Launching a Hindi general entertainment channel (GEC) can be fraught with risk. Nonetheless, Indian entertainment major Zee is off to a promising start with its new offering, &TV, which enjoyed record ratings in its opening week.

It can be tough for a broadcaster’s second GEC to draw in enough eyeballs to attract advertisers, prompting Zee to adopt a different approach for &TV.

“We never looked at it as a flanker strategy,” said Zee’s MD & CEO, Punit Goenka, speaking in Bali last month at this year’s APOS conference.

“We looked at it as a disruptor strategy even if it meant competing with my own flagship channel – Zee TV,” Goenka added.

Indian broadcasters are still chasing mass audiences, four years into the country’s government-mandated migration to digital TV – a move that was supposed to foster the development of more premium and niche audiences.

Goenka blamed India’s Arpus, which rank among the lowest in the world.

“The tiering mechanism which can help in driving subscription revenues is still not there,” he said. “Arpus in India have not even kept pace with inflation.”

Once new business models start to take shape around digital TV, a stage that will require more money to flow up the value chain from local cable operators, Goenka sees opportunities to explore new genres such as food, DIY and home-grown reality shows.

“We ourselves have lots of plans and we want to launch channels in that space,” Goenka revealed. “However, until we see subscription revenue coming, it will not happen.”

That might take some time. While Zee’s subscription revenue has grown at a robust pace after the initial phases of cable digitalization, covering India’s biggest cities, the next steps, covering smaller urban centers, represent a different proposition.

“Zee’s subscription revenue witnessed a CAGR growth of about 26%, driven by Phase I and Phase II,” Goenka said.

“However, realizations from Phase III and Phase IV continue to be quite low – pathetic in fact. The challenge is going to be in the logistics and in addressing the content needs of such a large base of viewers, spread across hundreds of towns and cities."

International & OTT

In the meantime, Zee executives are busy developing alternative revenue streams.

The broadcaster has started bolstering its overseas footprint with local content production, starting in one of its most lucrative international markets, the Middle East, ahead of similar forays in Southeast Asia, Africa and parts of Latin America.

“We will go with repurposed content to start with. This will be followed by true localization as and when we achieve critical mass,” Goenka explained.

The company is also extending its OTT presence, launching its SVOD service Zeefamily in Southeast Asia, while building out domestic offering Ditto TV at home.

Ditto TV has attracted 1.3 million paid subscribers at US$1.50 monthly Arpu, out of ~15 million subs overall. Almost 60% of paid subs are from rural markets.

Zee is also likely to take its shows down from YouTube, echoing Star India which removed most of its programming from the platform before launching its own OTT service, Hotstar.

“We view YouTube as competitors now, because we believe that content should be paid-for,” Goenka said.

“We are evaluating what to do with our contract with YouTube when it comes up for renewal next quarter,” he added.