It’s 5.30PM on Thursday, 23 August, but the offices of film production house Eros International in Andheri, Mumbai, are buzzing with activity. Meetings are still being held. Calls are being made. Tea is being served. This is unusual in Mumbai, where most office-going people leave their desks at this time to avoid the rush hour. But today isn’t business as usual. Eros is announcing its financial results to the Nasdaq Stock Exchange the following day. It is also gearing up for the launch of its first original episodic show—a comedy called Side Hero—on Eros Now, its digital streaming service.
Eros Now has become the driving force for the company’s digital wing, which has fast emerged as the growth engine of the company, says Eros’ chief financial officer Prem Parameswaran. For the quarter ended June 2018, digital revenues grew 34.3% year-on-year to $26.6 million. This accounted for a whopping 41% of the company’s gross revenue. This digital dominance is a marked departure from the company’s traditional reliance on revenues from movie theatres and television syndication. Over the last year, Eros’ digital revenues have outpaced theatre revenues in three quarters.
Today, Eros Now has a paying subscriber base of 10.1 million users. By the end of the current fiscal, it is looking to reach 16 million paying subscribers. This is an incredible spike from just three years ago when the streaming service had only 100,000 paying subscribers. For context, a December 2017 report from market research company CounterPoint estimated that Netflix has managed to get around 300,000-400,000 paid subscribers in India since its launch in the country in January 2016—almost three years ago.
So, what accounts for this mass adoption? In a meeting, Ali Hussein, Eros Now’s chief operating officer, says that a large percentage of the paid subscribers are coming through partnerships Eros Now has struck with telecom providers. Eros usually does 5 to 9-year deals with telecom operators—including each of India’s four leading telcos, Airtel, Jio, Vodafone, and Idea—each of which ensures a minimum guaranteed payout.
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Eros Now is no outlier. Video streaming services are increasingly relying on telecom operators to expand their distribution network and enable users to discover their content. At ALTBalaji, a streaming service run by production house Balaji Telefilms, it’s a similar story. Having only launched in April 2017, it already has 2.1 million paid subscribers. According to its management, about 60-70% of them are through partnerships with operators such as Airtel, Jio, Vodafone and Idea.
Things have been rosy for a while now, but this honeymoon period won’t last forever.
