UTV Software Communications has proved its mettle in the media and entertainment industry. Having begun its operations as a serial producer, the company diversified into movie production, gaming and television broadcast business. Of late, the company is focusing on scaling up its gaming business. It has invested around `550 crore till date in gaming business. Though such a huge investment has raised serious doubts among industry observers about the revenue generating capability of the gaming business, the company’s chief executive officer Rohinton Screwvala , is quite optimistic about it. In a conversation with ET Mr Screwvala tells about the company’s future plans as it explores new territories. Excerpts:
Could you share your thoughts behind the inclusion of television business under broadcast business?
We have been in the television industry for more than 15 years now. Our television business consists of producing content for Sun TV and other regional channels. In this, we get air-time and being a leading content producer in the South, we negotiate well with advertisers in our favour.
This seems to be a pure television business but it actually is similar to our broadcasting business. In our broadcast business, our core job remains the same: negotiating with advertisers. Many people in the management thought that instead of seeming to be quasi-broadcaster in our television business, we should include the television business under the broadcast business. This would iron out any sort of ambiguity for valuation and understanding of the company.
You have invested around `550 crore in the gaming business. Why are you so focussed on gaming business? Could you give us a projection of revenues that you are foreseeing from this business?
Investors need to understand the fact that our gaming business is for international market and Indian markets may account for a small proportion of it. In the gaming business, we are present in console, online and mobile platforms. In console gaming, we have UK-based Ignition, which publishes and creates games, while for mobile gaming, we have indiagames.com that offers games on demand through broadband and for online gaming, we have US-based True Games.
The gaming business is around three times bigger than the films market abroad. Even in India, with 3G technology coming in, mobile gaming would assume greater significance. At present, the mobile gaming market is estimated at around `140 crore. We have ample opportunity to capture a share of this huge market. Our association with Walt Disney would help us in this venture a lot.
Walt Disney holds around 50% in the company. What are the future plans?
If you look at the media and entertainment market in Asia, you would realise that there is enough potential for companies to scale up their operations and make good profits. The media and entertainment business out there in the US and the UK has almost saturated. This is the reason why many international entertainment companies are coming to India. Take for instance, Warner Brothers.
Though many big international players had entered Indian market in the 1990s, they had been making losses along with their Indian counterparts. However in our case, UTV had formed its own brand after several successful ventures in television and films. This is the prime difference that I think Walt Disney found in us.
Together we intend to become a huge media and entertainment conglomerate. As such, we could have de-merged our individual business and listed them as separate companies and earned stable revenues and valuations. But that is not our aim. We are keen to exploit opportunities in the entertainment business that would provide us higher margins for the long term. A case in the point is the gaming business.
What would be the expectations of Walt Disney on you as an Indian media and entertainment company?
Walt Disney’s investment in the company is a strategic one. It is more of synergistic relationship. Considering the fact that Walt Disney is a huge content company having worked across various geographies such as the UK and US, we get benefits from their experiences in our different businesses except films. A case in the point is the interactive division of our gaming business.
One should also take into account the fact that even Walt Disney benefits from this synergy as India forms one of its key expanded territories. Sensing a lucrative market here in India, they have increased their stake in UTV from around 15% to 50%. In its 50% stake, Disney has 31.4% stake, while the remaining 19.1% stake is the open offer which I can buyback till November 2012. The arrangement has made in such a way that they have 30% voting rights. Hence, the expectation from their side is more of a synergy of strength between them and us.
How has corporatisation helped your film business?
Since films business continues to remain a major contributor to our overall business, we needed to have a clear demarcation for experimental and commercial films production. One main reason for this is the fact that both these kinds of films involve different marketing and distribution strategies. So far, corporatisation has helped us a lot. Out there in the market, we realise the revenue making potential in backing films with unknown but promising directors having good content.
It is not the case that we choose anyone and everyone. We have an inhouse team that chooses projects that would have creative and commercial sense at the same time. If you look at our track record, projects backed by us have yielded good results. Films like Dev D, Aamir and Kaminey among others have been successful only because they had both creative as well as commercial sense. Much of this can be seen in the contribution of films in our overall revenues. It is around 55% of the topline.
Source: Economic Times
No comments:
Post a Comment