Zee Entertainment Enterprises (ZEEL), the broadcast arm of the Subhash-Chandra-led Essel Group, on Wednesday launched its over-the-top (OTT) service ZEE5 in over 190 countries in one go, taking on established names such as Netflix and Amazon Prime Video in the process. The platform will target the South Asian diaspora with content in 12 languages at an introductory price of $2-10 a month.
Amit Goenka, chief executive officer of ZEE International and Z5 Global, said the move was significant since the overall plan was to position ZEE5 as a destination for Indian content in global markets. “Given the presence of Indians across markets, there was a need felt for a service like this. We already have width and depth in terms of Indian-language content, whether it is entertainment or news. This can be offered to those interested in international markets. This also allows us to have a distinct identity for the platform globally in a very competitive market,” he said.
While ZEE5 will also look at acquiring content in foreign languages such as Korean or East European in a bid to beef up its local-language library in those markets, American and British TV shows as well as Hollywood films are not on the radar of the platform, Goenka said. “That space is competitive, thanks to the likes of Netflix and Amazon Prime Video. We are of the opinion that there is a strong market out there, which is outside of the Hollywood and America/British TV ecosystem. We will explore those avenues in terms of content acquisition,” he said.
ZEEL is expected to declare ZEE5’s India subscriber numbers during its September quarter results. ZEE5 was launched earlier this year, replacing ZEEL’s existing OTT platforms DittoTV and OZEE. Subscribers of DittoTV and OZEE were migrated to the new platform as part of the initiative, though ZEEL did not specify how big that base was.
As things stand now, Netflix, according to Counterpoint Research as well as industry estimates, has a subscriber base of 5 million in India. Rival Amazon Prime Video has a subscriber base of 11 million and Hotstar, which is STAR India’s digital platform, has 150 million active monthly users.
In a conversation with analysts, ZEEL’s MD & CEO Punit Goenka had said ZEE5 would break-even in the next three-five years and that it would start adding to advertising growth of the company by the September quarter of FY19. Goenka also said ZEE5 would add to subscription growth of the firm within the current financial year.
Though foreign brokerage Morgan Stanley had downgraded ZEEL last month to ‘underweight’ from ‘overweight’, saying ZEE5 would be a drag on margins, Mumbai-based brokerage Edelweiss on Wednesday said that operating margins would remain strong at 31 per cent. “We expect ZEE’s Ebitda (earnings before interest tax depreciation and amortization) margins to remain strong despite investments in new channels and ZEE5,” Abneesh Roy, senior vice-president, research (institutional equities), Edelweiss, said. “ZEE5 is also likely to begin contributing to the company’s top line in the September quarter, though Ebitda margin growth would remain flat during the period,” he said.
ZEEL is also pumping in significant money into ZEE5, which analysts said was 4-5 per cent of the company’s top line.