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Wednesday, May 14, 2008

interview with Colors CEO Rajesh Kamat

Rajesh Kamat, CEO of Viacom18's Hindi GEC Colors, has a clear mandate - to ensure his upcoming channel a position amongst the top 3 players in the category within a year of launch.

In a genre where Colors is the 10th entrant, Kamat has his task cut out and will have to bring to bear all the experience he garnered in earlier stints as MD of Endemol India and senior VP commercial & business planning at Star India.

What would you term as the core TG for Colors?
While we propagate programming that appeals across, if I have to specify a core TG, 15 to 34 is a number I would peg ourselves on.

In a GEC, the 15 to 34 is what gets you your first one third. The 25 + is where the loyal audience starts. What we're doing is, we're getting the early adaptors and the initiators in the first phase. Once we get that, we've made our entry into the single TV households. That's when you start consolidating. And the consolidation phase is actually your 25+ female. Though males would come in, that consolidation phase would focus on the female.

That aspect of your programming focus is not reflected in either Fear Factor or in Mohe Rang De, the two shows that have been showcased thus far?
Not right now. What happens is, with these differentiated and disruptive programmes is that you lock in your first eyeballs. With big movies as well.

So you will have a big band for movies?

But where will they come from? Isn't the market more or less locked in as far as movie titles are concerned?
These will be new ones. Now the market is moving towards syndicated movies - first airing, second airing, third airing… So there are quite a few lots floating around.

Your entry into viewer mind space will therefore be with these tent pole shows and movies?
I would not say entry into mind space. But the invitation card to viewers, if I can put it this way, would possibly have highlights on these. Because these are the ones that will actually draw the attention of the early adaptors and initiators.

But while doing this, we will have the conventional shows that we believe will compete in the long running rating game.

Will you be putting out your big movie titles in this six month window?
Absolutely. Be it big ticket reality shows, be it events, be it movies; that's where you'll get the sampling. As for differentiated content, it would be a Mohe Rang De, typically.

We see it that 300 GRPs is the target. But it is all this activity in the initial six months that will give us the 100 GRPs (base to build on).

How will you crack the balance 200?
Once you cross 100, it is all about adding 3, 5, 10 GRPs week on week That is what will take time. This is not a T20 game.

Isn't that's something that all the channels in the chasing pack (to Star Plus and Zee TV) have failed to crack? How to cross the 100?

Imagine is three-four months old. I take it as a compliment (to them) when somebody tells them that they can't go beyond a 90 or a 100. To get to a 90 was not simple. A Star One with all the clout of the Star network behind it opened with a 19 GRP, 9X was 20. Imagine opened at 55, and went to 89 in a short time. But from now on, the growth will be slow.

Which raises the question for you? These past three months has seen Imagine make a fast take-off and 9X slowly and surely build its story. That means among the new entrants two have already succeeded and are fighting it out for the third position. And way above them we have the strong number 1 and 2. Is that how you're looking at it in terms of the distance you have to cover?
Not quite. It is not necessarily going to be a 2 + 2. It could well be a 1 + 3. If that becomes the game, the difference between a 300 and a 150 might grow larger. And Star might gain back whatever its premium was, if at all. That remains to be seen.

But if we have such a scenario, the balance three, 150 and 300, or 150 and 100 or 150 and 120 there's a game. Two players at 120 each and one player at 80, is better than one player at 150.

Again, this whole game is about sustenance. It's financial investors versus strategic investors. What is the mindset? Are you looking at 'first year I have to extract this much money'?

You've identified six months as the time frame to embed yourself in viewer mind space. That all three new entrants might succeed is not a scenario that most experts have even considered, let alone thought possible?
If you take the US as an example, three networks used to account for 90 per cent eyeballs. Today the same three networks get 35 per cent eyeballs.

Even in India, where people used to talk about 70 per cent of the audiences flowing from one show to another, is a thing of the past. Now, there is nothing like saying I go from this show to this show on the same channel. It doesn't go vertical. You actually migrate between channels based on the shows you like. That's how the viewership pattern is going.

And it's not also as if the same person in the same household is watching. You're aggregating different types of eyeballs. There is no linearity in terms of audience flow.

Audience flow at an earlier point used to be from a Kasautti… to a Kahaani… and then on to a Kyunki. Because they (the majority) liked the same kind of shows. Those days are gone.

So whether addressability kicks in or not to a significant extent in the next two years is not a deterrent to any of you?

See, there is no GEC that has shut down. Can you beat that?

Which brings me to the point that in today's scenario we have carriage and placement costs as a more than significant overhead, which all of you now club as part of marketing expenditure. There is pure marketing expenditure, ground marketing expenditure…?
Distributor cost. Technically, if we were an FMCG, it would be the distributors' charge.

In today's market, just for these two elements, we're talking of a Rs 1.2 billion budget. And it's even more than that in your case. So let's say Rs 1.5 billion is set aside for marketing and distribution. Now you have your Fear Factor, which is a 26-episoder, right?

Ok, 16 episodes. The cost of which, in that case, would be nearly Rs 400 million; all of which appears to be adding up to the most expensive GEC launch India has ever seen?
That is with Akshay (Kumar)'s value. And that too, Akshay's quoted value in Mumbai Mirror. That's not the real value. What I will say is that it is higher (per episode) than what others in his league are getting but it is not something that we've bound ourselves with.

You must understand that this is not one of those 100 episode deals. We've done a clear series deal. So the values are also cost effective. It's not something that is over the top.

You talked of a launch cost. I see it a bit differently. How much would you buy a movie for. Typically in today's market something like a Welcome would cost Rs 7-8 crore (Rs 70-80 million) - for one plus 12 airings. You buy three Welcomes, you air it over three weekends, game over. And you've already sunk in Rs 24-25 crore.

Now let's examine our investment in Akshay for Fear Factor. Akshay is not just the host of the show, but also the face that will break through the clutter and get viewers to notice our channel when we launch. That is what an Akshay does for us.

In that sense this is not just a programming investment, but a marketing investment as well. This kind of a launch stunt, actually lasts you and first things first - you've entered the house, you've entered the mind space.

Akshay's coming on TV was the first one. He's coming on Colors is the second one. These are overlaps. Distribution overlapping with marketing; marketing overlapping with content.

When you launch in July, how many hours of prime time programming will you have?
Three-and-a-half to four hours is what we'll be having.

So you're launching with a four hour prime time weekday strip, a solid weekend line-up and a strong movie slate. That's really big bang.
Weekend would not be out and out blast but more in a phased manner. But yes we would have weekend offerings.

So you will more or less have a complete menu offering from Day 1?
Correct. We're not going in with a pistol, we're going with a cannon.

Doesn't an all or nothing approach leave you that much more vulnerable? A phased build up does allow more room for manoeuvre one would think.
Let me flip that at you. A typical investment plan for a Hindi GEC launch would be what? Some Rs 4-5 billion? A tighten the belt, so-called smart investing plan versus a lavish, exorbitant entry would be what? A Rs 250-300 million gap, or a Rs 500 million gap, broadly?

More like a Rs 1 billion gap.
Not that much. Because you'd have phased up investment later on rather than in the six-month time frame that we're looking at for Colors. Now let's take a perspective of a typical business. It looks at a three to five year break even. Over a five year period, will that Rs 500 million hurt you? That's where the strategic investor comes in.

And if you are the tenth player and you have to make a mark and you have a parentage of a Network 18 and a Viacom, will it hurt you? I don't think so. That's the mindset.

What we're saying is that I don't push my (operational) breakeven, I don't push my cumulative breakeven. I smartly manage the phasing (of investments).

You must understand that we're in this for the long haul. This is our bread and butter, so the extra Rs 500 million should be viewed keeping that perspective in mind.

So your medium term target would be to aim for the number 2?
A formidable player among the Top 3 is what we're aiming for within 12 months of launch. That's our target.

Speaking of programming, when will your bread and butter offerings roll out?
That will start from Day 1. We're giving enough time for the consumer to latch on to our offerings.

Of course, we'll be adding on a few shows as we go on.

So if we were to draw a one liner on why players like yourself believe you are not too late getting into this game, it would be because linearity in terms of watching scheduled are a thing of the past?
Absolutely. People will watch shows and come in and go out. That's what it is and that's what we're moving into as a market.

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