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DTH News : HBO Defined and HBO Hits worth Rs.40
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Aiming Rs 500 cr rev post tie up with HBO Asia: Eros

Eros International Plc has tied up with and HBO Asia to launch two new premium advertising-free movie channels, HBO DEFINED and HBO HITS.

Kishore Lulla, group executive chairman, Eros gives the details of the tie up to CNBC-TV18. Lulla says they are aiming to make Rs 500 crore after tieing up with HBO Asia for advertisement free channels.

Below is the edited transcript of Lulla's interview to CNBC-TV18.

Q: You have tied up with HBO Asia for an ad free channel?

A: Yes, we have tied up with HBO Asia for this new channel.

Q: What does this mean financially for Eros? Are you shelling out money? What will it mean in terms of costs?

A: The beauty of the model is that Eros doesn’t have to shell out even one rupee. We are going to monetise our library and the way our catalogue will hold. So, it’s a revenue share arrangement. HBO Asia has got the biggest library and we are going to launch what HBO is known for premium television at free model and only available on digital subscribers.

So, the way India is at the moment, we have 75 million digital subscribers, going up to 175 million digital subscribers in 2016. This will be available as a premium service. It will be similar to the service in US for the original HBO Series as well as the movie premieres (after theater release) on these two channels.

Q: What kind of subscriber revenues are you expecting to make from this joint venture and how soon? When is it up on air and will you be making any in FY13?

A: We are launching these two channels in the first quarter of 2013. We are looking at anywhere between 2 percent penetration to 25 percent penetration in the next three years. HBO’s penetration level has been always at 25 percent of the addressable home and if they can penetrate to 25 percent of the addressable homes of 176 million in three years, that will be amazing.

The model is simple. The subscription will be north of Rs 100. So, after you share about 50-60 percent with the DTH operator or the distribution cost or the digital cable operator, let’s say the collaboration will get about Rs 40 roughly. Out of Rs 40, it has to be divided between the studios providing the content to Eros. So Eros will get about 35-40 percent net after the operating expenses directly to their bottomline.

Q: So, that’s a 40 percent in terms of margins in that business?

A: Yes. About 60 percent will go to the studios and HBO and 40 percent will come to Eros and there is no capex investment. That is the beauty of the model.

Q: Will this also mean on-demand videos being made available? Are you thinking of something in terms of a value addition?

A: That’s right.Look at how iTunes is charging for the series. You can have those series available straight away within one week of the windowing in the US HBO.

   

will be added on all major DTH.
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