Eros the Leading Indian Film Studio Executive Summary
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Corporate Presentation June 2019 1 Eros the leading Indian film studio Executive Summary Eros: A global leader in Indian film entertainment with #1 box office market share 1 130+ new releases in the last 3 fiscal years 2 Large content library of Indian language films, 2,000+, and music 3 Multi-platform model for content monetization 4 ErosNow(1) strategically positioned to capture large digital opportunity in India 5 Highly attractive market opportunity driven by secular tailwinds 6 Culture of innovation and partnerships with leading international talent Note: (1) ErosNow is parent Company, Eros International Plc’s OTT entertainment service PAGE 2 Unrivalled Library & Film Production Capability New film •Hindi mix 40-50 Co-production Acquisition Own IP Creation •Regional language Films Each •ErosNow Originals, Year Short films 2,000+ film library (1 year after Theatrical Release) PAGE 3 Eros: A Multi-channel monetization Model Leading player in a growing and underpenetrated film market Theatrical Investing in content driven films with high ROI potential Film pre-sales facilitated by long-standing Eros brand, reputation and industry relationships Cable digitisation and rising Pay TV penetration drive market growth and demand for premium content Eros’ film library of over 2,000+ films is a stable source of revenue growth with high margins Television & Others Television rights are often sold before box-office releases Other streams through theatrical and catalogue rights include Music, Cable and broadband syndication, in-flight sales, DVD sales, etc. Exclusive content supplier to the fast growing OTT platform - ErosNow Digital ErosNow, with 18.8 m paying subscribers and over 154.7 m registered users globally, is the leading Indian Film SVOD Platform Expanding aggressively into digital content with ErosNow originals and short films Sale of international distribution and digital rights to the parent company benefits de-risking and cash flows Overseas Pre-determined recovery of significant film production cost through Eros International Plc Parent Company enjoys wide international distribution network across 50 countries Eros International is strategically positioned to monetise film content through multiple channels globally $$$ $ AD $ Theatrical TV Syndication Freemium Pay Per View Subscription Advertising Bundled Services PAGE 4 Deep and Longstanding Talent Relationships Select Leading Actors Amitabh Shah Rukh Salman Ranveer Deepika Priyanka Anushka Bachchan Khan Khan Singh Padukone Chopra Sharma 3 IIFA Awards 5 IIFA Awards 1 IIFA Award 3 IIFA Awards 4 IIFA Awards 3 IIFA Awards 3 IIFA Awards 4 NFA Awards 2 NFA Awards 1 NFA Award 1 NFA Award Select Leading Directors Sanjay Leela Anand Kabir Raj & DK Anurag Sujay Bhansali L. Rai Khan Kashyap Dahake 4 IIFA Awards 1 BIG Award 1 IIFA Award 2 IIFA Awards 1 NFA Award 2 NFA Awards 1 Stardust Award 1 NFA Award Note: IIFA = International Indian Film Academy. NFA = National Film Awards. PAGE 5 Industry defining partnership with Reliance Industries ⚫ Eros International Media and Reliance Industries Ltd (“RIL”),India’s largest private A Mutually Beneficial Strategic Partnership with India’s sector company, announced the creation of Largest Conglomerate to Consolidate Indian Content a joint film fund to co-produce and consolidate Indian content Content Distribution Capital Engagement o The new partnership will look to invest Rs 1,000 crore ($150mn) in Investment to dramatically scale Eros’ capabilities in content the near-term to produce and production, marketing, and distribution acquire Indian films and digital originals across all languages Symbiotic relationship with Reliance’s Jio to create high efficient unit economics for the ErosNow OTT platform ⚫ RIL, as per an agreement in February 2018, has acquired 5% equity stake in our Reliance’s production expertise to further bolster expansion and parent company, Eros International PLC at development of Eros’ original and short form content a price of $ 15 per share (18% premium to the then close price) PAGE 6 Successful Penetration into China, expansion into new Geographies Indo-Chinese Co-Production Bajrangi Bhaijaan in China Indo-Turkish Co-Productions 2 films created and produce by in-house, will be co-produced with a Chinese Studio • First for an Indian studio • Set in India and China • Shot in both languages Eros’ Influential Partnership in China Partnerships with three major Chinese state-owned film and entertainment companies to promote, co-produce and distribute Indo-Russian Joint Content Distribution Sino-Indian films across all platforms in India and China Central Partnership and Eros Int’l to distribute and promote Indian and Russian content across multiple platforms in both countries PAGE 7 2 Our markets India: Fast Growing Film and Television Market Indian Film and Television Market Projected to Grow at 10% (Rs. In Billions) ’17 – ’21E CAGR 1,191 10% 236 915 11% 816 175 156 9% 955 740 660 2017A 2018A 2021E TV Filmed Entertainment (1) Source: FICCI – EY Report. PAGE 9 India: Leading Economic and Population Growth Fast growing economy Massive Population Projected GDP Growth CAGR (2017A-2021E) (2017, in billions) ~18% of world 13.1% population 1.3 3.3% 0.3 India US India US Highly favorable demographics Increasing annual consumer expenditure Median age (Rs. billion) 39.3 37.1 31.6 101,146 90,016 27.6 80,266 83,858 71,324 74,967 Russia China Brazil India 2012 2013 2014 2015 2016 2017 Over the next 15 years India is expected to be the largest contributor of global GDP growth World Bank, IMF, OECD, CIA World Factbook, Euromonitor International, United Nations, Wall Street Research 1. Number of Eros Now subscriptions purchasable in India for each Netflix subscription purchasable in the India. Services’ costs based on Rs.500 Netflix Standard monthly subscription plan for India and Rs. 50 Eros Now monthly subscription plan for India, respectively PAGE 10 Rapid Growth for India’s Film Industry More Movies Made, and More Tickets Sold in India Than India - a highly underpenetrated market Any Other Country 2,500 (2016A1) Theatre screens per million population 125 2,000 India 1,500 1,000 60 Produced Japan 40 China USA 500 France Number of MoviesNumber UK 16 South Korea 8 10 0 0 500 1,000 1,500 2,000 2,500 India Brazil China South UK US Annual Tickets Sold (mm) Korea Multiplex rollout fueling growth …and substantial room to increase pricing Number of Multiplexes in India (Rs.) Average Admissions Price 1,028 2,750 2,100 635 458 517 1,500 393 1,225 308 925 190 India China Brazil Russia US UK Japan 2009 2011 2013 2015 2017 Eros Plc data, UNESCO Institute for statistics, Film Federation of India, Wall street research - Size of circles scaled to represent Number of Movies Produced x Annual Tickets Sold, FICCI-E&Y 2018 Report, India ticket price represents average ticket price at two leading multiplex chains as on 2017. PAGE 11 Growing Indian Television Market Increasing television household penetration…(1) …is Expected to Fuel Growth in the Indian TV Industry (1) (Rs in billion) Paid C&S TV Household Penetration (%) 862 84% 81% 594 494 351 243 368 Total # of 2016A 2021P 2016A 2020E TV 175m 200m Households: Advertising Revenue Subscription Revenue Willingness to pay for content…(1) ...is Supported by Favorable Viewing Preferences(1) (in millions) Paid C&S TV Household Percentage of viewing time spent 45% 42% 36% 70+% 22% 164 12% 11% 147 7% 7% 2016A 2021P Hindi GEC + Regional GEC + Kids + Music News Movies Movies 2014 2015 1) Source: FICCI Report 2017, 2018 PAGE 12 India: Compelling Digital Trends, Underpinned by Mobile In December 2017 India Reached 1.2 Billion Mobile Phone Subscribers, with Only 25% Smartphone Penetration A Young, Technologically Savvy Demographic Strong Mobile Internet User Growth 2 27% Internet Median Age 87% Internet Millions Penetration1 Penetration1 37.9 829 481 27.6 2017A 2021E Video Dominates Mobile Internet Usage in India A Handful of Telcos Control the Market Mobile Internet Usage in India (2017E) Wired & Wireless Broadband Market Share (Jun-2018A) File Sharing 95% Wireless Subscribers Streaming Audio 2% 48% 10% 21% 14% Video 10% → 75% by 2021E 5% 49% Web and Other Data Jio Airtel Vodafone Idea BSNL 39% Source: FICCI Report, CIA World Factbook, Telecom Regulatory Authority of India, Ericsson Mobility Report, Statista. Note: Vodafone India and Idea Cellular merger pending. 1. 2016A. 2. Includes non-smartphone mobile internet users. PAGE 13 The Big Regional Opportunity Language No. of films Top Grossing Worldwide Box Typical Typical released in Film Office INR & Production Print & 2017 USD Budgets Advertising Hindi 120 Dangal 1,870 cr ($291m) $ 12 -15m $3.0m Tamil 198 Enthiran 283 cr ($44.2m) $ 10 -12m $0.7m Telugu 156 Baahubali 2 1,560 cr ($238m) $ 8 – 10m $0.5m Kannada 183 Aptharakshasa 55 cr ($8.6m) $ 4 – 5m $0.2m Malayalam 132 Drishyam 75 cr ($11.7m) $ 1.5 – 2.5m $0.2m Marathi 98 Sairat 110 cr ($16.7m) $ 1 – 2m $0.2m Bengali 36 Chander Pahar 15 cr ($2.3m) $ 0.5 – 1m $0.1m Punjabi 40 Chaar Sahebzaade 70 cr ($11m) $ 1.5 – 2.5m $0.2m Over 1,000 films are released in The box office numbers suggest these are Varying Budgets. Low P&A. High India each year across languages not niche films. Contributions are significant Margins and Presales In the context of shortage of theatres, the Regional strategy adds scale, market share and margins without cannibalization Source: BookMyShow, KoiMoi, Market reports PAGE 14 3 A digital opportunity ErosNow(1) : #1 SVOD Platform for Indian Content 12,000+ Films Rights 5,000+ Into Perpetuity Rapidly Growing Paid Subscriber Base… 18.8 Eros now Paying Subscribers2 15.9 (mm) 13.0 10.1 7.9 5.0 3.7 2.1 2.9 FY'17A Q1' FY'18A Q2' FY'18A Q3' FY'18A FY'18A Q1' FY'19A Q2' FY'19A Q3' FY'19A FY'19A Reached FY19 guidance of 16m paying subscribers in less than nine months.