ZEEL Strategy Group5 SecF V 4.0
ZEEL Strategy Group5 SecF V 4.0
ZEEL Strategy Group5 SecF V 4.0
A Project on
ZEE
By
Section F Group 5
SAILOOSHA PATCHINEELAM 1811425
VINODHKUMAR S L 1811432
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Executive Summary
Zee started its operations 25 years ago with a single channel, Zee TV, largely targeting the
south Asian audience. With time they have expanded their portfolio to reach over a billion
people across 170 countries through multiple media. Zee Entertainment Enterprises Limited
comprises of domestic & international broadcasting, Movies & Music production, Digital
platform and Live performances. Currently, the TV penetration in India stands only at 64%,
providing scope for expansion, Average Revenue Per User per month is only at $3 compared
to $88 in USA, questioning the profitability of the industry. The Indian media and
entertainment industry saw intense rivalry in the near past with content creators are starting to
wield more power. Also, the consumers are increasingly getting attracted towards OTT
platforms which are growing at 35% y-o-y. Even amidst this growing competition and shifting
trends, big players like Zee have been able to make huge profits.
Zee’s strong content creation capability and distribution capability which reaches more than
1.2 billion across the globe provides it with the competitive advantages in the industry. Zee
leverages this to its advantage by devising a strategy that focuses on multi-format & multi-
platform delivery. Furthermore, ZEE increases the revenue realisation potential of the IP
through multi-platform access and lastly, they use divestments, partnerships & acquisitions to
create value.
The future of media and entertainment industry lies in providing consumers more control to
the user. Zee should focus on unbundling of content, using data analytics to improve
omnichannel experience, investing in niche channels to address individual customer needs and
implementing real time feedback through social media platforms to stay ahead in the
competition.
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TABLE OF CONTENTS
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1.0 Zee Entertainment Enterprises Limited
Zee started its operations 25 years ago with a single channel, Zee TV, largely targeting the
south Asian audience. With time they have expanded their portfolio to reach over a billion
people across 170 countries through multiple media platforms.
Zee has a broad base portfolio that comprises of below
Domestic broadcasting
ZEEL operates 7 Hindi channels. It also caters to programmes in 7 regional languages with Zee
being the leader in Marathi and Odiya and a close second in Bengali, Telugu, Kannada, Tamil
and Bhojpuri. ZEEL also hosts 7 Hindi movie channels catering to different urban and rural
appetites. ZEEL also brought to India 6 niche channels serving international content.
International broadcasting
Started in 1994, ZEEL now offers 39 channels in the international market to both the Indian
and Non – Indian audiences with 13 channels catering to the latter. ZEEL has presence in the
following countries: America (17), EU (7), MENAP (5), APAC (5), Africa (5).
Movies and Music
The Zee Studios is the film production and distribution arm of ZEEL with an enviable list of
movies under its belt. Zee Music is a leader in the music publishing business. It has a 15%
share in digital music consumption.
Digital
Keeping pace with the increasing consumption of entertainment over digital platforms, ZEEL
launched Zee5 and India Web-portal to deliver OTT content covering a myriad of genres.
Live
Zee also started their latest venture Zee Live which produces live performances such as Music,
Theatre etc.
Establishing its presence across platforms, genres and geographies notwithstanding, ZEE is
facing immense competition from its rivals such as Star India, Sony Pictures and Viacom18.
Besides these national players, competition is also rife in the local/regional entertainment
landscapes which are predominantly dominated by regional networks.
• Star India
They have an extensive portfolio of channels and content, both digital and traditional
such as Sports, Movies, Hotstar (Digital Platform), FOX Star production house etc. Star
India leads the pack in terms of Turnover as well as market share ~23-25%.
• Sony Pictures
Starting out in India in 1995, Sony has a strong presence in the Sports broadcasting as
well as English, Hindi and Marathi entertainment content. It also supports an OTT
digital platform by the name SonyLIV. It has a market share of ~ 8-9%.
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• Viacom 18
Established in 2007 through a J.V between Viacom and TV 18, they have a plethora of
regional channels, a digital platform called VOOT and several popular Music and
entertainment channels as well as movie production and distribution house under their
label with ~9.5% market share.
• Sun TV
This regional player with its dominance in South India commands an ~ 13% market
share and has the most viewership as per BARC ratings. It hosts a multitude of regional
language programs in Tamil, Malayalam, Telugu and Kannada.
Now, we will proceed with our analysis to understand the TV Media & Entertainment industry,
the resources and the capabilities of Zee that provide competitive advantages to the firm. We
would also analyse the strategy of the firm by leveraging its competitive advantages to meet
the Key Success Factors of the industry and then provide recommendations to the firm.
While this might seem to be promising, by providing scope for further penetration, the Average
Revenue Per User per month is only $3 in India compared to $88 in US. [2] In 2017, Indian TV
industry market size was Rs. 660 billion, comprising Rs. 393 billion subscription revenue and
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Rs. 267 billion advertisement revenue, which served 181 million households. [3] This puts the
profitability of industry under scrutiny.
ARPU ($/month)
USA
UK
Brazil
Singapore
Japan
Nigeria
China
India
0 20 40 60 80 100
With the above-mentioned factors, the industry analysis was performed and attached in
Appendix A.
3.0 Resources
3.1 Tangible Resources
3.1.1 Financial resources
Television broadcasting industry is capital intensive and operationally expensive. The growing
demand for high quality content coupled with the lack of talent in content creation has made
acquiring content costlier. High financial resources of Zee, relative to its competitors, helps it
to acquire high quality content suitable to the trends. [9]
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Net Current Assets (in INR Cr) as of
Mar 2018
4500
4000
3500
3000
2500
2000
1500
1000
500
0
-500 Zee Sun Network TV18 Broadcast HT Media
Entertainment
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3.2.2 IP rights of content
Over the 25 years of its operation, Zee has built a portfolio of content. It currently holds
Intellectual Property Rights of over 250,000 hours of content. [10]
4.0 Capabilities
Zee deploys the resources under its control to create, produce and distribute the content with
the help of technology.
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5.0 VRIN Analysis of capabilities
Non-
Capability Valuable? Rare? Inimitable? substitutable? Implication
Content
creation and Competitive
Production Yes Yes Yes Yes Advantage
Competitive
Distribution Yes Yes Yes Yes Advantage
Competitive
Technology Yes No No Yes Parity
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7.4 Multi-platform delivery
Acknowledging the fact that consumers are no longer limited to one source of entertainment,
Zee has made available its content across different platforms such as TV, Internet (digital),
Live. This enables them to maximise the capture.
7.5 Acquisitions
Zee has also focussed on a slew of acquisitions over the years to expand its reach as well as
enable it to serve the end consumer better and faster in terms of content and variety. [14]
• Sarthak TV – to enter into fast growing regional market in Odisha.
• 9X Media Pvt. Ltd. – It will add 6 more channels focussed on Music into Zee’s current
oeuvre. (Currently put on backburner)
• Margo Networks – Technology start-up acquisition to enable faster delivery of digital
content to consumers
7.6 Monetising IP
Zee monetises the Intellectual property by catering to a global audience by providing content
that are tailored to those markets. Zee currently owns rights to more than 250,000 hours of
content.
Zee has a 3-step model for International expansion, a model that is based on creating and
acquiring international subsidiaries and then ramping up the content customized to the local
language and culture. [15]
Step 1 – To create Indian Content for the Indian viewers abroad.
Step 2 – To create/adapt Indian content for local viewers. To understand the affinity
for such content among the international audiences they have invested heavily in
Market research, which has helped Zee to tailor nuances appealing to these audience.
Step 3 – Producing local content by either acquiring local channels/programmes or by
sourcing and producing local content since the larger audience here is the local ones.
Creating International content provides the benefit of re-packaging them and showcasing them
in India, thus leveraging its foray and presence in those markets.
7.7 Going Digital
A key focal point is the ZEE5 OTT platform launched in Feb of 2018. Though a bit late into
the fray, ZEE5 is quickly catching up and Zee is planning to launch up-to 90 original contents
by Mar’19 which will make it the most extensive catalogue across OTTs. ZEE5 operates on a
freemium model and eyes ad and subscription revenues. At INR99/month they have kept
subscription charges lower than the average monthly spent on TV.
7.8 Divestment and Partnership
Divesting comes up as an interesting strategy for Zee as it is on the lookout for a partner to
divest up-to 50% of its stake. Global players like Alibaba, Comcast, Google and Sony Pictures
have been speculated as contenders. This move could reap long term benefits as it provides
them timely access to the deep pockets of a global partner as the trend shifts from traditional
TV to digital viewership and also helps them consolidate their foothold in international
markets. [17]
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8.0 Recommendations
The future of television lies in providing consumers more control. We will look at some ways
in which ZEE can provide more control and better service to its consumers.
[18]
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consumers prefer to watch consecutive episodes at their ease rather than follow the traditional
daily or weekly episodic style.
Though ZEE has had a late entry to the OTT market, it is planning to make up for it by creating
the largest catalogue across OTTs by launching up-to 90 original content programmes by
Mar’19. Zee can use its vast catalogue to its advantage by getting more higher quality shows.
This is because for the same amount of show time, the bingeing model gives more content as
there is a less need to recap what happened last episode. For e.g. the producers and creative
minds behind “House of Cards” were very happy with the freedom Netflix provided and the
ease with which they could fit more content in the same time. Zee could follow the same path
by giving more creative freedom and allowing more content, thereby attracting creative minds
to its shows and thus producing high quality shows.
Also, Zee like Amazon Prime could use the OTT model to its advantage by launching several
Pilots for different TV shows and measuring directly the audience interest in them. This is way
more expensive to do in the traditional TV model. Combining this with new pricing models
where you pay for only what you watch can help Zee dominate.
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8.5 Real-time feedback
The heavy use of social media such as Facebook, Twitter, etc. opens opportunities to measure
viewership as well as trends in marketing, pricing and story-telling. Zee can use this to its
advantage by implementing social media crawlers and big data analytics
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Appendix A
1.0 Industry Analysis
1.1 Barriers to entry
Entry Barriers into the industry are very high due to the below reasons.
1. Stringent Regulations imposed by Ministry of Information Broadcasting and
other regulatory bodies.
Television channels’ content is regulated by Cable Television Networks (Regulation)
Act, 1995 and monitored by several bodies like Inter-Ministerial Committee (IMC),
Electronic Media Monitoring Centre (EMMC), News Broadcasters Foundation (NBF)
and Indian Broadcasting Foundation (IBF).
In addition to that, advertisements broadcasted in the television channels are monitored
by Advertisement Standards Council of India (ASCI). [4]
2. Highly capital intensive and high operating cost
Initial capital required for studio, satellite up linking and down linking equipment and
transponders are very high. Also, the transponder contract with TRAI are typically for
five years and upwards only which makes the transponder contracts available only to
those with very high financial capability. [5]
Operating costs are also substantially high to the tune of Rs 3.5-4 billion per annum due
to very high demand for new and high-quality content. Dearth of local talent and
professionals increases the content and the employee cost.
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10
0
% EBITDA Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
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Unconventional content creators also enjoy high bargaining power for high profile events like
IPL. Star acquired 5 years of IPL broadcasting rights for $2.55 billion from BCCI.
OTT Market
Platform Share
Hotstar 70.00%
SonyLIV 13.00%
Voot 11.00%
Prime 5.00%
Netflix 1.40%
1.5 Competitive rivalry
The threat of rivalry is very high due to below reasons,
• Broadcasters trying to tap the same audience and contract with the same advertisers
• Broadcasters copying formats of successful programmes on a rival channel
• Broadcasters poaching key personnel of rival broadcasters
The industry is filled with major players like Star, Sony, Zee and Sun, who operate in multiple
markets, and several other small players who operate in few markets but hold a significant
share in that market.
2.0 Industry profitability
Advertisement and subscription revenue are the major components of revenue. Higher
subscription leads to higher advertisement revenue, and hence 95% of the profits in the
industry is shared between the top 2 players. [8]
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PROFIT MARGIN
50%
38%
40% 33%
30%
18%
20% 13%
10% 7%
0%
-10% -2%
-20% -14%
-20%
-30%
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References
[1] BARC
[4] https://blog.ipleaders.in/television-content-regulation/
[5] https://trai.gov.in/sites/default/files/cpaper15mar10no3%5B1%5D.pdf
[7] https://telecom.economictimes.indiatimes.com/news/netflix-restricted-to-premium-subscribers-
hotstar-leads-indian-ott-content-market/62351500
[13] https://www.exchange4media.com/media-tv-news/zee-entertainment-acquires-sarthak-
entertainment-60810.html
[14] https://economictimes.indiatimes.com/industry/media/entertainment/zee-terminates-9x-
media-acquisition/articleshow/63334878.cms
[15] https://knowledge.insead.edu/strategy/zee-entertainments-three-step-process-for-worldwide-
growth-4747
[16] https://www.livemint.com/Opinion/UXjsDuhOnAQBaINAtYYknJ/TV-viewership-in-South-India-
takes-giant-strides.html
[17] https://www.businesstoday.in/current/corporate/zee-entertainment-decision-to-divest-is-a-
smart-move/story/291442.html
[18] https://www.ey.com/Publication/vwLUAssets/EY_-
6_trends_that_will_change_the_TV_industry/$FILE/EY-6-trends-that-will-change-the-TV-
industry.pdf
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