Sun TV Network, one of India’s largest home-grown broadcasting companies, said it will redraw at its investment plans for SUN NXT over the next three months in light of the app’s performance and the company’s cash flow.
The company had, a year ago, announced that it will invest Rs 150 cr over 18 months to produce original content for the app.
The decision to relook the investment plan follows the successful licensing of SUN NXT content to apps like JioCinema, Vodafone Play, Airtel XStream and Tata Sky Binge+ in recent months, as well as a relatively strong performance by Sun TV’s traditional broadcasting business.
“We had indicated 150 cr investment [for SUN NXT programming]..50 cr for the second half of last year, and another 100 cr for this financial year,” pointed out SL Narayanan, Chief Financial Officer for the Sun Group. “When things return to normal, I think this will be much higher, because we are making that kind of money today in our streaming business.”
“We will significantly [ramp] up our investments in OTT,” he added.
Company officials indicated that they were positively surprised by the traction generated by SUN NXT content on mobile phones, smart TVs and Android set-top boxes like Jio Box and Tata Sky Binge+.
The success can be attributed to the fact that Sun Network, with its 25-year history of creating television content and movies in South Indian languages, enjoys a unique position in India’s video-on-demand market.
While there are several companies — such as Zee, Sony, Star and Balaji Telefilms, that can provide content in North Indian languages, there is no other company in India that has a comparable repertoire of VoD-able content like Sun TV. Its content libraries span all four major South Indian languages — Tamil, Telugu, Kannada and Malayalam, something that no other company in India can offer.
As such, any app provider — whether it’s Jio or Airtel or Tata Sky — desirous of offering a pan-India portfolio of content can approach Sun Group as a one-stop-shop for content for all the major South Indian languages.
SUN NXT branded content now reaches 17.5 million unique users, up from about 15.5 mln unique users six months ago. The vast majority of these users come via third party apps, even though the company also has a paid in-house app called SUN NXT.
Interestingly, the Sun TV Group was among the last big content producers to make big investments in the digital or app business. However, what it lacked in speed, it has made up for in dexterity.
Perhaps due to its unique library and market position, SUN NXT has been the most willing, or the most successful, in inking content licensing deals with other app providers, which has helped it reach a large number of people in a short period of time.
Not surprising, therefore, that digital revenue is growing at an annual rate of nearly 100% for the group.
“The reason why we said that we will not follow a strategy of investment ahead of the numbers coming is because we have never done our business like that,” Group CFO Narayanan said in an interaction with investors.
“The intent was always to make it a profitable enterprise and not to splurge money just for the sake of putting out a number.”
The second factor that is driving the company to relook at its investment plan for SUN NXT is the fact that the group has done relatively well in the NTO era, which has favored players with strong, irreplaceable content portfolios.
Narayanan pointed out that not only is SUN NXT producing good revenue, the group too is in a position to make decisive investments and “relook at our entire annual business plan”.
“We are today at a time when this is producing some serious cash and we have now the wherewithal to reinvest, particularly because our cash flows have been exceptionally strong even in this quarter,” he said.
“The company’s financials are in a formidable condition now, and believe me, we will not shy away from making some big ticket investments in beefing up SUN NXT.”