Eros Now's paid subscribers grow 28.7% to 13 million in Q2FY19

Eros Now, the OTT service by Eros International Plc, is boasting on 13 million paid subscribers worldwide in the second quarter of FY19, an increase of 251.4% year-over-year and 28.7% since last quarter. The company is reiterating its previous guidance of 16 million paid subscribers by the fiscal year end 2019.

As of September 30, 2018, Eros Now exceeded 128 million registered users worldwide across APP, WAP and Web, Eros International claimed announcing the Q2FY19 results. The company reported a gross revenue of $72.2 million, compared to $65.4 million in Q2 FY18, which represents a year-over-year increase of 10.4%.

The OTT player premiered 16 films in Q2FY19 as well as 380 original short-form content pieces, including critically acclaimed short films. The platform premiered two original series, Side Hero and Smoke, to critical and commercial success.

Eros Now announced a ground-breaking partnership with iQiyi, the largest Chinese online video streaming service. With this partnership, Eros Now becomes the first South Asian OTT player to penetrate the Chinese digital space.

Talking about the performance, Kishore Lulla, Eros’ Group Executive Chairman and Chief Executive Officer, said, “We are pleased to announce another strong performance this quarter, highlighted by sequential revenue growth, improving margins and a solid capital structure. We also delivered strong growth at Eros Now, crossing 13 million paying subscribers, a sequential increase of 28.7%, and now have over 128 million registered users as of September 30, 2018. The media market in India is robust and growing, driven by rapid technological and socio-economic changes. We benefit from all areas of this growth, from ticket sales, digital downloads and advertising to pay television. While digital continues to be the main driver of our future growth, it’s important to remember that the television market in India is still growing at a strong pace — forecasted at c. 15% for the next few years, which provides strong tailwinds to our TV syndication business.

Being part of the largest independent Indian film studio with the biggest content library, we are well positioned to establish and maintain our role as a leader in the Indian OTT space given our brand-name, know-how and long-term relationships.  As the most established Indian film studio, we also have one of the deepest and richest content libraries. Over the last 10 years, Eros has been responsible for 36 out of the top 110 highest grossing Indian films at the box office. We are fortunate to have complete control over the content we create and benefit from the fact that our in-house content gives us the ability to create strong franchises, support and nurture new talent and ultimately give consumers the best possible entertainment choices. Eros Now pioneered online video streaming in India and we believe there is significant opportunity ahead as consumers continue to discover and consume entertainment they enjoy and we want to be there to help them on their journey.”

Rishika Lulla, Chief Executive Officer, Eros Digital, commented, “Our latest results are a reflection of the Eros promise to deliver viewers a premium entertainment offering at the right price around the world. The recent launch of Eros Now originals, Smoke and Side Hero, is a testament to our strategy of delivering quality cinematic narratives to audiences on digital. We are humbled and excited by the audience appreciation and adoption of the originals, which have received several accolades and important ‘firsts’.”

Side Hero was the first Indian original series to generate 10 million views of a trailer and has the highest IMDB ratings of any original in India, while Smoke was the only original from India to be screened at Mipcom 2018 in Cannes earlier this year.

“We remain focused on the OTT consumer and have an exciting pipeline of cutting-edge original content lined up for the rest of the year. This is in line with the Eros strategy of developing its own intellectual property and concentrating on content-driven films rather than high budget star-driven films. According to our proprietary data, overall platform engagement continues to increase. Long-form content continues to deliver the highest levels of engagement with the majority of Eros Now films being viewed in less than two sessions. An ‘engaged’ viewer also returns at least three times a week, spending a minimum of 40 minutes on the platform.

“During the second quarter alone, we’ve seen a 25% increase in the number of sessions per subscriber. Our registered user base of over 128 million people gives us a unique opportunity to both monitor and learn from viewing habits as well as the ability to convert a portion of this base into monthly paying subscribers. Our large registered user base also represents a new revenue opportunity for us in the form of online advertising. We look forward to rolling out over 100 originals over the next 18 months in multiple languages, further bringing the Indian entertainment ecosystem together,” Lulla said.

Prem Parameswaran, Group Chief Financial Officer and President of North America, said, “I am pleased with our second quarter performance as the business delivered strong EBITDA growth and margin expansion, continued balance sheet strength and exceptional Eros Now paying subscriber additions, outperforming market expectations. Our strong operating performance this quarter, as well as the previously announced investment from Reliance Industries, has helped reduce our net debt position to $162.1 million. This represents a comfortable net debt leverage ratio of 1.58x. In addition, our trade accounts receivable balance has reduced by $26.9 million and now stands at $198.0 million. Our strong operating performance coupled with our conservative balance sheet has us poised for growth in the coming fiscal years.

“As our business evolves, the majority of our future EBITDA will come from Eros Now. We, therefore, expect our adjusted EBITDA margins to continue to improve and target 35-40% margins for fiscal year 2020. Having reached over 13.0 million paying subscribers in Eros Now through the end of the second quarter, we are confident we can continue to grow our subscriber base over the next few years, especially given our premium content offering coupled with the large Indian and global market opportunities. To that end, we have planned approximately $750 million in content investments over the next three years, which we expect to generate a meaningful ROI for our business.

“On the strategic front, we continue to look to identify ways to simplify our corporate and operating structure, with a view towards providing a clear and accessible investment proposition for investors. To that end, our internal senior management team has formed an internal committee to explore all potential options. We look forward to giving an update on our progress over the coming quarters,” Parameswaran said.

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