A good article on the OTT players and importance of good content
Why India is attractive to tech Titans ?
Noticed that Saregama is not mentioned in this thread. They have also gotten into the fray with Yoodlee Films in creating content for OTTs i.e apart from the music IP.
Three movies completed, rights for two of them sold to Netflix and the other one under negotiation. I watched one of them (Ajji on Netflix) and was impressed by the quality.
These fit right there will Netflix’s other Original content in terms of quality.
5 more films coming in this quarter. Considering it takes them just 18-21 days to make a film and none of these are the traditional hero-worship type movies, their costs are low. However their production values are top-notch (Check out this brand film which has bits from their first 3 movies) with very good cinematography and sound (mostly recorded live on set for realism). Subjects as well are very youth oriented, sometimes multi-lingual and aimed at the typical Netflix watcher - in the Crime/Thriller/Romance genre.
I think in terms of content and scope, Yoodlee Films seems a better bet in the Content space where there is a lot of demand from OTT players like Amazon Prime/Netflix/Hotstar. However, not sure how exactly Saregama is monetising its content with Netflix and what were the kind of deals made for the two movies.
Disc: Invested in Saregama
Data points related to India’s Current Digital trends & potential:
A Target Group Index report suggests that 61% of India’s prolific internet growth is now coming from its regional belts, tier 2 and tier 3 cities.
India in 2017 had only 20% of 4G/LTE subscription, still, we have a huge runway for 4G high-speed internet penetration in tier2, tier3, and villages.
As the 4G/LTE adoption will increase the potential consumer for desi local content should increase disproportionately.
A piece on Hindu businessline about data consumption.
TV18 could be a decent candidate to play the digitisation theme on all fronts.
- Their mature channels give them solid cash flows.
- They have been investing in new initiatives over the last few years, that is why numbers and metrics look depressed. As this is how the nature of the business is. Once they mature, then operating leverage kicks in and numbers and metrics improve significantly. (to industry standard margins i.e TVtoday, zee, sun etc)
- New initiatives to slow down going forward and hence we should see a big increase in bottom line and metrics. The business can absorb one or two initiatives a year going forward without hitting bottom line
- They have thier viacom18 business that has some good content in addition to their regional channels and news channels.
- They also have their OTT in voot that has been gaining some huge traction and is second I believe to hotstar. They are above netflix and sonyliv.
- They continue to expand with new initiatives, but slowly now.
- valutations seem cheap for a business with their potential. The assets that they have and the ROE and ROCEs that the industry pulls. They should be able to pull such numbers hopefully as new launches slow down over the next few years.
I think they are a decent bet to play the theme, with limited downside.
About Digital advertisements and its future: If you are interested, you can go to the website of a co “Trade desk Inc” TTD in the US. They are one of the leader in pure play digital advertisement having about 10% global market share as a technology company assisting advertisers through a cloud based platform. Listen to their conference calls and you will get a very good understanding on where the industry is going, TTD is growing at 50% plus every year for last several years. In short - the CEO is gung ho about it. the industry will be a 1 Tn dollar industry from 700 Bn in next 10 yrs. And digital advertising will take a major share out of the 1 Tn. According to him, the fastest growth is from connected digital TV and in mobile video.
Here is the link for the latest concall of TTD - for those who are interested. You will get a wealth of info.