In an exclusive chat with CNBCTV18.com, Zee5’s CEO Tarun Katial speaks about reaching 15 million users by next year, their attempts to hyper-personalize the app to cater to individual needs, how gamification of their popular shows and characters will be the real game-changer and why the idea of an independent body for self-regulation of content doesn’t appeal to Zee5.
Let's begin with Zee5 and its journey. Where is the platform today in terms of its reach and presence? What is the larger vision for Zee5?
Tarun Katial: I think it's been a great journey. We’ve been able to reach 8.9 million daily active users, and over 80 million monthly actives and a huge watch time. What we've been able to capitalise is the data and the addressable universe that got created once 4G came into the country. When the (data) prices came down, we needed to make sure that we were able to capture, not just the length and breadth of users, but also for users, the device ecosystem, the data ecosystem, the content ecosystem, the user experience ecosystem; all of it. So it's about getting to the KaiOS feature phones on one end and the smart TV on the other end. And all the sub-hundred dollars Chinese phones to Android phones to iOS phones to the entry level smart TVs in between. Then, to be able to deliver video on a very adaptive bitrate through slow 3G (connections), slow 4G and all types of broadband.
So the challenge has been largely technological as opposed to content creation…
Tarun Katial: Yes. As you know, we have the 3V strategy – Vernacular, Video and Voice. Vernacular is very big for us. Our User Interface (UI) and User Experience (UX) support 12 languages. So (when) you get into our app, the first thing we ask you is what's your language, because that's the key for us to be able to reach out to those many languages, both in display and content.
Display is the tougher one to build. We had the content through our web of Zee language channels. But building the UI in those many languages, navigating consumers in so many languages, that was the tough part.
Now coming to voice search - Indian keypads don’t support so many languages, so while you have the content, you have the UI in that language, consumers won’t be able to consume it. So it was important for us to be able to install the voice search feature which can discover content that quickly and that easily.
Besides that, we’ve also build a robust AVoD (Advertising Video-on-Demand) and SVoD (Subscription Video-on-Demand) strategy. We made some very big investments on the AVoD side in building the ad suite. We needed to do all of this because beyond the big tech, very few Indian companies had actually done any work on ad tech. Ad tech is run by big tech companies in India – Google Facebook and Twitter – and if we want to compete in the ad space we knew that we needed to build our ad suite.
We have also embarked on the journey of building the self-serve bidding model where advertisers can book their own advertising slots, bid for advertising slots, the pricing is on a bidding model and optimise the advertisement themselves on an optimisation engine.
You've got about 8.9 million daily active users as of today. What’s the user base you want to get to?
Tarun Katial: We want to get to a minimum of 15 million daily active users. But for that we need to get watch time up. We need to get more and more hyper-personalised. We've launched a new recommendation engine and our attempt is that between auto-curation and hyper-personalisation, we should be able to give you what you would like as a segment of one. The more we can do that, the more your app will look different from mine or somebody else’s and our attempt is to really get there. From the time you launch your IP, we are going to be able to give you languages of your state, your UI and UX will get customised to that language and the content you will watch will be hyper-personalised in terms of the kind of recommendations that come to you. Because we have so many data management platforms, even when a user logs in and has low consumption, we've understood where he/she comes from and is likely to watch. We can even do cold-start recommendations so that even at the entry level, the app can show content that will excite him/her to come back to the platform.
Apart from the vernacular interface and voice recognition features, what are the other technological interjections to hyperpersonalise the UI and UX?
Tarun Katial: So one of the big things is video encoding and transcoding. To be able to serve this device ecosystem, we needed to be backed up by different kind of encoding technology and intuitively be able to offer that to users. So when you launch your app in a slow 3G environment on a slow phone – a sub-hundred dollar phone – and your memory is low, we know what kind of video, what MPEG, should be delivered to you, what Content Delivery Network (CDN) to use behind it. So the entire content pipeline that delivers the content needs to be intuitive. It can't be one size fits all. We are making it hyper-personalised.
Given your focus on hyperpersonalisation, how soon do you think you can get to 15 million daily active users?
Tarun Katial: I would think about six months. The way we are investing behind technology, I think we can progressively make that leap. We’ve made a significant investment behind our technology teams. It's a significant percentage of the total cost and we've upped that technology investment. We've been able to optimise costs on manpower because we are automating, but we are putting all of that behind technology.We're doing a lot of automation today. We've just finished piloting with the tool from Microsoft Azure for self-editing. My 25-minute episode can be converted into a 7-minute episode through machine learning without having to edit it.
The machine decides what scenes need to be picked up and creates a short form of the long form video.
Most of our app today is fully curated through artificial intelligence and machine learning. We don't do any manual curation anymore. So no human decides what story or show will go up where and how.
We are also moving into being able to do packaging of content on the fly. So we’re working with another Israeli product that will be able to create a pack for you, which is significantly different from the current packs which are standard packs; I can personalize packs for you.
At your last investor meeting, Puneet Goenka had spoken about creating lighter user packs. What is on the anvil?
Tarun Katial: I think our effort is to see what we can package within that and what price point we want to be at. So we're testing two or three packs. These could be regional, hyper-local, hyper-personalised packs, we are looking at what kind of technology can allow us to do this in real time and I think we're very close to it.
You also announced plans to launch a mobile-only plan, much like Netflix. When do we see that happen and how will it play out commercially for Zee5?
Tarun Katial: We are close to it. Technology-wise we are ready, but we're just evaluating the way we want to play this out. It may not be just be a mobile pack, it may be packaging of different content into different devices. There are multiple factors at play here, including the number of logins and concurrencies. We are throwing a lot of things in the air and deciding what combination works best.
I think it's working well. We’re seeing significant growth month-on-month, both on the AVoD and SVoD side. I think we've got some significant tailwinds on the B2C side; we've seen some significant movement on that and we're very proud of that traction. I think today, outside of (Amazon) Prime, Zee5 possibly has the largest subscription base in the country. And Prime is not necessarily comparable because it includes shipping, shopping and is essentially an end-to-end retail company and video is just a small component of that.
Give us a sense of Zee5’s current revenues and growth rate. When can we expect the platform to break even operationally? As far as breaking even is concerned, I see ourselves being able to do that within 5 years. On the content side, you have a partnership with ALTBalaji to co-create content that plays out on both platforms. Are you interested in tying up with other OTT platforms as well?
Tarun Katial: Yes we are. We are in talks with a couple of players as well as good production houses. Digital will require a regular supply of good quality content for the needle to move effectively in the large base of India and the addressable market.
You're offering 12 Indian languages today and five foreign languages. How you're looking at expanding that bouquet?
Tarun Katial: We want to do a little bit of more in India. We want do the Northeast. I think Assamese is an opportunity we want to tap into. One language we haven’t done enough in is Malayalam. We want to do more local original content in Malayalam. We want to do more content in Kannada. We’ve been very surprised to see the kind of off-take we saw in Kannada. We can see all of this come to play in the next six months.
At the moment, Zee5 is also investing heavily into franchises – spinoffs of your popular TV shows as well as direct-to-digital movies. What’s in the pipeline?
Tarun Katial: We will do a lot of it. We may create spin-offs for both old and new shows. Over 27 years, Zee has created some great IP. It's lying in our treasury and we're now discovering and recreating it. ‘Jamai Raja’ was an old show but it has done humongously well for us in its new version (‘Jamai 2.0’). We are also working on almost five such new shows which would come back in some form. Direct-to-digital has been another great space. We’ve done some great films like ‘Barot House’, ‘377’, ‘The Sholay Girl’, ‘Badnaam Gali’ and we’ve seen very good numbers on it.
What other segments are you getting into?
Tarun Katial: Kids’ content is a tough market to crack, and we will do two or three things. One, we will obviously acquire some of the content that's available in the market, both in India as well as internationally. We also want to invest in some original IP. We have some very good IP from ZeeQ (ZeeQ was launched in 2012 and offers TV content for children between 4 and 14 years). For example, ‘Bandhbudh and Budbak’ was a very big show and there are several others. So we want to create some of these IPs in the long run.
We also want to do a certain amount of User Generated Content (UGC) for kids. We think that’s a big opportunity. We’ve had some great franchises in ‘Sa Re Ga Ma Pa L’il Champs’, ‘Dance India Dance Little Masters’.
Will you formulate children talent shows specifically for the OTT platform?
Tarun Katial: The talent space is a big space. It's kind of unique. We will do an on-going challenge on the platform, and participants could eventually find themselves on the TV show.
The other space we want to leverage is content gamification. That's a big space and we want to do 2-3 things. One, we want to gamify our platform with the original content and new content that comes on-board. What we're trying to do through gamification is to let people play along, do specific shows for play-along. We're in the midst of getting a low latency technology that allows us to do live gamification.
We are also gamifying all our TV shows together in one thread. Fantasy leagues as a concept is very popular in sports and is targeted more towards males. We are bringing a similar concept in a very different avatar of ‘Indian families’ to the viewers of these shows. So far TV channels have primarily done gamification for non-fiction shows like ‘Kaun Banega Crorepati’. Even on ZEE5, we have done gamification for our top non-fiction shows like ‘Saregamapa’, ‘DID’ and ‘Dadagiri’, which did very well in terms of impressions. This is the first time we are planning a gamification for fiction shows.
So the ZEE5 Super Family will be the first and only gamification for fiction shows. These are shows which have completely involved audience and they love the characters. The idea of this gamification is to take that affinity to these shows and characters to another level, where you are virtually making a family with them and getting a chance to win exciting prizes. The idea of owning your favourite characters comes alive in this gamification. So popular Zee TV shows including ‘Kumkum Bhagya’, ‘Kundali Bhagya’ etc will be gamified. It’s a fairly interesting thing we are doing.
The industry is divided on the issue of instituting a two-tier mechanism under an independent body much like the Broadcasting Content Complaints Council ( BCCC). As I understand, Zee5, Netflix, MX Player and ALTBalaji are not keen on an independent body. Why?
Tarun Katial: If a two-tier mechanism is going to tell me to pull content down without having a conversation or discussion, it's a bit tough, right? That said, I think we will get there eventually, we first need to get the basics sorted. We can't jump into it yet. Let the industry agree on a unified code for what is blasphemy, what is not child-friendly, get the age-appropriate classifications, get the entire regulation on grading content and all that done.
So, are you saying that will happen only when all the nearly 40 OTT players unify on the self-regulation code?
Tarun Katial: At least a significant number of them. We've already started. We have parental control, age grading, genre grading, all of it. And it's just not about grading it, but it's also about how you post that onto the front end. Do you want the grading to stay all through the video, what classification should we put or not, these are the details that we need to iron out first. All players, Netflix, Voot, ALTBalaji, MX players may it do it differently.
Tarun: I don't think it's going to become censorship because BCCC is also not about censorship. It's, at some level, guidance for what you do right or wrong. But I do think that there is a difference between broadcast and OTT. In OTT, you look at the thumbnail and you decide to consume it. Then again, there are so many variables such as YouTube, which provides purely UGC content. So it's not an apple-to-apples comparison either between platforms or between technologies of broadcast and OTT. So it is unfair to apply the standards of film or TV to OTT because they're different technologies.
Do you feel that a body like BCCC is eventually going to lead to censorship? I still do believe there is a need for some amount of regulation. The industry needs to be responsible. People must think about where this goes for the Indian society.
So, I think we all need to come together to at least agree to the first level - get the tier one mechanism in place, see how it works, see how much consumers and policy makers like it and then if it doesn't work, we move to tier two.I would find the need for tier two (mechanism) if I felt that I am not capable of addressing grievances through tier one. Zee5 has enough checks and balances to be able to deal with consumer complaints. At tier one itself, I believe we have (an equivalent to) a two-tier level mechanism, which is my own mechanism, to listen to people. We have a panel of people who look at all the complaints, a customer service team who gives feedback, who holds up the content team and we do make changes ourselves. We are very sensitive to our reputation management. We never want to be seen in a negative light. And for brands that's extremely important today in the day and age of social transparency.