Amazing work. I learnt something new today. This significantly dents my Shemaroo thesis.
Nice analysis and interesting way to look at shemaroo. Isnât shemaroo business model susceptible to regulation from censor board some time in future then? Just wondering what happens if sometime in near future if censor board wants to regulate at least organised channels on youtube which can be viewed in india.
Very good work indeed. Where did you get the drilled down details of the views? It is very interesting to do the dissection this way. My two cents on few of your points
-
Explicit content getting large share of views- I think this is a phenomena that is not only true for Shemaroo for many many channels across youtube. Shemaroo is one of them. Without getting into morality side of it (which again I feel is very subjective), the key question is what is the negative impact of significant part of the views from explicit content on Shemarooâs business? Also, your presumption that people watching these videos will just skip the advertisingâŚseems to be contradictory to the data points that you brought up in the next point (very high CPM). How do you think it is explained? Personally, I do not think there is anyway to ascertain this assumption as people watching any other category may also be âskippingâ advertisements as much as the explicit content video
-
Songs are significantly more popular than movies- I think this is what even management has been saying that till now shorter form of content is being consumed because of the lower speed of internet and higher cost of data. Their hypothesis is that with 4G launch, the data will be cheaper and speed will be higherâŚleading viewers to consume longer form of content. Whether this hypothesis is true or notâŚneeds to be monitored
-
On B&W classics- I think it is too early to draw conclusions especially when we know that internet penetration is low and content consumption leans substantially towards shorter from of content. Another point to addâŚin last 3 years company has invested substantial money to build content libraryâŚand the investment is geared towards monetizing the content on digital platforms. The kind of content acquired is different ( i.e. in one concall- mgmt talked about co producting Hunterr as the content is attractive/suitable on digital platformâŚand also asserted that large part of their recent acquisition is geared towards catering to digital and the kind of content suitable on digital platform is different). My take away is that as much as we know as outsiders that what kind of content catches up on digital (or what doesnât), as they are in thick of thingsâŚthey have much more handle on the same due to data points that they generate from the consumption/monetization.
-
On your calculation two points
The first assumption of USD 1 million (as 30% of the new media revenue in q1 FY 16) is not an accurate one. If you listen to their concalls, they have always been saying that there is seasonality to Youtube business and their seasonally best quarter is Q3. Thus, 30% of new media may be on yearly basis but on quarterly basis, it may not be evenly spread. Thus, unless and until we know the exact break up, it will be difficult to make accurate calculations. -
Secondly, in terms of the methodology, why do we divide 175 million by 2? I think when we talk about effective CPM (and my understanding is that mgmt talks in terms of effective CPM when it gives a number), it is youtube partnerâs share of CPM after deducting youtube CPM. So, if the youtube share is factored in the CPM number, why divide the monetizable views by 2?
2 Likes
First let me congratulate on fabulous work on the subject. Amazing work and do look forward more countering view so that we can understand business better.
Let me take opportunity to express my opinion on certain issues raised by you
First on explicit content viewershhip. Just taking lead from your work. find enclosed Shemaroo Gujarati Channel Most Viewed vidoe statistics
http://vidstatsx.com/shemaroogujarati/youtube-channel
The wonderful thing to notice is average time spent by viewer is around 2 hours
From the Top 49 Gujarati viewership, hardly 4-5 plays, which may called adult comody. Further most of plays are story around affairs with some humour added to it without any explicit content. All the rest are 100% family entertainment stuff. I can not comment same about the Punjabi and other stuff. Personally, I also support Dhwanil View about Morality and business. Shemaroo also have devotional channel, but none of us are interested to get and anlyse there viewership.
Secondly, while we understand that youtube is major contributor to media business, are we becoming too much obsessed with youtube? What is important is the content being king and Indian Eco system moving towards payment based on content then from current form of advertisement sponsorship. The payment based on content significantly increase share of content provider in the overall media revenue.
Thirdly, well it would be wrong to say that explicit content only appeal to India. Your analysis suggest that nearly 47% of content has explicit content in case of Shemaroo. Even some estimate of net usage in USA, nearly 35% of total download is accounted by Prongraphy. Find enclosed link for same
Other members may also there view.
4 Likes
Thanks. Much appreciated .did the drill down analysis myself .
on high CPM with explicit content . it cannot be explained. i was actually trying to highlight that glaring contradiction .
Even without content categorisation , i was finding it hard to reconcile shemaroo making almost 3 times per billion views than the most popular and most viral of youtube music videos.
On monetisation of explicit content , it turns out youtube does have a advertiser friendly content policy.
Some recent analysis
The revenue estimate for the quarter , was based on what the management said in this quarter
i thought $2-$8 guidance which they give was always eCPM before youtubeâs cut
if we consider for full year FY16 , 1/3rd of 63 cr New media revenue would work out to about 3 million dollars for roughly 1.1 billion views (annualized ballpark figure based on average monthly views provided at the end of quarter ). This again would yield similar results regardless of whether i divide half of the views with youtubeâs share and deduct it later, unless you are saying they report the revenue with youtubeâs share and deduct it somewhere in expenses on P&L . how are you calculating it? do clarify.
1 Like
-
we always know what we pay for the stock to determine its value . Here , we just have to go by managementâs word that they will buy every movie at best possible price and turn over a dime (18% IRR) . Since i have no way of knowing how much shemaroo would acquire its titles for and its hard for me trust management from an industry historically known for its opacity in financial dealings , the best thing i could do as an interested investor is to look at more visible consumption side of the story and try to determine if demand for its second hand well-worn content is strong enough that they can still make money regardless of what they pay for building their movie inventory. youtube already covered in my post , it doesnât look that impressive but maybe further internet penetration can improve or change consumption behaviour but it could as easily accentuate existing consumption pattern.
-
here are the barc TRP ratings for hindi GEC and movies
Not sure what ET article is looking at , atleast TRP data doesnt support that view. do you know which data they are dissecting? Also , as the article points out soap audiences are loyal and sticky , Advertisers can count on same audience turning up day after day . Movies , its hard to predict , from movie to movie who will watch . If you noticed , GECs are expanding their daily soaps to prime time saturday and in some cases sundays also ! .usually movies were played in these spots 2-3 years ago.
-
Again youtube viewership has left me with mixed feelings.data supporting that view provided in my post
-
the questions iam trying to answer is why would someone who pays for a premium service like Netflix or Amazon prime would use the paid service to watch shemaroo content which is available free on youtube ? Will it be akin to expecting a paying DTH/cable consumer to watch doordarshan channels ? From what iâve seen on youtube , it would appear about 100-150 movies are accounting for 3/4th of views , Do premium OTT services really need a very large library?. they can start with 100-200 movies and incrementally build up as new releases come ? will it affect their premium positioning if they include content which is available for free easily ? Will shemaroo provide with some marquee titles which are not yet exploited ?
2 Likes
Find enclosed my view on your obeservations:
-
While I agree that we do not know whether the company actually discplined to acquire movies to generated 18% IRR, I would look at Historical RoNW for the company to get some comfort on same.
As per Screener Data, the compnay has generated RoNW of aroud 17% over last 5 years, with marginal decline in last twelve month to 16%. The number are reaonably close to 18% Pre IRR number stated by the management in my opinion
Shemaroo Entertainment Ltd financial results and price chart - Screener -
The artcile on ET was suggesting about Hindi GEC and Hindi Movies channel reach has been same among Indian market. Having said that, I concur with you that viewership on Hindi GEC is more stable and higher as suggested by BARC data.
However, the advertisement share which Hindi GEC channel are getting as against Hindi Movie channel is significantly higher. I am not an media expert and also do not know whether same being global practice as well. As per BARC Data, Average Top 10 Hindi GEC of Week 40 is around 4,61,242 while data same for Hindi Top 5 Movies is around 3,04,802; i.e. 51% lower than GEC Channel.
The estimate for 2015 advertisement on Indian Television on Hindi GEC is around Rs 5,000 Cr while same is around Rs 800 Cr for Hindi Movies. So, difference between advertisement revenue is huge, even after considering sticky and quality audience for Hindi GEC channel, in my opinion. Please refer to Page 5 table in enclosed file for my working.
http://www.exchange4media.com/pmar2016/pmar-report.pdf
- On youtube revenue for Shemaroo, I do not have any opinion except that only one observation that how one differentiate CSM for 5 minutes video and 2 hours video? Probably that could be one reason for higher CSM for Shemaroo.
Also, find enclosed estimated rate for Youtube from website: http://youtubemoney.co/
The screenshot for 1.1 billion view is given as under
As per above estimate/guestimate: the expected realisation are in range of USD 1.36-3.4 with revenue of USD 1.5 million to USD 3.7 million, which is very kind of matches with range of USD 3 million you have estimated. Please let me know in case I made any mistake in calculation.
We need to get some more insight from company/media expert to come to any conclusion on same.
- While your point is valid, I believe there is market for various class and demography in the society. While, money is important parameter at lower income section, the higher income group is more appealed by convenience and quality then price. For simple analogy, why even in DTH service, one paid higher amount for HD channel? I think at higher income level, superior quality of telecast would also matter. So If I am big fan of Amar Akbar Anthony and wanted to watch on my home theater with 80 inch screen, Would I mind paying 4K quality on Netflix Rs 25 vis a free youtube version?
So, in my opinion, it would be individual choice which would matter and there is sufficient market for each class at correct price.
Do look forward to your counterview on same. It is really becoming an interesting discussion thread.
2 Likes
Thanks for the kind words .
i concur wholeheartedly on segregating morality and business . i had pointed to gujrati plays aswell as a promising niche and if they combined with devotional songs had generated large number of views would be analysing and reporting on them 
On explicit content , i wasnât referring to porn per se , it was more mainstream racy content . The top movie on the shemaroo channels for example âThe dirty pictureâ was initially banned on tv despite having a good theatrical run . This would be interesting niche to operate in thanks to different censorship guidelines on three different movie consumption mediums i.e theatres(moderate),tv(Heavy)) and internet(Zero censorship). even if monetising such content is questionable on youtube , it may be more viable on OOT apps like netflix and amazon prime.
2 Likes
Hi friends - Thanks for bringing out some very very detailed
analysisâŚSo, far so goodâŚI think we are beginning to get into an over
analysis phaseâŚToo much of an analysis could lead to paralysis⌠Even
the best of companies will have some negatives if we do too much
analysisâŚAs someone said, every stock is good at a priceâŚAt a PE of sub
18, in my view Shemaroo is a good betâŚI respect others views also that it
is not worth itâŚ
Disc: Have invested 3% of my portfolio in ShemarooâŚStock hasnât moved
above it for last 6 monthsâŚBut still hopeful
With all due respect. I think it is a very good discussion happening here and I donât find it to be over analysis. It is purely a discussion trying to dissect how the business works, what works for the business, where does the revenue come from and where can the revenue come from in future.
I wouldnât have been able to visualise the details of the business the way it has been discussed in last few posts. Such analysis can help you understand the business like no one else does and therefore gets rid of the hope factor and one holds on for the right reasons then.
Majority of us wouldnât have been able to visualise the business the way it has been discussed above (atleast I am in that camp ), hence to look at the business from above lens is a learning even if one is unable to contribute to the discussion.
One may feel it to be over analysis but at the same time many would find above quality discussion to be valuable and hence belonging to the latter camp I encourage this quality discussion.
Just my views.
Cheers.
Discl: Invested
3 Likes
Absolutely. This is a fascinating thread now, and much of it is due to the counter view of @anon34631667. In fact the way he has analyzed the new media business of ShemarooâŚI wouldnât have imagined to break it up into separate parts in that manner.
Please guys, do post such notes. Commoners like me can learn a lot from that.
Disc: invested.
1 Like
I have re-worked the calculation/data presented by @anon34631667. He calculations are absolutely correct. All the data is taken from conference call of company.
Below are re-worked calculations (original work attribute @anon34631667)
CPM = $1 - $4
(For purpose of our calculation, let us take average CPM = $2, it is highly unlikely that all Shemaroo video will have CPM = $4)
$1 = INR 66
1000 views = $2 = INR 132
1 million views = INR 1.32 lac
Monthly view = 125 million
Monetizeable view = 60%
Quarterly monetizable views = 225 million
Revenue/quarter = 225 x 1.32lac = 2.97cr
New media revenue/quarter = 20cr
30% revenue from Youtube = 6cr
Difference is huge, I cannot explain such difference.
New media revenue/quarter = 20cr
30% revenue from Youtube = 6cr
Difference is huge, I cannot explain such difference.
CPMs are usually quoted for the âad impressionsâ and not the âvideo impressionâ, which means that for long form videos there could be multiple ads per video view.
Hi @photon
Management themselves said Google monetize 40-60% of views. Please go through June 2015 concall transcript.
Management themselves said Google monetize 40-60% of views. Please go through June 2015 concall transcript.
Typically in online Ads industry - there is âCoverageâ and there are â# ads per page/viewâ (among many other jargons). The former is the ratio of (Ads-Actually-Displayed / Total-Ads-That-Could-Have-Been-Shown), which I believe is what Shemaroo management hinted at (40-60%). Later is number of ads displayed during the video-watch (includes text ads on bottom, pre-roll video ads, mid-rolls video ads), and is usually directly proportional to length of video.
For example for 1000 video views, each of which may have upto 3 ads with 40% coverage will result into ( 1000 * 3) * (0.4) = 1200 ad views.
Again this is how typically these terms are used by Industry, I donât know about specific case of Shemaroo.
1 Like
Interesting news about Netflix growth in subscription in Q32016
only about 40-50% of views are monetised , so i suppose we need to put in about 500 million views in that calculator .
Movie/Long form videos could be a possible explanation of higher CPMs. Before accepting that there are few factors we need to be mindful of :
-
Contribution of Long form videos >15 mins to view count is around 30% based on the Top 50 analysis which i did .
-
India has low CPMs . Iam assuming lot of growth is driven by india so india is likely to have very large share of views. .
3.We are going with the belief that all explicit video views are being monetised on par with ânormalâ video views.
considering all that it all seems little too good to be true.
Good Results by Shemaroo
http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/09C9AA20_480E_402C_A6DE_626DF3DB8A82_195405.pdf
2 Likes
Dolat Capital update on Shemaroo Q2FY17 results
http://www.moneycontrol.com/mccode/news/article/article_pdf.php?autono=7842441&num=0
On the immediate topic of discussion on google monetisation I would add that this is the key driver of higher business returns. This is clearly not in the calculations when the movies are being transacted for C&S rights along with online rights.