Sun NXT, the over-the-top (OTT) platform run by Sun TV, will not enter into a ”bidding game” as the management feels the platform can use “existing content and still deliver reasonable results.” SL Narayanan, group CFO of Sun TV Network on Friday said that the company has “done a decent job instead of just frittering away resources on opportunities which are suboptimal.” The group CFO of Sun TV said “it’s very easy” for the company to enter into a “bidding game and have what’s called the winner’s curse.”
Sun NXT “Cherry Picking” Movies Until Normalcy Returns
Sun TV, one of the largest broadcasters in India operating satellite TV channels across multiple Indian languages on Friday announced its fourth quarter results with the company recording 6% increase in revenues. The company said that the revenues for the quarter ended March 31, 2021, touched Rs 781.99 crores with Sun TV recording Rs 428.12 crores as subscription revenues in the quarter. In the previous year quarter, Sun TV said that its subscription revenues were at Rs 398.79 crores, translating to a 7% year-over-year (YoY) increase.
Mahesh Kumar, managing director at Sun TV said in the earnings call that the streaming platform recorded a 40% to 50% increase in monthly active users (MAU) over the past six months. Further, the managing director at Sun TV also highlighted that the company released “three small time movies” directly on Sun NXT before releasing it on television.
“That has been pretty much the very good factor for us, so that's a model which probably we might also recreate over a period of time,” Kumar said in the fourth quarter earnings call.
Narayanan said that the Sun NXT platform is currently “riding on the content which has been created by Sun TV” but that the company is “creating web series originals.”
“It's perhaps not the wisest thing to bid outrageous sums of money because we know some of our competitors who bought the rights exclusively for a streaming release have actually burnt their fingers,” Narayanan said.
Crucially, Narayanan said “its best” for the company to enter into the “bidding game” for acquiring streaming rights for Sun NXT “when a state of normalcy returns.” However, the group CFO of Sun TV said that the company “in the meantime” would do “some cherry picking.”
In the past, Narayanan said that the company had “walked away” from the “bidding games” when Sun TV “found that the asking price was too much.”
“Every content investment has to answer certain basic financial criteria,” Narayanan said. “It's very easy to put some outrageous sums of money and win the bidding for satellite rights and streaming rights, but at the end of the day, if it doesn't make any meaningful financial return, it's money down the drain.”
Additionally, Narayanan said that the company is in talks with “very reputed international producers” and that the “whole industry is going to sit up and take notice” when Sun TV releases the shows.
“We're seeing that every time we put a new movie on Sun NXT, it drives up subscriptions immediately,” Narayanan said. “At the current stage you know, all our focus is on movies, but we are in dialogue with a lot of potential producers for web series originals.”
Motilal Oswal Financial Services, an Indian diversified financial services firm on Saturday said in a report that the Sun NXT subscriptions is likely to increase in the current financial year.
“However, the most concerning factor is the delayed OTT investment – besides monetizing the existing library, the company has not made any material inroads in the space,” Motilal Oswal said in its report. “We see the delayed investment in OTT as a key risk that could dilute its competitive position.”
Sun Direct “Cannot Randomly Increase Price” of Its Packs
Similar sentiments were also shared by ICICI Direct, a financial product distributor on Saturday, with the firm highlighting that the investment in Sun NXT “needs to pick up” for the platform “to remain competitive.”
“There had been disconnect and delays in intent vs. execution on digital several times,” Dolat Capital, a financial firm engaged in the trading markets on Saturday, said in its report. “Delivery on digital would be critical.”
Meanwhile, Narayanan said that the company is set to witness “double digit growth” in subscription revenues in the current financial year with Kumar highlighting that the growth is largely aided by the digitalisation of users. Kumar also said that the company has witnessed “some very decent growth” in the Direct-to-Home (DTH) numbers in the southern regions of the country.
Crucially, Kumar said that the increase in the prices of the Sun Direct packs is due to the “normal growth” and that the DTH provider is “governed by the regulatory framework.”
“So, we just cannot randomly increase [the] price,” Kumar said.