He goes by many names. The Laundry Man and The Marathon Man being two of the more popular monikers. The second one is self-explanatory given his passion for running, especially marathons of many hues all over the globe. It’s the former one that makes people, sometimes, stop and give a quizzical look. Its origins, according to Unilever folklore, can be traced back to his days at the global FMCG company where he was at the helm of the laundry division in South Asia. But Sudhanshu Vats, group CEO of Viacom18, doesn’t mind the aliases; rather, he refers to them himself, at times—like he did in November at CASBAA Convention 2017 in Macau,where he was featured as a keynote speaker. At the time,Vats explained that running a marathon and running a company had lots in common as they taught one about the importance of planning and breaking down longer plans or goals into shorter milestones.
Five and a half years into his new role in one of the top media companies of India that is an equal JV between US’ Viacom and Reliance Industries-controlled Network18, Vats is considered a thought-leader within the complex maze of the Indian media and entertainment industryand in government circles. His social media savviness makes him articulate on a range of subjects from media to women empowerment to an individual’s role in the Clean India campaignto the importance of health and fitness.
In a free-wheeling chat with Indiantelevision.com’s consulting editor AnjanMitra and deputy managing editor Satyam Nagwekar, Vats speaks on a number of issues related to the M&E sector, including the necessity of regulation in India (he sometimes holds contrarian views to the general sectoral outlook of his peers) and why it’s important for a media company to be equally alive to data analytics to derivestrategies.
Edited excerpts from an interview that took place when he was few days away from completing hisannual tenure as the chairman of BARC India, a joint industry body entrusted with collating audience data in a highly fragmented and, at times, quirky Indian broadcast sector, wherein competition is cut-throat:
Q: What would be the three major changes in the industry that you have witnessed over the years in the complex M&E industry of India after your switch to the media sector from FMCG?
A: The first significant development is the entire digitisation of the cable. While digitisation of the signal has happened, allowing (the pipe) to carry more content, addressability needs to improve. Overall cable digitisation has enabled the pipe to carry more content and to improve the viewer experience. The second development is the rise of OTT services; delivering content on demand in addition to the existing linear delivery of content. The third development would be the increasing importance of live and experiential entertainment. The advent of quality multiplexes has certainly made a difference in viewing experience in cinemas. Similarly, in the sphere of live entertainment, experimentation with modern technology has dialed up consumer experience. We have also experimented with theatricals. What happens is that as kids develop a relationship with characters, it allows you to bring those characters alive in different forms outside of television. One can take them outside of television into theatricals, into experiential zones and merchandising.
I would add a fourth important development and that is the evolution of BARC India. I think the joint industry body that we formed to measure ‘what India watches’ is a significant development. It’s a unique feature that industry bodies have come together for audience measurement in India.
Q:Are Hindi general entertainment channels (GECs) the largest contributors to the Viacom18 revenue pie?
A: Yes, they are.
“About 59-60 per cent of India communicates in regional languages, about 39-40 percent in Hindi, and the balance one per cent in English. This 59 per cent is still under-indexed in viewership. As the viewership catches up with actual consumption, so would monetisation opportunities.”
Q: Keeping in mind what you said, how do you see the market for Viacom18 going forward over the next couple of years?
A: The GECs will remain an important block (from the point of view of revenues), but I am very bullish on the regional piece, too. I personally feel that regional businesses are gaining traction and will continue to get dialed up significantly in the future. The reason for that is that in television, and arguably in all mediums of television, digital and films, the regional languages have been under-indexed from the point of viewership and monetisation.
In my opinion,the genesis of this lies in the fact that the erstwhile measurement system was a bit skewed towards the Hindi-speaking urban audiences; perhaps as it too developed along with the cable movement in India in the 1990s, which started with the Hindi-speaking regions. However, in the last decade, language programming in other parts of India, especially South India, has developed considerably. With BARC’s arrival, these markets are being better represented. As we go deeper into India, the regional language play will keep getting dialed up. About 59-60 per cent of India communicates in regional languages, about 39-40 percent in Hindi, and the balance one per cent in English. This 59 per cent is still under-indexed in viewership. As the viewership catches up with actual consumption, so would monetisation opportunities.
Why do I say this? There is an intuitive understanding --- not entirely always incorrect --- that the English consuming audience has a higher propensity to spend and that amongst the other language markets, Hindi-speaking markets (HSM), perhaps, have the highest propensity to spend. Equally importantly, regional markets like Tamil Nadu, Karnataka, Andhra Pradesh/ Telengana, Kerala, Maharashtra and Gujarat have higher per capita income (compared to India average) and would therefore have a higher propensity to consume advertising and brands. My hypothesis is that the affinity to one’s mother tongue will remain and India will continue to remain a multi lingual country (most Indians speak at least two languages and in some cases three or more). All three clusters of English, Hindi and regional will grow with regional leading the rate of growth for viewership and monetisation.
At Viacom18, we will continue to build our portfolio of services in all the three language-clusters mentioned above, while significantly dialing up our regional language clusters. To illustrate this, let me share how our dependence on our flagship Hindi channel Colors is systematically coming down. When I joined Viacom18, we used to get 80 per cent of our ad sales from Colors standard definition channel. That number now is 50 per cent or may be a little lower.
About 59-60 per cent of India communicates in regional languages, about 39-40 percent in Hindi, and the balance one per cent in English. This 59 per cent is still under-indexed in viewership. As the viewership catches up with actual consumption, so would monetisation opportunities.
Q: As Colors is the biggest revenue earner, a lot of strategising must be done forprogramming. How do you slice and dice programming for appointment viewing for different parts of India and the HSM?
A: Not just Colors, but for all our content engines we marry insight to gut in the way we strategise and develop content. At Viacom18, we started an ambitious data science project called Project Pi with the objective to provide information and insights to the users and establish one single version of truth in the company.
The second leg to this is a free-flowing discussion that we have recently started`Content PeCharcha’ (discussion over content), inspired by PM Modi’s now famous `Chai PeCharcha’ (discussion over tea), primarily with Raj (Nayak, COO, Viacom18), Manisha (Sharma, content head, Colors) and some more team members. These are open sessions where we have a qualitative and free-flowing discussion on both macro content trends and specific current and future programme story arcs.
Let me give you a couple of examples of how this works. When I joined people said mythologicals/historical dramas don’t work on Colors. But our research suggested that competitors were successfully running them and it was a white space that hadn’t been explored properly at our end. We came up with Ashoka and proved the naysayers wrong. In one of our early meetings, we figured comedy was a white space for us and we should actively explore it. While our first attempt didn’t work, the next one (Comedy Nights with Kapil) created history as it was based on our learning. We then experimented with the crime genre with shows like Code Red and Dev. A Hindi GEC is like a `thali’ (an Indian plate with a variety of food offerings): it needs to have a spread of flavor and taste. Balance, however, is the key to how your audiences perceive the spread to be.
Q: Has the rise of mythological and historical shows on Viacom18 channels, as well as on other TV channels, increased after 2014 or are we reading too much into it?
A: I am a firm believer—and I am keep saying it often—that the richness of the Indian culture is reflected a lot in some of our mythological and historical stories. Brilliant evergreen tales like `Ramayan’ and `Mahabharat’ can be told over and over again but there are so many other stories that need to be taken to the audiences. If you look at some of our mythological stories, India has long been telling superhero stories—both of superwomen and supermen. But to answer your question, yes there has been a definite rise in these stories (on TV channels) post 2014.
"My assumption is that over the next five years, India will follow China’s example and 10 per cent of all internet video consumers will move behind a pay wall. Once this happens, it will create both advertising and subscription economies at scale.”
Q: Hanuman probably was the first super hero and remains till day one. Agree?
A: Precisely. I personally feel that these are stories that lend themselves well to a variety of interpretations. Moving forward, production quality can make our stories richer and give the consumers a better experience.
Q. Is the digital venture VOOT making money?
A: If you are asking if we are monetising VOOT, then yes we do have a fair number of advertising brands on VOOT. But having said that, I’d say we, like most consumer digital businesses, have substantial distance to cover in our monetisation journey.
The digital VoD space is one that requires an extended gestation period for investment. Today there are300 million Indians consuming video on the internet. That number is poised to touch 600-700 million in the next three to five years time.Further, my assumption is that over the next five years, India will follow China’s example and 10 per cent of all internet video consumers will move behind a pay wall. Once this happens, it will create both advertising and subscription economies at scale.
Q: So, is VOOT targeting 10 per cent of subs behind a pay wall in, say, three years’ time?
A: Absolutely. Maybe, even more. We are planning to launch the subscription service of VOOT early next fiscal.
India is a price sensitive market and, unlike the West, we do not have the price arbitrage advantage between cable and VoD. In the US, Netflix disrupted the market with its offering at USD8-10 versus a monthly cable bill of USD80-100. In India, we still get 300 channels at Rs 200-250 making linear television the economical entertainment option. But having said that, I believe the right pricing for data and content will continue to drive VoD in India. I think, it is fair to assume that the range of pricing for subscription VoDin India lies between USD 1-3 to begin with.
Q: So you are working on a price model that is between USD 1-3/sub/month in India?
A: Yes. If you want to look at large numbers, you need to keep prices competitive in India.USD 3 is approximately Rs 200, but it will also depend on how many people you want at what price and that will be determined on the price volume elasticity study underway.
Q: Does it help for a content owner and producer like Viacom18 to also have a group company like Reliance Jio, which is a platform that is practically giving data free to consumers?
A: There are clear synergies and we complement each other.
Q: Have you ruled out sports altogether?
A: The business of sports,particularly cricket,is a high-investment and long-gestation game. In our current scheme of things,such an investment can be better utilised in a host of other opportunities and, hence, we are not looking at sports as of now.
Q: What are your views on the evolution of BARC India and that some of the audience data and methodology has been questioned by some industry players?
A: BARC has made a promising start. The measurement is clearly more robust, transparent and objective. The sample size has already been dialed up to 32k (almost four times the size of the erstwhile measurement system). We plan to further grow the sample size to 40k by next year and even further in the years to come.
The sample has also become broader,holistic and reflects more accurately what India watches. Even rural consumption and regional languages are getting represented in a better way. The fidelity of data has improved considerably and tent-pole events on television --- from a big TV channel launch to a new program introduction and all the way to an important news break event in an hour --- are captured and show up with a very prominent spike. The areas where more work needs to be done by all stakeholders are the measurement of niche channels by BARC and management of volatility as high fidelity brings high volatility.
The initiatives like return path data and premium panel will help improve the measurement of niche channels.
Q: When is BARC likely to rollout digital measurement?
A: BARC is in the process of getting all stakeholders aligned for rollout of digital measurement. There are debates around all digital players being a part of the measurement, equitable methods/process used for data capturing from all players and the more holistic India stack/dmp for representation and publishing of the data. All the stakeholders at BARC are debating these issues and the timeframe of publishing digital data will depend on the speed of alignment and approach taken by the stakeholders. Until these issues are resolved, it would be premature to commit to a timeline.
Q: What is your take on net neutrality?
A: It is quite a nuanced subject. My broad take is that NN is essential and net should be as neutral as possible because that’s in the best interest of a functional democracy. Essential services, depending upon the evolution of our society, will need to be looked at differently. In years to come, the internet would be a basic requirement for day to day life and therefore net neutrality is an imperative to offer equal opportunity to everybody.
Q: What about legal and illegal content as the latter results in revenue losses for content owners like Viacom18?
A: The issue of piracy is entirely different, and another elaborate subject on its own. Illegal content is a big challenge for any content owner. Piracy is a complex topic where different stakeholders need to play a part. My view is clear: illegal content should not be made available, but then enforcement is not always that easy. Having said that, consumers too are not clear on legal and illegal content when it comes to the digital world, at times. In my view piracy should be tackled through a three-pronged approach of legislation, enforcement and consumer awareness. In addition, if content is made available to consumers at competitive price points, it would be a big deterrent to piracy and, business models permitting, arguably the most effective way to tackle this menace.
"Technology is causing disruptions almost daily and resultantly the very definition of a media company is changing. For any regulator anywhere in the world or any government, it is a challenge to keep abreast or even keep pace with such changes. As we move forward, we will need to evolve a mechanism where there is greater participation from all stakeholders.”
Q. Do you think powerful lobbies like global video-streaming services can have a bearing on legislations relating to NN? How do you see that playing out?
A: I would not like to specifically comment on this. But there are two fundamental considerations here. The first is that every player will have its point of view and arguments on the subject. Second is that considering the width and complexity of these arguments, the government is best placed to examine in detail and take an overarching view after wide-ranging discussions with every stakeholder.
Q: You are head of the CII entertainment committee, part of the IBF board, associated with BARC and also head one of the largest media networks in the country. What are your views on the regulatory regime in India as it’s considered a challenging market?
A: I think the tricky piece, or rather the interesting piece, is that media and entertainment as an industry, both in India and globally, is evolving at a rapid pace. Technology is causing disruptions almost daily and resultantly the very definition of a media company is changing. For any regulator anywhere in the world or any government, it is a challenge to keep abreast or even keep pace with such changes. As we move forward, we will need to evolve a mechanism where there is greater participation from all stakeholders. As one cannot operate in isolation, there is a need for some regulatory framework that is akin to the ground rules of a game, if one wishes the industry to flourish. So, yes, in my opinion, light touch regulation always works well.
What are your views on FTA vs pay TV considering many popular TV channels are on DD’s free-to-air DTH service FreeDish, taking advantage of DD’s reach and making money on advertising?
A: I am a firm believer that India is an ‘and’ market. So, I don’t think it’s an `and’ ‘or’ equation between FTA and pay TV. Both will continue to flourish as there is significant headroom for growth for both. Now, coming to DD FreeDish, you’re right in identifying it as a platform as it is a means to carry content to the consumer and represents a very affordable option. Admittedly, it is a rapidly growing platform where many private channels are also present. However, all other platforms are cognizant of the opportunity that a low priced FTA channel bouquet provides. It is quite likely that alternate platform options will emerge if DD FreeDish decides to bar privately owned channels.
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