Anirban Roy Choudhury

Why ALTBalaji's Pantvaidya won't spend Rs 50 crore to acquire film rights

Instead, the company CEO is betting more and more money on creating new shows. The strategy is working. Turnover is doubling every year and customer acquisition costs have dropped.

In India, most video streaming platforms are fighting to get a share of the consumers' wallet. To attract subscribers, the likes of Netflix, Amazon Prime Video and Disney+ Hotstar are now aggressively acquiring movies that are yet to be released in cinema halls. It is an expensive proposition that guarantees only three hours of engagement, something Nachiket Pantvaidya, CEO, ALTBalaji, and Group COO, Balaji Telefilms, says he isn't chasing.

Launched by Ekta Kapoor in 2017, ALTBalaji is a wholly-owned subsidiary of Balaji Telefilms, a content production powerhouse that reported a revenue of Rs 576.63 crore in the financial year that ended on March 31, 2020.

ALTBalaji is known for its volume game, and some of its titles are streaming their fourth season. 'Test Case', 'Bose: Dead/Alive', 'M.O.M', and the recent one starring Karisma Kapoor titled 'Mentalhood' are some of the marquee shows streaming on the platform. Then there are crowd-pullers like 'Kehne Ko Humsafar Hain' and 'XXX' (Season 3), and 'Gandi Baat' (Season 4). Overall, it is a content library with over 60 shows.

Instead of going after movies, Pantvaidya says he'd rather focus on series as they help in "forming a habit". In an exclusive interview with afaqs!, he talks about the growth registered over the years, content strategy, and the change in consumption behaviour.

Tell us a little about ALTBalaji's performance in the last fiscal that ended on March 31.

Since we started, year-on-year, our subscription revenues, both through partners and direct, have doubled. It grew from Rs 15 crore to Rs 40 crore, and then to Rs 77 crore. We've been doubling our topline every year. Out of that, roughly 50 per cent of the revenue comes through direct subscribers. In the last quarter ending March 31, the subscriber base has moved away from the top eight metros to Tier-II cities, like Surat, Nagpur...

How has the subscriber base evolved over the years?

Before this calendar year, 60 per cent of our subscribers came from the top eight cities. Now, it has dropped to 45 per cent. The composition of the subscribers is 70 per cent skewed toward males. But if you look at viewership, it depends on each show.

Remember, we offer access through five devices (per subscription). So, when a 'Kehne Ko Humsafar Hain' streams, the viewership is 55 per cent skewed toward females. Seventy per cent of our payment comes from male subscribers.

How do you position ALTBalaji in a market that is often described as 'cluttered'?

We've always been a mass targeted entertainment platform available at an affordable price point of less than Re 1 a day. We've never reduced our prices. If you look at our competition, they've dropped it down and rolled out several packages, taking the price downwards. Therefore, as our library is growing, our revenue is doubling every year.

Along with the revenue, our direct subscriber acquisition has also doubled. Last year, we had around 3.2 million subscribers. At any given point of time, it was around 1.5 to 2 million active subscribers. Right now, we're at 60 shows. As our library hits 100 shows, we'll see a massive tipping point in terms of both engagement and subscriber numbers especially targeted at 'mass India'.

Also Read: "Competition is everywhere": Nachiket Pantvaidya, ALTBalaji

How do you see the subscriber base change, going forward?

This 45:55 composition that we're seeing now, will probably become 30:70, where 30 per cent of the subscriber base will come from the top eight cities in the next 8-9 months. That's what we're trying to occupy as a position.

We're clearly positioned as a platform that is targeting mass India, and is available at Rs 300 a year, or Rs 100 for three months. Nobody else has that price point or that kind of mass programming to really get into Tier-II and Tier-III cities, which we'll penetrate in the next 9-12 months.

"Unless you have a library of shows, like 10 in one language, you are unable to address the needs of that language segment."
Nachiket Pantvaidya

What does this positioning mean for your content strategy?

With original programming, our focus will remain Hindi. We want to grow in regional content, but right now, we are sticking with one language. We want to do only series programming. We don't acquire movies, nor do we stream sports. With that strategy, we have been successfully acquiring consumers, and that is doubling every year.

As you move towards a subscriber base where 70 per cent is outside the top eight cities, will the content strategy change accordingly?

Content strategy has already changed in the last three years. When we started, we had more of urban programming as the Reliance Jio effect wasn't in full play. We launched programmes like 'The Test Case', 'Bose: Dead/Alive' to start with. So, 40 per cent of our programming was urban-focused, and right now, it's about 20 per cent.

We have moved from urban to urban-mass and now towards the Tier-II, Tier-III cities. We had also launched a kids' section, but over the years, we realised that we're a subscription-based platform creating content for the 18-plus (age group) audience. Hence, we've eliminated that offering completely.

What about content in regional languages?

We launched three shows in three different languages - Bengali, Bhojpuri, and Tamil. The consumer feedback was that unless you have a library of shows, like 10 in one language, you're unable to address the needs of that language segment. It was a learning experience and that is when we decided focus on Hindi. Once we have 80 Hindi shows, we will probably try and focus on one of the south Indian languages to expand.

"We're not acquiring movies that other platforms do by spending Rs 50 crore to Rs 100 crore just to make it available on OTT."
Nachiket Pantvaidya

As you grow your library and establish ALTBalaji as a strong brand, does the customer acquisition cost go down?

We're getting efficient, so we're spending less than Rs 100 to acquire a customer. It is a very good place to be in. During lockdowns, we could attract customers without having to spend on marketing. That was a major boost. I'd like to underline that we don't believe in spending massive amounts in acquiring customers at this point and becoming a loss-making entity. We want to ensure that our customer acquisition is in line with our content library strategy.

As we hit 80-100 shows, which I think we will by May next year, we will see another burst in customer acquisition. We want to make sure that the platform has newness of content and we don't end up acquiring customers who go through our library fast...

How do you retain the viewers who're accustomed to binging, and can go through your library fast?

You can't! As a matter of fact, when there is an excess acquisition of customers who come in and they're going through your library, unless you are putting fresh content regularly, retention becomes difficult. I think because we have 20-25 shows in the pipeline, which will stream in the next nine months of the financial year, people will stay and watch.

We aren't acquiring movies that other platforms do by spending Rs 50 crore to Rs 100 crore just to make them available on OTT. On the other hand, our total content cost is around Rs 100 crore. So, we aren't in this high-money-game of getting content out. Starting September, we will have a slew of male-focused thriller programming on the platform...

Not having sports or movies, isn't that a challenge, especially when you all are battling for the same wallet?

We're very confident about our volume game. We've put out more than 60 shows, which nobody else did. With three years' data, we're very sure who we're targeting. We have managed to fine-tune our strategy. Our biggest strength is that we understand the mass audience for the last 25 years, and now we have data of more than 50 shows launched over the last three years.

Therefore, we're in a position where we can do a show that costs around Rs 4 crore to Rs 5 crore for 10 episodes. Also, by doing series, we're able to form a habit that you can't do with, unlike movies that end in three hours. With series, fate is in our hands, and if something clicks, we can accelerate and do a second season immediately.

What would be the biggest challenge for ALTBalaji in the next 12 months?

Our biggest strategic focus in the next 12-18 months would be to get all our shows that we've developed so far, out and launch roughly at the rate of 2-3 shows every month. We want to achieve that clip rate to ensure that the momentum we've got in our revenues and customer acquisition, doesn't die down.

Second, and very important, by January next year, we will see a rapid acquisition of consumers from Tier-III towns, which we also call less than one lakh (population) towns. We have to be prepared for an acquisition thirst to acquire more consumers from those markets. Tier-III towns will drive the next wave of subscriber acquisition.

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