I believe that Shemaroo is a play on Nostalgia. When you are Nostalgic Shemaroo is the “go to” company. And nostalgia can hit you anytime especially when you cross 40. So Shemaroo is going to be around forever because Nostalgia is going to be around forever. My Dad still gets misty eyed when he sees Mughal-e-azam and i am going to certainly remember Andaz Apna Apna when i move past 50. Or Judwaaa. Nostalgia has a market that i think Shemaroo owns. The thing is for you guys to decide what Nostalgia is worth. As of today its worth 1083 crores
That’s such a simple way of putting forward a powerful insight. Terrific! Loved it.
In the same way a “Jab we Met” or “Mai Hoo Na” will keep catering to newer “nostalgic” audiences every few years.
Religare report dated 5th Dec 2016 recommending SELL on Shemaroo.
Shemaroo Entertainment - Company Update 5Dec16.pdf (226.1 KB)
Disclosure: not invested, tracking.
Absolutely. nostalgia is a plane that never lands but keeps on changing airports
Further to my working and information sought by Sandeep, I have tried to compile Gross Purchase and Net Purchase, also Contribution margin for Shemaroo. In case of Gross and Net purchase, I have also added, change in short term loan as part of inventory. Plese note that these figures are derived from annual report and my understanding of financials. In case of any error, feel free to give feedback.
The increase in contribution margin explain increased share of new media business. Further, increase monetisation (higher purhcase of content vis what is consumed/sold by the company) is clear from the above calcuation. Gross Purchase of the company over 5 years, increased at CAGR of 35% from Rs 96.81 Cr during FY11 to Rs 434.34 Cr during FY16. Contribution margin increased from 21% during FY11 to 47% in FY16. In may be noted that during same period share of new media business increased from 4% during FY11 to 17% of Sales during FY16. All these tie-up explain what logic company and Dhwanil was trying to explain.
Discl: I am holding shares and have increase my holding during last 30 days. My view may be biased due to my holding.
Religare has a poor trach record of sell recommendations.
They rated NFIs a big sell in 2014, just before they became the most fancied stocks
Disruptive or catalytic for shemaroo?
It is obviously a catalytic or tailwind. And Amazon is buying bollywood
content unlike netflix. Shemaroo will benefit
Online YouTube market related article
Another platform for Shemaroo …
Not so sure. If someone starts streaming content at 499/- per year unlimited (even in the US it is 99$ a year unlimited, so it may rise, but only to 2000/- per year or so), then how does a shemaroo make money? Why would I want to watch a youtube movie with ads when I can watch adfree content for a pittance? And while producers and studios will benefit if Amazon, Netflix and Eros start competing with the likes of Shemaroo for content, I can’t see how Shemaroo benefits. After all, it still has to buy content. The same logic of nostalgia can be applied by other people too. If you check the Amazon content, there are lots of old movies on the catalog already. The same is true for Eros Now.
Correct me if I am wrong. The Shemaroo model is about buying older Bollywood content (10-15 years old) for 5-10 years, and monetizing this content by a) Selling DVDs (dead to dying business) and b) Streaming it, accompanied by Ads. This means they can make money either by a) Buying the content cheap, because there are few takers for old content or b) Monetizing it easily because there is lots of streaming going on.
I think both sides of the equation will suffer if Amazon offers ad free streaming for next to nothing, and also competes for content. In the short run, maybe Shemaroo benefits if Amazon would sign agreements for streaming for an upfront fee. But in the long run, this is disruptive.
This company is not qualifying my checklist point - “Can sales and profitability destroyed by digitization / IT disruption in long term?” - If yes - then company is not good for 10 year CAGR/ compounding return on my investment. However, it might be good for short-term if somebody has competency to assess its time of de-growth and sell before actually destroy margin?
Please let me know can some Other company buy rights of movies that Shemaroo has for that time period, thank you
So, I have subscribed to Amazon Prime Video - the library can be called small (has 600 Hindi Movies) but rich.
True to what my connect mentioned, Amazon is building its own library (titles not sold anywhere else are available on Amazon - like Yashraj).
As I mentioned its a small library - to make it catering to a larger audience, they would either have to buy more titles or rent it out — Could Shemaroo come in play — we need to watch out for announcements.
My personal feel is…they will have a couple of Exclusives + Other Good Rented out Content
Interesting points from above article
“Amazon is in final lap of negotiations with Yash Raj Films, Mukesh Bhatt-owned Vishesh Films, and Salman Khan Films for the digital rights of their libraries, and with TSeries for music rights. The company has already announced a deal with Dharma Production”
"Multiple sources in the industry said that Amazon is looking at deals valued on the basis of box office performance of the films.
For example, if the entire catalogue of films collected a certain amount at the domestic box office, Amazon will pay out in low-teens of that amount to have a specific window of streaming "
Executives of rival companies said that while Amazon’s entry will have a “significant” impact on the overall digital over-the-top (OTT) ecosystem, it will not affect their business model as Prime Video will be an add-on service for Amazon’s Prime customers.
“One has to understand that content is not the core business, but an add-on service for Amazon. Yes, its business is expanding and in time that will drive content usage as well, provided the content is good. But it will not be a threat to others, a top executive of an OTT player said on condition of anonymity”
@desaidhwanil Thanks Dhwanil jee, you could not have explained it better Get your point on accounting part. Food of thought for me to put more effort as once you explained, did not look too difficult.
Disc : Not invested due to discomfort over business model and probability of technological disruption
Some movies I saw on Amazon Library as well as Shemaroo Library
- Humpty Sharma ki Dulhania
- Salaam Bombay
- Ungli (Emraan Hashmi)
Shemaroo has full rights of about 1/4 Hindi movies and 1/3 full rights of regional movies of all movie titles it hold, so this is its moat. Rest it has partial rights.
NEW HORIZON OPPORTUNITIES MASTER FUND bought 23 lakhs units in block deal…
Another revenue stream opens up for Shemaroo…A dedicated religious channel for Tatasky
disc: Invested - 5% of my portfolio