The 50-year-old company, which has seen sweeping changes in the way movies are consumed, is now focused on owning and distributing content across media.

Fate has been doubly cruel to Shemaroo. First, the digital revolution happened. The wholesale shift to digital audio and video at the consumer end sent the VHS cassette into the dustbin of history – and nearly took Shemaroo’s business with it.

But the largest provider of movie-based content in India managed to recoup and become a major player in the VCD and DVD entertainment segment – till the online revolution hit India.

With piracy and the fast changing digital world eating into the home video market, Shemaroo faced its second life-threatening crisis – how to innovate and re-define itself. For Shemaroo, it has led to a complete overhaul of its business model. From becoming a content aggregator and distributing content to television and other platforms, to producing movies, Shemaroo is busy transforming itself to tackle the post-digital age, even though the company believes physical content formats might be “down but not out yet”.

As per industry estimates, there are still about 35-50 million DVD and VCD players in Indian homes. Hiren Gada, Executive Director Shemaroo, admits the physical business of CDs and DVDs has seen a decline in the last two years. “But it is like the car-petrol relationship. If you have hardware, consumers would want to have content to play on it. Though the larger challenge here is that a large part of this demand for content is being met through pirated content and one needs to push more and more legitimate form of content to this audience.”

Industry players also point out that the acceleration in decline of the home video market was caused more by internal factors than external factors. Players such as Moser Baer who entered the business some time ago lowered prices to the level at which pirated CDs and DVDs were available. Analysts believe, even though prices were down, demand was not elastic as it did not grow proportionately to the fall in prices.

But even as the home video segment has declined, Shemaroo has already changed tactics. “Last year we have seen some price stabilisation. But we also decided to raise prices and though the volumes were lower we made better recoveries on our investment,” says Gada. The company has also been focussing on selling collections of movies, repackaging them as well as offering value additions to DVD collectors.

Reinvention

For Shemaroo, the home video business has not been the largest stream of revenue for some years now. In fact, it is not even the second largest. “The first seeds of transition were sown as far back as 1993-94, where we redefined our positioning. We realised that our connect with the consumer is content and it has to be platform-agnostic. We realised that we cannot be a video cassette company any more and for 6-7 years we worked on consolidating our position,” says Gada.

Today Shemaroo focuses on aggregating, owning and distributing film content across media to its audiences.

Nearly four years ago, Shemaroo was among the first Indian players to become an official content partner on YouTube. It runs nearly 32 channels such as ShemarooMovies, ShemarooEnt and FilmiGaane with both old and new movie content playing on it. The company depends on monetisation through advertisements on YouTube.

“We have a dedicated team which works on these channels and looks at repackaging content and monetising the videos, songs or clips,” says Gada, adding, “We have, for instance, started the 15-minute movie segment, where a three-hour movie is edited down to a 15-20 minute video. The YouTube generation does not have patience and likes to watch the movie quickly, so our attempt is to offer that and be more engaging.” He also said that this helps in getting the movie buff to sample content and then watch the complete movie. The company believes it has seen success as it states it received nearly one million hits across all its channels on YouTube everyday.

But for the company, the key business has been, as one of the largest suppliers of movie content to television channels, a B2B activity. Besides leveraging on rights that it owns for older movies to newer remakes, it also generates a big chunk from the re-issue market. The re-issue market is made up of movies whose rights are up for grabs after being controlled by one player for an initial 5-7 years. From movies such as Jab We Met, Golmaal and Golmaal Returns, the company has rights for several older movies such as Amar Akbar Anthony. Overall, Shemaroo has rights for an eclectic mix of nearly 2,500 movies.

“With digitisation, we believe there is going to be more and more demand for movie content and more revenues as channels experiment with various business models,” says Gada.

Also the company has its post-production business that it ventured into some years ago. Though not as big as some of the other players, it serves more as support activity for its own requirements besides servicing other clients.

Now in its 50th year, Shemaroo which has been producing Hindi, regional and animation movies, also did an interesting experiment by launching its 3D animation movie Super K exclusively on Yahoo! Movieplex. The company has also aggressively forayed into non-film movie content, which it calls the special interest segment. From roping in Shilpa Shetty and Bipasha Basu to produce fitness DVDs to producing a management DVD on the teachings of Chankaya, it is experimenting by producing different kinds of non-film content.

Talking about the future of its film production business, Gada says, “We are distributors turned producers and we will always look at film production based on opportunities. We expect to produce on an average one to two films a year and will continue to focus on the special interest segments such as fitness, health and self-help and motivation segments as we believe there is a big demand for non-film content.”

Asked if the company has plans to do a Netflix in India, Gada says, “We are present across mediums like Internet and mobile in partnership with various service providers. In the next 18-36 months, the physical delivery formats will give way to digital formats. Also, the advent of 4G is likely to boost the demand for more and more rich media application from consumers.”

But he adds that for Shemaroo, there are currently no plans on the drawing board for launching its own delivery platform to offer its content directly to consumers.

But asked how the company expects to earn more bang from the buck as monetising is a big challenge on the Internet, Gada said, “As Internet penetration grows, the industry is expected to go out more aggressively against pirated sites to improve monetisation models. Also, we expect more and more premium content moving to paid platforms or hybrid models which would mean offering some content for free for the consumer to be able to sample while asking her/him to pay to be able to watch the entire movie.”

For now, the company is experimenting across mediums and believes the way the technologies are transforming on a daily basis it’s difficult to predict how consumption of movies changes.

(This article was published on February 28, 2013)
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