BL Research Bureau

The December quarter performance of Zee Entertainment, one of the largest players in the entertainment industry, was over and above industry estimates. Sustainable content, expansion in to new markets and launch of original content has aided the growth in the latest quarter.

The company has reported robust revenue growth across all its segments – advertisement, subscription and digital business, which indicate that the company is able to capitalise on its market position. Zee’s Zee5 application too was able to sustain its strong momentum with the company now reporting 56.3 million users as of December, a growth of 36 per cent over the September 2018.

Domestic business

Zee’s revenue grew about 18 per cent y-o-y to Rs 2,167 crore in the third quarter. While the overall advertisement revenue grew 22 per cent y-o-y, the domestic ad revenue registered growth of 21 per cent y-o-y driven by strong performance of broadcast business and ad spends from various sectors such as auto (two-wheeler segment) and e-commerce.

Robust viewership, not only for Zee TV (Hindi, the company’s core offering), but also for its regional channels such as Zee Bangla, Zee Marathi and Zee Kannada have helped in this growth.

In addition, monetisation of video content from digital business has also contributed to this growth.

Zee derives about 67 per cent of its revenue from advertisement, about 30 per cent from subscription and the remaining 3 per cent from other segments such as movies and music.

On the subscription front, though the revenue grew 23 per cent y-o-y, the domestic subscription expanded at a healthy pace of about 29 per cent y-o-y. The expansion to new market – Kerala (Zee Keralam) and launch of new shows has further strengthened its position in the market.

In addition to strong regional portfolio, Zee has one of the largest movie libraries among its peers which have helped garner new subscription. The telecom regulator’s new tariff order is likely to help the company’s subscription revenue growth, given its market share and content portfolio. The company is already in talk with its partners for smooth implementation.

The operating profits (EBITDA) increased by 30 per cent while the profits grew over 50 per cent to Rs 562 crore in the recent December quarter compared to same period last year.

Digital business expansion

Zee5 continues to gain viewership and is among the largest creator of digital content. The company was able to generate 31 original content and premiered 38 movies by end of December 2018. The app’s users spend about 31 minutes per day on an average on the platform and Zee5 has a maximum of three advertisements per show (each show is around 22 minutes).

The company has also launched multiple price subscription packs, especially for Southern content, which have seen good traction.

Zee5 content is available in 12 languages (Original content in six languages). The company plans to launch six shows, one in each language every month in FY20. Given the potential of OTT platform, the company intends to increase its investment in Zee5 in the coming years.

To increase viewership, the company has entered into partnership with key players in digital eco-system. For instance, Airtel subscribers with ARPU of Rs 199 and above can view selective content of Zee5 through Airtel TV application.

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