Contemporary and not classic is the theme for Home Box Office’s (HBO) mother channel’s content internationally and in India. HBO’s homely office in Gurgaon,a New Delhi suburb, flaunts pictures of Tom Cruise and Marlon Brando among others and depending on the generation the visitor belongs to, these actors could fall under the contemporary or the classic genre or both. The movie entertainment channel set its sights on Indian shores back in 2000 and Shruti Bajpai, HBO India’s country manger has been part of the channel ever since. Bajpai, in an interview to FE’s Malvika Chandan, talks about the evolution of HBO India’s content, distribution and advertising strategy.
There were press reports recently about HBO becoming commercial free in India. Is there any truth in these claims?
Absolutely not. It was a case of an over zealous news medium adding two and two and making it 22, a lot of smoke without any fire. Our pay out from subscriptions are very low and in India. We simply cannot sustain on such a model. Take the conditional access system (CAS) model, for example. Recently a friend who lives in south Delhi’s RK Puram, and subscribes through CAS, said she pays about Rs 5 for every add on. So, if she gets 20 channels, she pays Rs 100 per month. On the other hand, if you are a direct to home (DTH) subscriber, and pay Rs 300 to, say, TataSky for 250-300 channels you can imagine the amount which actually filters back to even the higher end channels as subscription revenue.
India, Pakistan and Brazil are similar in this respect and therefore the combined subscription and commercial model are working well.
What is HBO’s USP and how big is its presence in India?
HBO prides itself for its refreshing and innovative on-air packaging. HBO is a TV channel, but we position ourselves as more than a TV channel. We screen quality Hollywood blockbusters and have a good international presence including the US, South America, Asia and Eastern Europe. The company was founded in the US in the mid-seventies and it has grown to 20-plus channels in the US including HBO Family, Hits and Signature. All these channels are bundled with the mother channel and cannot be viewed without a subscription to the mother channel.
In Asia, we have a presence in 22 countries, excepting Japan, Korea and Australia. The Australian market is dominated by local content and 80% of the market is terrestrial, cable penetration being low. China is closed to outside content and except for a local general entertainment channel, which occasionally airs our movies, we cannot independently get into that country.
Who are your main competitors?
Today television entertainment competes not only with other TV channels, but with other media such as the internet. A lot of people watch TV serials and sitcoms on YouTube. Thankfully, most movies are too lengthy and need a bigger screen for better viewing. But the point is that there are so many mediums and channels for entertainment that the market has become more competitive.
HBO is able to meet different viewer preferences for the simple reason that we are backed by killer content. This is also our USP as getting the best Hollywood movies from the largest production is expensive and this library fee is not affordable for all channels. Today STAR Movies and HBO are in that sweet spot and therefore we alternate between No 1 and No 2. Many channels claim to enjoy prime ranking; but these are false claims and misleading. Channel PIX recently claimed that it is ranked No 1 in Delhi, but if you see the fine print it was No 1 for a particular week.
What are some of your recent branding initiatives?
In India we’ve made our brand relevant by small subtle initiatives. For example, we got quite a few requests from our viewers in the south and places such as Baroda requesting sub-titles, as the American accent is not always understan- dable to the Indian audience. A suggestion we took up and executed. On Independence Day we dubbed a few movies in Hindi, a trend we may continue if it makes business sense. For Diwali we are planning specials relevant to our audience.
How does HBO India manage distribution?
Distribution was not a problem eight years ago; today, with 300 to 400 channels running in the same 24-hour time span, there is a much bigger battle for the prime spots. Our distribution and our advertising are outsourced to ZEE Turner which negotiates on our behalf with the CAS, DTH and media planning partners.
What part of your content comes from outside production studios? How much do you produce in-house?
About 75% of our content comes through HBO Asia’s exclusive tie-ups with Universal, Sony, Paramount and Warner Brothers. We put the movies which come through these production houses in two categories—the Raters and the Differentiators. Raters would be everything from a Spiderman to A Mighty Heart to The Mummy and viewings such as An Inconvenient Truth and Blood Diamond would fall under Differentiators. Our objective is to air content which targets all the viewing segments—family, children, stay at home moms etc.
Twenty five per cent of our content is original, such as Entourage and Big Love. We have more home productions coming up that we cannot announce yet.
What is HBO India’s revenue break-up from ads and subscription?
Without sharing exact numbers, I would say it is balanced, but skewed more towards advertisements. We currently have about 30 million viewers and 300 advertisers. We hope to see ad revenues grow by 15-20% over the next year.
Does HBO have plans of bringing any of its other channels to India?
No, there are no plans to bring other channels to India. The cost of launching a channel is high what with the carriage fee and marketing costs, and unless there is a strong business case we will not add channels in the country.
Already there is a deluge of channels in the market and the cost could vary between $50 and $200 million. Many of the new channels such as 9X were able to launch because they adopted a free-to-air model, which means that they get zero revenue from subscriptions. Now, the total market for ad revenues is about $2 billion; so for a new channel to be viable, it would need to target about 5-10% of this market.
Instead of starting three channels to reach all our target groups, we’ve chosen to focus all our energies on the one channel we have been airing in India and make it more robust.
6 months ago