CEO presentation October 2015
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
CEO presentation October 2015
Investment Highlights
Leadership built on strong fundamentals of content ownership
and global distribution network
1 A global leader in Indian film entertainment with strong box office market share
2 Large unmatched content library of 3000+ Indian language films and music
3 ErosNow has first mover advantage in the significant digital entertainment opportunity
4 Robust India macro landscape with attractive fundamentals & structural upside
5 Strong revenue growth and solid track record of profitability
6 Deep relationships within talent built over four decades in the business
Eros the leading Indian film studio
Content Ownership is Key
•Hindi
New film mix •Regional
Co-production Acquisition Trinity
65-70 films language
Pictures
each year •International
3,000+ film library
(
Pre-sale revenue
at Cinemas is only
the start, recurring
revenue from TV
and digial
We are strategically positioned as a leader in our segments and able to monetise through
channels enhance
the revenue model
multiple channels globally
$
Theatrical TV Syndication Freemium Pay Per View Subscription Advertising Bundled Services
Dominant Box Office Market Share
Last 5 years - Leading Market Share in UK & United States(1)
2% Market Share 2011-15 • 3 or 4 out of Top 10 Box office Indian films are Eros
Eros
4% 1%
International/Ayngaran
films every year
6% UTV Motion Pictures • Last 5 years aggregate market share of 40%
Yash Raj Films
• In 2015 year to date market share of 71%
10% 40% • Note Eros dominance but also fragmentation of rest
Reliance Big of the market
14%
Entertainment PVT. Ltd.
Fox International
23% Viva Ent
2015 - Leading Market Share in UK & United States(1)
Market Share 2015
4%
Strong release slate: Top 3 so far in 2015 1%
2% Eros
International/Ayngaran
8% B4U Network
9%
UTV Motion Pictures
5%
71% Yash Raj Films
Reliance Big
Entertainment PVT. Ltd.
$77 m box office $40 m box office $20 m box office
worldwide worldwide worldwide
(1) Represents market share of all theatrically released Indian language films 2011-2015 (Source: Rentrak)
The Greenlighting Process
THE CO-PRODUCTION MODEL THE GREENLIGHTING FUNNEL
Content
Exclusive
variety
ownership
across
of content Run high, low
genres and Evaluate script,
developed
budgets
screenplay, and medium
genre, director, scenarios based
star cast, music, on historical
budget, release data and pre-
date sales estimates
Less upfront talent
Ability to co-
fee and profit
produce high Renegotiate,
share after greenlight or
quality content
recoupment
hurdles
across languages pass based on
risk analysis
within portfolio
elasticity
Ability to tie up
Leverage
with actor or
powerful, long
director or any
standing
relationships
talent
We won’t greenlight something if
it has to be a blockbuster to recoup
its investment
Disciplined Green-lighting process and the risk-balanced co-production model play a crucial
role in sustained profitability of the film slate
Dynamics - Hollywood vs Bollywood
PARAMETER HOLLYWOOD BOLLYWOOD
Blockbuster Production Budgets $200-$250 million $12-15 million
Print & Advertising Budgets $125-$150 million $2-3 million
Presales de-risking model Yes but don’t cover cost Cover 70-100% of the cost
Domestic vs International share 35% vs 65% 65% vs 35%
Market stage Mature. Hit Driven. Growth. Less hit driven.
Talent costs High upfront – Gross Points Co-production model
Music Industry Separate industry Subset of film industry
Screens to population 125 screens to a million people 7 screens to a million people
No. of tickets sold Over 1.27 billion tickets Over 4.6 billion tickets
Windowing & Holdbacks Prescriptive rigid holdbacks Disruptive windowing (Eros)
India Market share Fragmented Eros dominant (over 40%)
Studios owning OTT platform None of the major studios own Eros owns ErosNow
Hollywood only accounts for 8-11% of Total Indian Box Office mainly driven by large franchise films
Learning from the pros and cons of the Hollywood history and building Bollywood which still has a huge upside
[6]
Two-year forward slate visibility
Over 120 films in various stages of production at any given time.
Film name Star Cast (Director) Co-production partner
Dhishoom Varun Dhawan, John Abraham Sajid Nadiadwala & Grandson
Housefull 3 Akshay Kumar, Jacqueline Fernandes, Rietesh Sajid Nadiadwala & Grandson
Deshmukh
Rock On 2 Farhan Akshat, Shraddha Kapoor, Arjun Excel Entertainment
Rampal
Baar Baar Dekho Siddharth Malhotra, Katrina Kaif Excel Entertainment/ Dharma
Production
Shivaay Ajay Devgn Devgn Films
Hera Pheri 3 Akshay Kumar, Sunil Shetty, Paresh Rawal and Feroz Nadiadwala
others
Welcome to the Jungle Anil Kapoor, Nana Patekar and others Feroz Nadiadwala
Singham 3 (Tamil) Suriya Studio Green
Untitled (Telugu) Pawan Kalyan Pawan Kalyan Creative Works
The above is only a small section of high profile films. It also does not include Trinity films
A dominant part of our annual investment in content goes to fund the forward-looking slate.
Diversity in mix and portfolio and advance visibility to navigate release dates and pre-sales is key.
Strong track record of growth
Delivering Attractive Growth
GROUP REVENUE ($M) GROWTH CAGR
Leading market share of Indian language films in India,
UK and US
284
Broad, well-established global distribution network 20.0%
THEATRICAL
Film releases in 50 countries and 25 languages
Portfolio approach by film, budget, genre and language
Regional language films are a key focus area
66
License film content to content aggregators to reach Cable
and Pay TV subscribers 2007 2015
TELEVISION Long-term value in TV syndication from on-going
SYNDICATION bundling of library content with new film releases
Successful carve out of new window for Erosnow between GROUP EBITDA ($M) GROWTH CAGR
theatrical and television
101
9.6%
ErosNow rapid roll-out and registered users
Music sales from new release film soundtracks and our 49
DIGITAL library catalogue
& ANCILLARY SVOD and VOD offerings in international markets (US,
UK, Asia, etc)
Bundled rights in dubbed markets 2007 2015
Strong financial performance with diversified earnings streams and strong marginsOur markets
Indian Media & Entertainment Market
Media & Entertainment Market Projected to Grow at 14%(1)
($ in billions)
$32 ’14 – ’19 CAGR
$28
$6 19.8%
$25
$5
$3
$21 $5 10.0%
$3
$19 $4
$3 $6
$16
$3 $6
$3 8.0%
$3 $5
$2
$2 $5
$5
$4
$16
$14
$12
$10
$8 $9 15.5%
2014A 2015E 2016E 2017E 2018E 2019E
Television Print Film Other (2)
(1) Source: FICCI-KPMG Report 2015. Rupees converted to USD at 62.19
(2) “Other” includes radio, music, out of home, animation & VFX, gaming and digital advertising segmentsIndia: High Growth and Attractive
Fundamentals
A rapidly growing economy…(1) With significant population expansion…(2)
Projected GDP Growth CAGR (2014 - 2020) (in billions) Population
12.7%
1.6
1.2
8.1%
7.6% 1
4.3% 4.0%
India China Brazil United States United Kingdom
2000 2011 2050
Highly favorable demographics(3) Increasing annual disposable income(4)
Median age
38.9 $1,863
36.7
30.7 $1,744
27
$1,616
$1,559
Russia China Brazil India
2012 2013 2014 2015
(1) IMF World Economic Outlook as of April 2015, Nominal GDP corresponding to fiscal year, current price
(2) FICCI-KPMG 2014 & 2015 Report
(3) CIA World Factbook (5/22/2015)
(4) Euromonitor InternationalRapid Growth for India’s Film
Industry
Theatres seeing consistent YoY revenue growth… (1) …with multiplex rollout fuelling growth… (2)
($ in billions) (in thousands)
Indian Domestic Theatrical Revenue Multiplexes in India
2.2
2.1
1.9
1.8
1.6
1.5
1.4
1.2
2.1 2.3
1.8 2.0
1.5 1.6
2014 2015E 2016E 2017E 2018E 2019E 2011 2012 2013 2014E 2015E 2016E 2017E 2018E
…in a highly underpenetrated market… (3) …with substantial room to increase pricing(4)
Theatre screens per million population ($ in USD) Average Admissions Price
125
15.7
85
9.7
57 61 7.9
7
6
4.7
7 1.6
India Germany UK France US India China Brazil Russia US UK Japan
(1) FICCI-KPMG Report 2015; Rupees converted to USD at 62.19
(2) CRISIL Research
(3) FICCI frames 2014
(4) Magna Global, June 2014, India ticket price represents average ticket price at single screen theatres as of 2013 from company dataGrowing Indian Television Market
Increasing television household penetration…(1) …is expected to fuel growth in the Indian TV industry(2)
TV Household Penetration (%) ($ in billions)
71%
61%
$11
$5
$5
$2
2014 2019E 2014A 2019E
Total # of
Households: 168m 196m Advertisement revenue Subscription revenue
Willingness to pay for content…(1) ...is supported by favorable viewing preferences(1)
(in millions) Indian Pay-TV subscriber base Percentage of viewing time spent
45%
187 70+%
149
18%
11%
7%
2014A 2019E Hindi GEC + Regional Kids + Music News
Movies Channels
(1) Source: FICCI-KPMG Report 2015
(2) Source: FICCI-KPMG Report 2015; Rupees converted to USD at 62.19The explosive digital landscape
Internet penetration is still in early stages(1) Strong mobile internet user growth(1)
(in millions) Mobile Internet Users in India
90% 87%
457
399
53%
342
46%
286
232
173
19%
UK USA Brazil China India 2014E 2015E 2016E 2017E 2018E 2019E
India’s digital ad market to reach c$2.8bn by 2020 Mobile advertising to be largest component
($ in millions) Online advertising spend ($ in millions) 2020 share of online ad spend
$2,767
Mobile, $858 Social Media,
$830
$ 452
Display, $208
FY' 14 FY' 20 Email, $42
Online ad spend as Video, $415
7% 19% Search, $415
% of total ad spend
(1) FICCI KPMG Report 2015, and broker researchLooking at India as United Europe :
Diverse Range of Indian Languages
MAIN LANGUAGE SPOKEN IN INDIA1 POPULATION DENSITY BY REGION1
India/State/Union Population
Territory 2011
INDIA 1,210,193,422
Jammu and Uttar Pradesh 199,581,477
Jammu and
Kashmir Maharashtra 112,372,972
Kashmir
Bihar 103,804,637
Himachal West Bengal 91,347,736
Himachal China China Andhra Pradesh 84,665,533
Pradesh
Pradesh Punjab Madhya Pradesh 72,597,565
Pakistan Punjab Pakistan Arunachal Pradesh
Uttarakhand Uttarakhand
Tamil Nadu 72,138,958
Arunachal Pradesh Rajasthan 68,621,012
Haryana Haryana Sikkim
Sikkim Karnataka 61,130,704
Delhi Nepal Delhi Nepal
Bhutan Bhutan Gujarat 60,383,628
Uttar Assam Nagaland Uttar Assam Nagaland
Rajasthan Rajasthan Orissa 41,947,358
Pradesh Bihar Pradesh Bihar Meghalay
Meghalaya Kerala 33,387,677
Manipur a Manipur
Bangladesh Bangladesh Jharkhand 32,966,238
Tripura Tripura
Jharkhand Jharkhand Assam 31,169,272
West Mizoram West Mizoram
Gujarat Madhya Gujarat Madhya Punjab 27,704,236
Bengal Myanmar Bengal Myanmar
Pradesh Pradesh Chhattisgarh 25,540,196
Chhattisgarh Chhattisgarh Harayana 25,353,081
Kannada
Orissa Orissa NCT of Delhi 16,753,235
Hindi
Maharashtra Daman and Diu Maharashtra Jammu & Kashmir 12,548,926
Daman and Gujarati
Diu Uttarakhand 10,116,752
Marathi
Himachala Pradesh 6,856,509
Konkani
Tripura 3,671,032
Andhra Pradesh Bengali Andhra Pradesh Meghalaya 2,964,007
Oriya
Manipur 2,721,756
Goa Kashmiri Goa
Nagaland 1,980,602
Assamese Goa 1,457,723
Karnataka Pondicherry
Nissi/Daffla Karnataka Pondicherry Arunachal Pradesh 1,382,611
Ao Pondicherry 1,244,464
Tamil
Manipuri Tamil Mizoram 1,091,014
Nadu Khasi & Garo Nadu Chandigarh 1,054,686
Tamil POPULATION Sikkim 607,688
Kerala Kerala 10 000 000 AND BELOW
Malayalam Andaman & Nicobar
10 000 001 – 25 000 000 379,944
Punjabi 25 000 001 – 50 000 000
Islands
Sri Lanka Telegu 50 000 001 – 100 000 000 Dadra & Nagar Haveli 342,853
Mizo 100 000 001 AND ABOVE Daman & Diu 242,911
Lakshadweep 64,429
2010A 2011A 2012A 2013A 2014A CAGR 2015E 2016E 2017E 2018E 2019E Average
GDP per RealGDP2
capita (US$) 1,417 1,503 1,481 1,487 1,631 4.8% growth 6.4% 6.5% 6.6% 6.7% 6.7% 6.6%
Despite the wide range of dialects spoken, more than 40% of the population speaks Hindi, but sizeable markets still exist in other regional markets
Source: World Bank
1. 2011 India Census
2. International Monetary Fund, World Economic Outlook Database, October 2014The Big Regional Opportunity
Language No. of films Top Grossing Film Worldwide Box Typical Typical
released in Office INR & Production Print &
2014 USD Budgets Advertising
Hindi 141 PK 735 cr ($115m) $ 12 -15m $3.0m
Tamil 203 Enthiran 283 cr ($44.2m) $ 10 -12m $0.7m
Telugu 113 Bahubali 600 cr ($94m) $ 8 – 10m $0.5m
Kannada 118 Aptharakshasa 55 cr ($8.6m) $ 4 – 5m $0.2m
Malayalam 151 Drishyam 75 cr ($11.7m) $ 1.5 – 2.5m $0.2m
Marathi 56 Lai Bhari 40 cr ($6.2m) $ 1 – 2m $0.2m
Bengali 68 Chander Pahar 15 cr ($2.3m) $ 0.5 – 1m $0.1m
Punjabi 41 Chaar Sahebzaade 70 cr ($11m) $ 1.5 – 2.5m $0.2m
Others 101
Over 1,000 films are released in The box office numbers suggest these are not Varying Budgets. Low P&A. High
India each year across languages niche films. Contributions are significant Margins and Presales
In the context of shortage of theatres, the Regional strategy adds scale, market share and margins without cannibalizationDemand for Indian Content Outside of
India
1.0M
2.7M
Europe
4.5M 196M SELECTED TARGET
Pakistian’s GROWTH MARKETS
Population²
Germany
Russia
China
Japan
Korea
Taiwan
1.2B Indonesia
India’s
Population of Overseas Indians Population²
Established Distribution Markets
Developing + Recently Opened Markets 0.5M
GLOBAL OPPORTUNITY EXPANDING INTERNATIONAL MARKETS
Global demand for Bollywood content Significant demand in Europe and Southeast Asia
Large South Asian diaspora Arrangement with local distributors to target theatrical, TV
and DVD releases
Opportunities from technology penetration and proliferation
of distribution channels
Attractive and sizeable international market across 50+ countries¹
Source: Eros Corporate Presentation (February 2015), FY 2015 20-F, Ministry of Overseas Indian Affaires
1. The Migration and Remittances Factbook 2011 2. CIA World FactbookThe magic of the “Dubbed” Markets
25 Different genres and stars
Digital or
different have appeal in different
bundled markets
languages
These dubbed markets
are already watching 50
Hollywood films curated different Theatrical
in local language and countries
now its Bollywood’s turn.
There are over 200 different
Dubbed relationships across markets.
Deals can vary from $0.5 m to
Television or $5m. Deals designed to
subtitled encourage local distributors to
open market for Bollywood.
Goal is for international markets to contribute 65-70% of Revenue and EBITDA at superior margins of a much larger pie…
much like Hollywood. [ 19 ]New International markets eg. China
China
$4.8 Billion 34% 23,600 600
Chinese Movie Market 2013-2014 growth Total Screens in 2014 Films produced in 2014
Rest of the world
Global demand for Bollywood
content , especially in Europe and
Southeast Asia
Large South Asian Diaspora
Arrangement with local
distributors across the global to
target theatrical, TV and DVD
releases
Already well established in
Germany, Russia, China, Japan,
Korea, Taiwan, IndonesiaInfluential Partnerships Secured in
China
Shanghai Film
China Film Group Group Fudan
Corporation Corporation University
Co-produce Eros to license
Explore exploitation Fudan’s IP for
motion picture,
of IP rights owned remakes or co-
Tang Xuan Zang,
by both companies productions in India
starring China’s
and develop /
most popular and Eros to gain
produce /
multi-faceted publishing licenses
distribution films in
actor, Huang for strategic film
both India & China
Xiaoming distribution in China
[ 21 ]A digital transformation
The ErosNow Phenomenon
CONTENT, PRODUCT, TECHNOLOGY,
MARKETING, DISTRIBUTION, ANALYTICS,
THE FASTEST GROWING Media
Content
ONLINE BOLLYWOOD
NETWORK OFFERING A
Interactive Technology
Services
UNIQUE ONE-STOP-
SHOP ENTERTAINMENT
TO OVER 30 MILLION
REGISTERED USERS
Affiliate
Programmes Data &
Analytics
WORLDWIDE
User
Acquisition
Advertising
& Brand Partnerships
OWNERSHIP OF CONTENT IS A KEY UNIQUE COMPETITIVE ADVANTAGE
Source: Registered users as of 30th Sep 2015Outlook
3 Pillars of Growth & Profitability
1. SCALE THE FILM SLATE
Scale film slate from 65 films a year to 250 films a year including Hindi
and regional as well as international co-productions and crossover films
2. EXPAND INTO NEW INTERNATIONAL MARKETS
Expand into new markets such as China, Japan, South Korea, South
America, Middle East and Europe to curate Indian films in local
language as well as co-productions with local market leaders
3. MAXIMISE THE FULL POTENTIAL OF THE DIRECT TO
CONSUMER EROSNOW BUSINESS
Garner over 100 million registered users for ErosNow and upsell premium
subscriptions to the large base. Expand to gaming, e-commerce and other
synergistic domains to monetize the large base beyond entertainment
[ 25 ]Important notice and disclaimer These materials contain statements that reflect Eros International PLC’s (the “Company”) beliefs and expectations about the future that constitute “forward – looking statements” as defined under U.S. federal securities laws. In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “forecasts”, “plans”, “prepares”, “projects” “anticipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this presentation and include, but are not limited to, statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies, business development, the markets in which the Company operates, expected changes in the Company’s margins, certain cost or expense items as a percentage of the Company’s revenues, the Company’s relationships with theater operators and industry participants, the Company’s ability to source film content, the completion or release of the Company’s films and the popularity thereof, the Company’s ability to maintain and acquire rights to film content, the Company’s dependence on the Indian box office success of its films, the Company’s ability to recoup box office revenues, the Company’s ability to compete in the Indian film industry, the Company’s ability to protect its intellectual property rights and its ability to respond to technological changes, the Company’s contingent liabilities, general economic and political conditions in India and globally, including fiscal policy and regulatory changes in the Indian film industry and other factors discussed in the Company’s public filings. By their nature, forward-looking statements involve known and unknown risk and uncertainty because they relate to future events and circumstances. Forward-looking statements speak only as of the date they are made and are not guarantees of future performance and the actual results of the Company’s operations, financial condition and liquidity, and the development of the markets and the industry in which the Company operates may differ materially from those described in, or suggested by, the forward-looking statements contained in these materials. The forward-looking statements in this presentation are made only as of the date hereof and the Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of current or future events or otherwise, except as required by law or applicable rules. In addition, even if the results of operations, financial condition and liquidity, and the development of the markets and the industry in which the Company operates are consistent with the forward-looking statements contained in these materials, those results or developments may not be indicative of results or developments in subsequent periods. A number of factors, many of which are beyond the Company's control, could cause results and developments to differ materially from those expressed or implied by the forward-looking statements. The Company has filed a Registration Statement on Form F-1 with the U.S. Securities and Exchange Commission, which includes (under the caption “Risk Factors”) information concerning the factors that could cause the Company’s results to differ materially from those contained in the forward-looking statements. You may obtain a copy of this document by visiting EDGAR on the SEC website at www.sec.gov.
You can also read
