Zee Revamps Digital App As Battle For Mobile Video Market Begins 

Zee Entertainment Enterprises Ltd. merged its live and streaming services into a single ZEE5 app that offers on-demand and live TV in multiple Indian languages as it looks to fend off rivals like Hotstar, Jio TV, VOOT, Netflix and Amazon Prime.

The company, part of Subhash Chandra's media-to-mining Essel Group and one of the largest TV media groups in India, offers 1,00,000 hours of content, including exclusive originals, Indian and international movies and TV shows, music, and health and lifestyle videos and over 90 Live TV channels, it said in a statement. All original, premium international and Indian and old re-edited content will be behind a paywall, but the app offers free shows to choose from as well.

India's digital entertainment media is expected topple its film industry, the world's biggest, in two years as growing smartphone penetrations and cheaper and faster data plans allow Indians to stream content, EY said in a report. Subscription revenue of over-the-top apps is expected to jump fivefold to Rs 2,000 crore by 2020. About 30 such platforms are vying for audiences' attention.

ZEE5 will boost revenue and support long-term growth of the company as the falling cost of mobile data has reduced the price arbitrage between TV and OTT video, brokerage CLSA said in a note. “Local language and content availability should drive adoption.”

Nearly a third of the content consumed through OTT apps is in regional languages, except Hindi, EY report said.

ZEE5 viewers can choose their preferred display language from among 11 languages – English, Hindi, Bengali, Malayalam, Tamil, Telugu, Kannada, Marathi, Bhojpuri, Gujarati and Punjabi. It's rivals like Star TV's Hotstar and Viacom 18's VOOT are among those who offer content in regional languages.

The app will have content from both Ditto TV (live platform) and Ozee (video streaming service).

Brokerage Take

Kotak

• Plan to launch one new original show in six different languages every month.
• ZEE5 in talks to tie up with digital companies to expand consumer reach. Finer details are being negotiated.
• Launched in the Middle East as an advertisement-based video-on-demand app, and they plan to expand in European markets this year.
• Management confident of monetising ad-based viewership to subscription-based model going ahead.
• Expect Zee to maintain over 30 percent Ebitda margin in the financial year starting.

CLSA

• Zee5 to boost revenue and support long-term growth.
• Local language and content availability should drive adoption.
• Falling cost of mobile data has reduced the price arbitrage between TV and OTT video.
• Expect broadcaster-led OTT platforms to benefit given their significance lead in local content.
• Expect revenue and net profit to grow at 15 and 23 percent, respectively, next financial year

Citi

• Technology initiatives or customisation for smooth streaming experience differentiates ZEE5.
• Management reiterates over 30 percent Ebitda margin guidance after factoring in investments in ZEE5 app.
• ZEE5 to track active user base, time spent on the app, trends in paid subs in the early days to dictate stock performance in the near term.
• Expect Zee to grow ad revenue at an annualised rate of 14 percent in five years, driven by higher yields and viewership.

Edelweiss

• ZEE5 big positive for Zee in the long term.
• Exclusivity of content to hook viewers to the app.
• Both free and paid premium content to cater to a mix of audiences.
• Seamless content discovery through voice search option remains a big technology innovation.

Subscription-based over-the-top streaming services flooded the Indian market over the past two years with around 30 players vying for audiences' attention, EY said in its report.

About15 lakh consumers in India today are digital-only and wouldn't normally use traditional media, EY said. That's expected to grow to nearly 40 lakh by 2020, generating significant digital subscription revenues for the sector.