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Sudhanshu Vats, Group CEO & Managing Director

Sudhanshu Vats

Group CEO & Managing Director

Viacom18 Media Pvt. Ltd.

 

Sudhanshu Vats leads Viacom18, which as one of India’s leading entertainment groups releases 14,000 hours of content each year in eight languages across television, streaming, and cinemas. Powered by brands like COLORS, MTV, VOOT and Nickelodeon, Viacom18 has grown over 50x in the last ten years, a record of success that Vats attributes to the company’s bold “challenger mindset.”

Viacom18 chief: opportunities abound in TV, digital

The Category and Company

Where do you see the television and television advertising heading in the next five years?

India is an AND country offering a long runway of both Digital and TV. India has about 300 million homes. Of that 300 million, only about 197 million, or two-thirds, of those homes actually have television. There are roughly 100 million homes that don’t own a television. We know from our research, and anecdotally as well, that one of the first gadgets that come into people’s homes is a television.  And as more people are lifted out of poverty, more homes will have TV.  I see India in the next three to five years reaching 90% household penetration for television. Essentially, we’re talking about 75 million additional homes.

The second interesting thing is that among existing television viewers, the viewership in India remains skewed toward big cities and metros. One of the strong hypotheses we have to explain this is that there is still an issue with consistent 24/7 power supply outside of the big cities. So as household electricity supply improves in India, we will have more viewership from small towns and rural areas.

Together the above will lead to more penetration in terms of the number of homes reached and more viewership, which is the number of hours watched per viewer. And both of these bode very well for television and television advertising in India.  

How do you win loyalty in an age when the viewer has more choice than ever after, especially after the Indian government’s tariff order reshaped the television industry?

It’s absolutely right that the consumer is more in the driver’s seat than ever before. In my opinion, the business is becoming more direct-to-consumer. Media has always been a consumer-focused industry, but the business model has always involved many business-to-business transactions. That will continue to morph and change as television becomes more about transacting directly with the consumer.

One thing we’ve seen with the new regulations is that roughly 35% of Indian viewers are exercising their choice on which channels they want. These are not part of the packages that are sold by the distribution platform, as was always the case in the past. This leads to television companies having to play by the rules of consumer marketing, which is an interesting turn of events. At Viacom18 we have what I think is a very compelling proposition with a great value to the consumer. The price is very affordable; we are offering a mix of entertainment and news at less than a rupee per day.

In this brave new world for Indian television, what’s the brand vision that sets Viacom18 apart?

In terms of what we do, and what are the points of differentiation, it obviously starts with our popular brands, like COLORS and MTV and Nickelodeon. These brands stand for innovation and to consumers they represent disruptive storytelling. That’s our first pillar. The second pillar is a very strong challenger mindset that permeates through every brand we own. We are the youngest major media and entertainment group in the country and the fastest growing one, having grown ~50x over the past ten years. The third pillar is what I would call being socially relevant. I think a lot of our entertainment tries to touch upon socially relevant issues, from child marriage to bonded labor. One of current popular serials, Shakti, touches on how we treat transgenders. In films, look at the women-centric cinema that we’ve done, or the ways that we’ve used entertainment to emphasize the importance of sanitation… We’re also known to do things at a scale and impact that’s unprecedented in the industry – whether that’s in television, or with 3D formats in film.

But the other element that sets us apart is how we play the game. What are the values that we live by? There are five sets of values that are important to us. Our first value “Create Tomorrow” embodies the idea that we give the audience something a little ahead of time. It can’t be too far ahead of time, especially in television, but it’s an ability to pull tomorrow into today that is critical. The second value that we live by is, “Stay Curious, Stay Fearless”. The third value is “Learn with Humility”. This value helps us keep grounded, in an increasingly dynamic world where we need to realize that no one knows everything. This also segways into our fourth value - “Listen Deeply.” And lastly, we are in the business of executing big ideas which defines our final value “Execute with Excellence.” I’d also say that, as we do all of this, we also try to find the fun and joy in it, which is an integral part of the culture that distinguishes us.

Stability and Change

What does “stability” mean for Viacom18 in a disruptive world?

I think when you are in the content business, the business is very dynamic. To expect that things will remain the same is perhaps not prudent. Having said that, one question we have to stay focused on at Viacom18 is, what business are we in? We are in the business of content – we are in the business of storytelling. Our mission is “to take every story to its audience, and every audience to story”. The singular constant is that we are creators and curators of stories.

What is going to change is the screen those stories are on and the pipe and cables through which that content flows and reaches its audience. Today there are more screens than ever: the tv screen, the mobile screen, the notebook or your iPad, and of course the big screen, for films.

We’re a company that’s going to tell stories for all different types of screens. The stability comes from saying that we’ll always be storytellers even while everything else is changing – the screen, the pipe and the platform.

How can you position your brand to win even in times of relative economic slowdown, stagnation, or volatility?

The way to do that is to balance the portfolio. I’m a big proponent of the importance of the portfolio play – building a rich and diverse portfolio is extremely important. Entertainment is an integral part of one’s life – whether happy or sad, the need for entertainment will always be there. This makes us one of the more recession-proof industries.

The other thing that helps during economic slowdown is revenue split balance. For a media and entertainment organization it is essentially about how we can dial down our dependence on advertising revenue while dialing up our share of subscription revenue. Typically, advertising money tends to follow GDP growth and economic movements more closely, thus reflecting the market sentiment and, in turn impacting Advertising revenue closely. Subscription revenue, on the other hand, is a bit more insulated.

New Technologies, New Formats

What does the rise of mobile phone viewing mean for Viacom18?

We are doubling down on digital in a big way, and digital in India primarily reflects mobile phones. And that space is growing very rapidly – close to about 400 million Indians are on the internet, and somewhere between 325 and 350 million are streaming video on their connected devices. This number will only continue to grow as smartphone become more affordable and ubiquitous.

I think India will follow China’s digital market development model. If you were to look at China in 2012, China had about 350 to 400 million internet video users, and the offerings were all free, or what’s known as AVOD: advertising-led video on demand. Today, there are close to about 800 million internet video users in China, and now they have about 15-20% of people paying for content behind paywalls. If I were looking at India today, we’re where China was in 2012 in terms of video users, and most of the content is on AVOD. There are some subscription offerings, but they currently have less than 2 million customers. Three to four years out, I think we’ll have 700 or 800 million internet video users, and as in China we’ll have 15-20% of Indians behind paywalls, so 100 million+ people.

How are you building out streaming options to prepare for this growth?

Here at Viacom18 we already have a very strong AVOD service called Voot. During this year we will also offer segmented and Voot Fremium offerings at an affordable price. In the freemium offering, while you enter free to use Voot, you can to pay a little more to access more content and get a vastly enhanced user experience. Our free AVOD service already has close to 200 million downloads, 60 million monthly users, and over 60,000 hours of content.

The interesting thing we have noticed is the healthy interplay between digital and television in our viewers’ consumption patterns. This trend helps us in leveraging each medium’s strength and experiment to innovate not just content ideas but also dissemination platforms. To give one example, last year we did a love triangle story that was rating reasonably well but not spectacularly on TV, but was showing a lot of traction on Voot, going from 100,000 daily views to 2 million daily views while it was airing on TV. When we pulled this off TV, we decided to put it exclusively on digital, and started getting 6 million views per episode. And it was so successful that we’ve now done a second season.

What role do you see branded content playing in the future television landscape?

The very concept of branded content is constantly evolving. It’s quite a broad term, but to me, the future is about brands being able to be become an integral part of the story. The future is about what you could also call native advertising. It can’t be in-your-face – it has to be content that places brands into the story seamlessly and authentically and in a relevant way. So as we build branded content, we will need to be come together as creators and brand owners to deliver something that’s embedded in the right way.

Ultimately, branded content will help brand owners to grow their brands. Classic advertising, what we call the 30 second spot, is going to come progressively under more pressure, particularly in the digital world. The role that more classic advertising tends to play is to generate awareness and give messages around functionality. If you want to bring elements of emotionality and express your brand more holistically, I think you will want to use more branded content and you will need to find ways for your brand to reach out to their audience in a more interesting, less intrusive way. Overall, the role of branded content will go up, but how we do it has to evolve, and hopefully we can all work together on that.

Understanding Today’s Audience

What’s the best way to connect with Gen Z and young Millennial viewers?

Every 2 years, we host the MTV Youth Marketing Forum where we release the MTV Youth Insights Study – perhaps the country’s most definitive report on the youth of India. While we haven’t published our latest report yet, the singular most dramatically changing aspect in the youth today is the concept of ownership. Gen Z especially doesn’t believe as much in ownership as they do in experience. They are ambitious, entrepreneurial, and want to do things on their own – but at the same time, they want to do things that are relevant to society. The socially relevant portion is continuously getting dialed up: what am I doing, how is it socially relevant, how is it important to community and society around me? It’s important to this generation that brands walk the talk. You have to be authentic and real. That’s important for us in the way that stories play out, in the characters that are drawn.

They are also more attuned to on-demand formats – they want to watch what they want to watch, when they want to watch it. The content will have to be linear (esp. sports, news) and on-demand to cater to them.

What do “mass viewing” and “family viewing” mean in today’s fragmenting media landscape?

Mass viewing and family viewing are still relevant in Indian culture. There are certain genres that lend themselves well to it – comedy is a very good one. We’re also beginning to do some work with our kids programming to encourage co-viewership between young parents and young kids, bringing in more family interactivity. If you look at certain shows like talent shows, singing and dancing challenge shows, or quiz shows, those are also family shows. Some sports, too, lend themselves well for family viewing. Family viewing is still very important in India.

What niche audiences are you thinking the most about?

I think about the late high school and early college segment. That’s a very important demographic. We need to address them, and continue to look at their preferences and the genres they’re interested in. Interactivity; creating an intersection where gaming meets entertainment – that is an interesting space to explore.

I think about early teens as well. Nickelodeon is a very strong brand in India. But how do you address that last stretch of childhood? What works for them? Because they begin to grow out of kids’ animation, but they’re not ready for the other content that we have. It’s a bit of a conundrum that we are trying to resolve.