ZEEL Q1 FY20 revenues up 13.3%; domestic ad revenues slow down to 4.2%

Zee Entertainment Enterprises Limited (ZEEL) has reported consolidated revenue of Rs 20,081 million for the first quarter of FY2020, a growth of 13.3 per cent YoY. The growth was driven by the strong performance of domestic broadcast and digital businesses. EBITDA was Rs 6,598 million with an EBITDA margin of 32.9 per cent. PAT for the quarter was Rs 5,306 million. 

Advertising revenues 

During the first quarter, ZEEL’s consolidated advertising revenue grew by 3.6 per cent YoY to Rs 11,867 million. Domestic advertising revenues grew by 4.2 per cent YoY to Rs 11,322 million. The domestic advertising revenue growth was slower than the previous quarters primarily due to the impact of two leading channels getting converted from free-to-air to pay channels, and therefore moving out of DD Freedish. Also, as the implementation of the tariff order was underway during the quarter, the reach and viewership of all entertainment networks got affected. Due to this uncertainty, some of the brands moved a part of their advertising spends temporarily to sports channels airing cricket events which promised a higher reach. As the impact of tariff order normalizes and the festive season begins, the advertising growth is expected to return to its normal trajectory. 

Subscription revenues 

ZEEL’s consolidated subscription revenue grew by 36.7 per cent to Rs 7,088 million during the quarter. Domestic subscription revenue grew by 46.7 per cent YoY while the International subscription revenue declined by 9.2 per cent YoY. The implementation of the new tariff order has led to better monetisation of viewership, which explains the step jump in domestic subscription revenue growth. Over the years, ZEEL’s broadcast business has built leadership positions across markets, which has resulted in strong uptake of their channels and bouquets under the new tariff order. The order has allowed the media conglomerate to price their channels in line with their popularity, leading to a sharp improvement in subscription revenues, especially in the southern markets. 

ZEE5’s performance 

With an expanding line-up of exclusive content and tie-ups with partners in the digital eco-system, ZEE5, the OTT platform from ZEEL, continued to strengthen its position as the go-to platform for on-demand entertainment. ZEE5’s global monthly active users (MAUs) stood at 76.4 million, while global daily active users (DAUs) stood at 6.6 million in the month of June. 

ZEE5 users spent an average of 33 minutes per day on the platform. 

During the quarter, ZEE5 launched 18 Original shows and movies, of which 7 were in regional languages. 

During the quarter, ZEE5 entered into partnership with Hathway and ACT Fibernet to offer bundled package to consumers. To expand its footprint, ZEE5 has tied up with players in the online eco-system like Myntra, Qwikcilver, Netmeds and Gaana.com. 

To improve the consumer experience, ZEE5 is collaborating with some of the leading OTT technology companies. It announced a strategic partnership with Optimove to bolster the performance of the platform based on a suite of services backed by insight, engagement and optimisation. It also announced a collaboration with Applicaster, one of the leading global cloud platforms, for media app development and management in the media space. 

Following the launch in priority APAC markets, ZEE5 commenced marketing activities in the neighbouring countries to leverage its language and content affinity. After #sharethelove and #dilsedesi campaigns saw great traction, ZEE5’s ‘Extreme Emotion’ campaign introduced ZEE5 to mainstream audiences who love Indian content. ZEE5 is entering into partnerships across the region with several distribution platforms. To tap into the existing demand for Indian content in several markets, it also soft-launched dubbed content in 5 international languages. The roll-out in APAC will be followed by MENA, Europe, Canada and the Caribbean markets. 

Commenting on the performance, Punit Goenka, Managing Director and CEO, ZEEL, said, “We delivered another quarter of strong performance despite the operational challenges faced by the industry due to the implementation of TRAI tariff order. We have witnessed a strong uptake of our channels across markets, which is reflected in the 47 per cent growth of our domestic subscription revenues. It validates our standing as the #1 entertainment network of the country, built on the foundation of strong position in each of the markets we operate in. We are confident that the new tariff regime is going to be beneficial for all the stakeholders and will greatly improve the consumer experience.” 

At the same time, he added, “Domestic advertising growth of 4.2 per cent YoY is considerably lower than the growth in past quarters. This is primarily on account of the decision to convert our two leading FTA channels to pay, which significantly impacted the ad growth for the quarter. Additionally, the implementation of the new tariff order in the previous quarter negatively impacted reach and viewership of most entertainment channels, leading to a temporary shift in some of the ad spends from entertainment to sports. We believe that the underlying demand for advertising still remains strong and we are confident that spends would come back as the tariff order settles down and the festive season kicks in.” 

“ZEE5 continues its strong run and is working towards achieving its aim of becoming India’s #1 digital entertainment platform. In the international markets, it has seen an encouraging response in the initial phase. I am confident that with its strong content line-up and partnerships with leading players in the digital eco-system, value proposition of the platform and engagement with the consumers will continue to improve,” Goenka further said.