Film studio Eros International is looking beyond the big screen to establish itself as a media house over the next 10 years. The company, which is listed on the National Stock Exchange, Bombay Stock Exchange and the New York Stock Exchange (earlier this year), will be focusing on its digital platform to extend its scope.
Eros is preparing to scale up its portal, Erosnow. An online content streaming site, it has been making its full-length movies and television content (from the broadcasters Colors and Zee TV) available, besides music videos from its library. Eros will now be launching exclusive content for its digital audience and is in talks with producers for creating a library.
“The television (business) is governed by ratings and these lie in rural India. However, there is a more evolved media consumer who wants access to differentiated content, which need not be films. That is the consumer we are targeting. With the introduction of 4G, the bandwidth issues will also be largely resolved,” says Jyoti Deshpande, group CEO, Eros.
Apart from creating content for the digital consumer, the company is also developing services. There will be a DRM (digital rights management) service, which will allow users to download content from Erosnow. The downloaded content will then be available for consumption across mobile devices for 24-48 hours. The service will most likely be available to premium users (who pay for ad-free streaming).
Even as it spruces up its digital presence and spins off a business model from it, movie-production remains its driving force. Eros has earmarked investments in the range of $180-200 million (Rs 1000-1200 crore) for the next fiscal for films, says Deshpande. Most of it would be spent on big-budget Hindi films.
In FY-16, Eros will be releasing films like Bajirao Mastani (Ranveer Singh, Deepika Padukone, Priyanka Chopra), Tanu Weds Manu 2, Shivaay (Ajay Devgn) and Bajrangi Bhaijan (Salman Khan, KareenaKapoor). In the current fiscal, the studio has the Ajay Devgn’s Action Jackson (already released), the Arjun Kapoor-Sonakshi Sinha starrer Tevar (Jan, 2015) and Amitabh Bachchan’s nextShamitabh (Feb, 2015).
Scoping out new markets
Eros is only too aware of the restrictions on foreign films in China. It is looking for joint ventures with a Chinese company to produce and distribute Indo-Chinese content and work around such restrictions. “China is a big market and the regulations restrict the entry of too many foreign films. We feel there is potential to set up a JV to produce content that has global appeal. Eros can distribute it worldwide, while the Chinese partner can handle its home market,” says Deshpande.
Closer home, Eros is aggressively looking at south India. It has picked up equity in some of the biggest south Indian productions this year, including Rajnikanth’s Kochadaayiaan and the recentLingaa. It is setting up a separate distribution unit in Chennai.
“The south gives us the opportunity to scale up. It is a star-driven and fragmented market, something like Bollywood 10 years back. Many movie-makers still go to money-lenders for finance. But the appetite for films is great,” Deshpande says, refering to the scope of a studio’s early-bird advantage.
Derisking the stars
Deshpande says that contrary to perception, deals of films with big stars do not put the entire risk on the studio. “No actor wants the studio to take all the risk. The agreements are worked out to ensure that the studio is not exposed to a large risk. Having a portfolio of films helps ensure returns on total investments. If a big movie makes lower returns on investments, there will be many small budget movies that will make 100 per cent or more RoI,” she says. One of Eros’ big releases this year Jai Ho did not do very well.
The studio prefers to retain the intellectual property rights (IPR) of the movies. In case of big directors and actor-producers, the IPR is shared. Sharing or retaining the IPR lets Eros build value. Hence, it can use its catalogue to build its pay per view service online. The portals of other studios are not as evolved yet. Deshpande says that the catalogue content (movies from previous years) contribute to as much as 20 per cent of the total revenues of the studio.