Update on the Indian Equity Market:
On Friday, NIFTY closed in the red at ~12,056 points (-0.8%) reversing the previous day gains. In the sector-wise performances, REALTY (+1.0%) was the best performing sector while Media (-2.5%) and Metal (-1.2%) was the worst-performing sector. Amongst the NIFTY 50 Stocks, INFRATEL (+6.7%), ADANI PORTS (+2.3%) were the top gainers while ZEEL (-7.9%) HINDUNILVR (-2.6%) were the worst performers.
ZEEL: ZEE5 targets to reach ~15mn daily active users in 6 months
Key takeaways from the interview of Mr Tarun Katial, CEO of Zee5, the online video streaming Over The Top (OTT) platform of Zee Entertainment Enterprises Ltd (ZEEL); dated 28th November 2019 on CNBC-TV18:
- ZEE5 reached out to ~8.9 million daily active users, and over 80 million monthly actives and huge watch time. It targets to reach out to ~15 million daily active users in about ~6 months.
- ZEE5 is offering 12 Indian languages today and five foreign languages. The company is looking to expand in Assamese, Malayalam, Kannada in the next six months.
- It has a 3V strategy – Vernacular, Video and Voice. The User Interface (UI) and User Experience (UX) supports 12 languages. When the user opens the app, the first thing it asks is the language preference which reaches out to those many languages, both in display and content. ZEE5 gets the content through the web of Zee language channels. But building the UI in those many languages and navigating consumers in so many languages was critical. Indian keypads don’t support so many languages. A voice search is an important tool to let consumers discover the content quickly and easily.
- ZEE5 also built a robust Advertising Video-on-Demand (AVoD) and Subscription Video-on-Demand (SVoD) strategy. The company made some very big investments on the AVoD side in building the ad suite. Ad tech (advertising technology) is run by big tech companies in India – Google Facebook and Twitter – and to compete in the ad space, ZEE5 needs to build its own ad suite.
- ZEE5 is also 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 optimises the advertisement themselves on an optimisation engine.
- To reach out to more and more audience; ZEE5 needs to get hyper-personalised. It launched a new recommendation engine which between auto-curation and hyper-personalisation enabling it to offer a differentiated yet personalised service.
- ZEE5 is investing in automation. It piloted with the tool from Microsoft Azure for self-editing.
- Most of the app is fully curated through artificial intelligence and machine learning. ZEEL doesn’t do any manual curation anymore. ZEE5 is also evaluating a mobile-only plan, much like Netflix.
- There is a significant growth month-on-month, both on the AVoD and SVoD side. ZEE5 is expected to break even within 5 years.
- According to Mr Katial, outside of (Amazon) Prime, Zee5 possibly has the largest subscription base in the country. ZEE5 is also looking to tie up with talks with other OTT platforms as well as good production houses.
- ZEE5 is looking to capitalise on the content created by ZEEL over 27 years.
- Brands are extremely important today in the day and age of social transparency. Mr Katial mentioned that ZEE5 has enough checks and balances to be able to deal with consumer complaints. It has a panel of people who look at all the complaints, a customer service team who gives feedback, who holds up the content team and make changes themselves.
Consensus Estimate (Source: market screener and investing.com website)
- The closing price of ZEE was ₹ 286/- as of 29-November-19. It traded at 15x/13x/12x the consensus EPS estimate for FY20E/ FY21E/ FY22E of ₹ 19.7 / 22.3 / 24.3 respectively.
- Consensus target price of ₹ 351/- implies a PE multiple of 14x on FY22E EPS of ₹ 24.3/-