriage, rather than continually coming down, has begun to rise again in recent months. As we move forward, MSOs would need to drive revenues and collections from the subscribers, thereby reducing /eliminating dependence on carriage.
What about the unequal advertising/subscription skew in India?
Worldwide ad subscription revenue tends to be almost equal. Like many things in India, change for the better is slow but gaining momentum.
What best practices does Viacom18 need to grow?
The next growth phase requires that we build capacity in talent, systems and processes and invest behind key strategic opportunities. Capacity building especially in processes and systems is an ongoing journey. We have begun to lay greater emphasis on analytics, automation and processes such as ERP. They are being implemented at Viacom18. We have focused leading brands in each genre and this is unique to us. Finding the right balance between independence and interdependence is important, hence we are driving synergy as we grow. We are building greater interdependence – in our processes and in our culture.
We are hiring from colleges, as well as carrying out lateral hires. We constantly evaluate how best do we provide our people with new and exciting opportunities within the organisation. Finally, we also have a structured end-to-end approach to offer to our clients through our Viacom18 Integrated Network Solutions team. We offer a full bouquet of services to advertisers, who can partner with us on live events, broadcast, film integration – the entire spectrum of consumer connect.
