Balaji Telefilms 2.0: From chasing platform dreams to rewriting content playbook

New Delhi: From being one of the first movers in India’s OTT landscape to now strategically scaling back on platform ambitions, Balaji Telefilms is in the middle of a reinvention. The media company, while recalibrating, is eyeing to compensate for the dips of the traditional space in the dynamic digital world. 

Balaji Telefilms is shifting gears to focus on what it believes it does best. Content Production. A media company that has seen the Indian media landscape from possibly every vantage point is, today, choosing pragmatism over platform, production over sales, and internal rate of returns over top-line obsession. 

The burden of being too early? 

Alt Balaji (now ALTT) launched at a time when the content consumption on OTT in India was already on the rise and was yet to experience the sharp uptick due to the COVID-19 pandemic. 

Starting with what Sanjay Dwivedi, Group CEO and Group CFO, Balaji Telefilms said, “show zero,” Alt Balaji gradually reached more than 100 shows on the platform. 

“During COVID, we had roughly 2.3 million paid subscribers,” Dwivedi recollected. “That is the number we had touched, post which, everything kept on declining.” 

During its decline, ALTT was burning a hole in the pockets of Balaji Telefilms, to the tune of Rs 125 to Rs 145 crore per year. An unsustainable cash burn and a mismatch between content economics and consumer behaviour brought Balaji Telefilms to an inflection point. 

They timely realised that continuing on this path would mean requiring more funds. Hence, rather than going rogue against the biggies of the content industry, the media company has scaled down on ALTT. 

“The strategy is not to make it zero. We will still be relevant to the Indian audience, albeit not at the same scale or size as those larger platforms," Dwivedi told BestMediaInfo.com.

The pivot: Content first, platform later

Balaji Telefilms claims not to have exited the OTT race. While asserting the presence of the company in the OTT space, Nitin Burman, Chief Revenue Officer, Balaji Telefilms, said, “We are still very much in it. But of course, we are not competing with the big players right now, given the deep pockets they have.”  

The leadership at Balaji became cognizant of the fact that OTT requires consistent investment month after month to build content. 

“So, we’ve adopted a more cautious approach. We’re producing only as much content as we are confident will generate revenue and help us reach at least a breakeven point,” Burman added.

Balaji Telefilms started taking very calculated risks. This is evident in the launch of ‘Kutingg.’ When Balaji ventured into the short-form content space with ‘Kutingg,’ under the umbrella of ALTT, it did not create a separate budget for the platform. 

“We reallocated 50% of ALTT’s content budget to start producing micro-dramas. This ensured we did not incur any additional expenditure,” Burman said. This is the reason, he added, that it is still kept under the ALTT platform.

Initially, 15-20% of the total cost for ALTT was allocated to Kutingg. Balaji Telefilms started editing their existing shows on ALTT into vertical formats, along with producing some new ones. Now, the company claims to launch one show, with 25 to 50 episodes, every week. 

Discussing the future of Kutingg, Burman said, “As of now, the tech remains the same because 'Kutingg' is part of the AlTT app. However, it has been structured in a way that allows us to evaluate its performance over the first three to six months. If it performs well enough during this period and shows potential to stand on its own, we may consider launching it as an independent app altogether. 

The Netflix deal

At the heart of Balaji’s renewed confidence is its strategic content partnership with Netflix. While the finer details are bound by contract to remain confidential, Dwivedi confirmed that it is a long-term, multi-format agreement. He also mentioned that the agreement even involves an IP-led model. 

“I can’t reveal much, but what I can say is that this is a long-term deal. It’s not just about one show. Typically, you pitch a show, they commission it, and then things move forward from there. But this arrangement goes beyond that. 

It is a multi-show agreement, which also includes films. It even involves an IP-led model where we retain intellectual property rights and the content gets commissioned seasonally,” Dwivedi elaborated. 

Burman chimed in, saying, “This is very clearly a multi-format and long-term deal between Balaji and Netflix. We aim to create both limited series and movies for their platform. It’s a strategic tie-up, not a one-off arrangement, where we are planning multiple projects to be released on Netflix.” 

While these projects will primarily be in Hindi, there is “openness” to regional content as well. Speaking on the matter, Burman told BestMediaInfo that they are keen on exploring other languages too. 

“These projects will primarily be in Hindi, targeting the Hindi-speaking markets (HSMs), but there’s openness to regional content as well. Given our legacy and stronghold in the Hindi market, the initial slate will focus on Hindi-language shows. 

However, we are definitely open to exploring other languages too. And with Netflix’s global reach and perspective, regional stories also have the potential to resonate widely,” said Burman. 

Not chasing vanity metrics anymore

The ‘Balaji 2.0’ is less interested in scale and sustainability. Key focus areas now are IP ownership, pre-sales, and controlled production for OTT platforms. 

When asked if IP creation is more profitable than outright sales, Dwivedi said, “Absolutely. And we will continue to build our strategy around it.” 

Currently, Balaji Telefilms is sitting on roughly “Rs 165 crores and is sufficiently funded.” The C-suite made it clear that the focus is more on return on capital than just driving the top-line growth. The company also boasts of a Rs 350 crore order book for digital content.  

In close to three years, Balaji Telefilms wants to increase its production rate to six films a year, from the current three to four films. “Why we are bullish on this segment is because we do pre-sales. So we do not risk the capital,” Dwivedi said. 

The leadership at Balaji Telefilms expects a large portion of the revenue will come from the content deal with broadcast companies and/or OTT platforms. 

Offering a candid view about the current landscape, the Balaji Telefilms CEO said, “Even if an Indian production house has its own app, it is unlikely to match the scale and size of what broadcasters or global platforms like Netflix can achieve.”

YouTube is yet another notable element of Balaji’s strategy

What Balaji observed is that in India, most of the YouTube channels cater primarily to the urban Gen Z audience, but their offerings were limited to five to eight episodes. “However, longer TV-like content (50 to 60 episodes) was only being served by Pakistani or Turkish dramas,” Burman said.

After the geopolitical tensions arose between India and Pakistan, and following the void created by the ban on Pakistani channels, Balaji sensed an opportunity. “We realised this is the place we also need to be in,” Burman said.

Their YouTube show Pyar Ki Rahein, launched on Valentine’s Day, has already garnered over 200 million views across 70 episodes, growing the channel to 1 million subscribers organically.

“This is not short-format snackable Gen Z content. It is a long-format family drama - what we’ve always done well. And the audience is responding,” Burman clarified.

TV is under stress, but the content will stay

With all said and done, Balaji still makes most of its money through TV. Dwivedi, laying down the numbers, conveyed that out of the Rs 650 crore revenue, on a consolidated basis, clocked out by Balaji Telefilms in FY24, Rs 350 crore was still coming out from television, with Rs 200 crore from motion pictures, and the remaining from their digital ventures and verticals. 

Dwivedi declared that motion pictures are lined up to become the dominant revenue segment for Balaji Telefilms, followed by digital, driven by the “long deals” the media company has with the broadcast and OTT players. 

Television, which is currently the money-minting machine for Balaji, will be the third component going forward. Despite being one of India’s largest TV content producers by volume, clocking 800 to 1,000 hours annually, Balaji is under no illusions about the tumbling television business. 

“TV as a business is under stress right now. Our yields are down 28%, compared to pre-COVID levels,” said Dwivedi. While TV is the backbone of Balaji Telefilms, the leadership is betting on motion pictures and digital strategy as their main drivers of growth. 

“TV will remain a significant part, but motion pictures and digital are where we think it is much easier to scale the IP-led business.

What Dwivedi pointed out as most glaring is the decline of investment in content on television. He explained, “Whenever such a slowdown happens in any industry, people go back and see what costs they need to cut down. In television, the first cost-cutting happens in the content.” 

According to Dwivedi, if one wants to bring the audience back to television, they “need to invest heavily in content,” calling it the only selling point for television. 

The second aspect that the television is missing is the partnership model, Dwivedi said. Elaborating on the subject, he said, “When content is brewing, somebody has to invest in that. It is a partnership model that is applicable globally but is missing in India.” 

He further said, “There needs to be belief in the content house and a genuine partnership, where the entire value chain benefits. Right now, when a show becomes a hit, the broadcaster reaps all the rewards, and the production house sees little to no upside. 

But when a show fails, it's the production house that gets served a termination notice. That’s an unfair dynamic - extremes on both ends.” 

Sustaining Balaji Telefilms

If there is one thread running through Balaji’s reset, it is clarity of purpose. They are storytellers, not tech companies. And their future lies in building content that is sustainable, both creatively and financially.

“Whether it's Balaji or anybody else, a content house will remain the beneficiary of this boom, whether it's digital or OTT-led broadcast models,” Dwivedi said. But owning the platform? That might not be viable at scale.

In that context, the new Balaji is perhaps more focused. Leaner, sharper, and a little wiser from its bruises.