Shemaroo’s streaming service will not ape the Netflix model
Shemaroo Entertainment is planning an online streaming application in 6-9 months, even as the company looks to be ‘on all platforms,’ CEO Hiren Gada says.Updated: Jun 04, 2018 17:16 IST
Shemaroo Entertainment Ltd. has transitioned from renting DVDs to streaming movies online -- while the business model move may sound familiar, the company doesn’t want to be pigeonholed as an Indian Netflix Inc.
Shemaroo holds the rights to 3,500, mostly older Bollywood films, through which it earns TV licensing fees as well as advertising revenue from nearly 40 YouTube channels. While the Mumbai-based company is planning to start its own streaming application in the next six-to-nine months, throwing it into competition with Netflix and at least six other local and international rivals, it doesn’t see this as its endgame.
“Given the opportunities that exist in the market, we want to grow our revenue fivefold in five years,” Hiren Gada, the company’s chief executive officer, said in an interview in Mumbai. “The best way to play the digital boom is to offer services on all platforms in all forms.”
Shemaroo aims to grow its movie catalog 3 to 5 percent every year, and is looking to license out its library to other online platforms. While Gada said the company may produce “some content,” it sees controlled spending on content and online platform maintenance as a key difference between its planned app and Netflix.
India’s media and entertainment market is estimated to expand to more than Rs 2 trillion ($30 billion) by 2020 from Rs 1.5 trillion in 2017, buoyed by robust growth in digital formats, according to a report by Ernst & Young LLP in March. With its population of about 1.3 billion, India is among the most important markets for Netflix, which had 5 million subscribers as of Dec. 31. The country’s online media boom has also drawn Amazon.com Inc. and Viacom Inc., among others.
“Competition will be a key challenge for Shemaroo,” said V. Harini Priya, an analyst at Firstcall India Equity Advisors Pvt in Hyderabad. Still, the company has “a huge opportunity,” says Priya, who has an overweight recommendation on the shares.
Shemaroo’s annual revenue has risen by an average of about 18 percent over the past five years, helping its share price triple since its October 2014 listing. Digital media revenue for the company’s latest quarter jumped 41 percent to Rs1.3 billion, with average daily hits on its YouTube channels surpassing the 20 million mark.
“Over the next 12 to 18 months, we will be looking to monetize our current catalogue and won’t be as aggressive with acquiring content,” Gada said. “We have gone through the whole investment phase over the last four to five years and are sitting on a good size of content library,” he said.
First Published: Jun 04, 2018 17:14 IST