Sun TV Network expects to get 20 million subscribers for its over-the-top (OTT) platform Sun NXT by year-end, helping revenues as it bolsters its app and signs agreements with an OTT player and a telecom company to expand reach.
The company’s management, in a recent conference call with analysts, said they expect slow advertisement revenue this fiscal because of low market sentiment.
The company said that it has signed a minimum guarantee agreement with an OTT platform for revenue, helping Sun NXT to increase reach to 11 million subscribers in October. The company has also entered into an agreement with a telecom operator to feature the Sun NXT app on its platform.
"We think this number (subscribers) will go to at least 20 million by end of the calendar year. The realisation may not be as high as for which we are getting directly. It will be far lower. But people will start sampling our product and because the telecom operator also is interested in driving up its data consumption, they are also going to promote this in a big way,” said S L Narayanan, group chief financial officer of Sun TV Network.
“Once I'm fairly well entrenched into the smartphone universe, we can certainly look at increasing the ARPUs (average revenue per user) as we go forward," said Narayanan, referring to the company’s total revenue divided by the number of subscribers.
Media reports recently said the company has partnered with Reliance Jio to include the Sun NXT within the telecom company’s streaming app Jio Cinema.
"Whether we would be riding on the back of large international OTT platforms or whether we build our own OTT, I think subscription revenues will be a very, very robust number in the coming quarters," he added. The company will start producing original content for the OTT platform.
Subscription revenue should reach Rs 420 crore to Rs 430 crore quarterly run-rate by the fourth quarter of FY20, with Rs 100 crore digital revenues and 20m OTT subscribers from 11m currently, said analysts from Motilal Oswal Financial Services Ltd. However, the revenue and Profit After Tax estimates has been reduced owing to weak advertisement outlook, lack of new movie releases and others.
The company said demand fell after Diwali and it doesn't expect an improvement till March next year. However, the company is bullish and continue with investments creating high quality content with an eye on higher ratings, which will help it to gain the momentum once the market picks up.
During the quarter ended September 2019, revenue from advertisement was Rs 337 crore. The subscription revenue was up by 17 per cent at Rs 397.31 crore, during the period compared to the same period last year.
Sun NXT has three subscription models: monthly for Rs 50, quarterly of Rs 130 and annual for Rs 485.
