MUMBAI: The television and movie content companies are combining in India as a way to scale up their businesses. Eros International Media, the leading global company in the Indian film entertainment industry, and Endemol India, producers of some of the most spectacular television content, have entered into a strategic alliance to co-produce three feature films as well as original programming for television.

The deal will allow Endemol to penetrate into the mainstream Bollywood market while Eros gets an opportunity to enter into the television content business. While Endemol is widely known for its versatile TV formats across genres, Eros has a vast film library.

Says Eros International Media Executive Director Jyoti Deshpande, "We both are IP driven companies and Eros having been market leaders in the filmed entertainment arena, while film co-production has its natural synergies, we will also create original high quality compelling television content as digitization takes Indian television into the premium subscription phase. The alliance is founded on the coming together of our respective core competencies in film and television."

As a part of the three film deal, Eros and Endemol will be co-producing an action comedy which will be a remake of a South Indian blockbuster, an original romantic comedy and a comic caper.

The collaboration has earmarked Rs 1 billion to fund these three productions. Targeted at Bollywood enthusiasts across genres, the first film to be made will be a romantic comedy, which will go on floors later this year.

Says Endemol India CEO Deepak Dhar, "After successfully producing content for some of the biggest format shows in the country, we are expanding our portfolio to films and are delighted to partner with leaders in this space. Through this association, we look forward to making a mark on the big screen as well."

Television formats and original programming for television is another area that Eros and Endemol plan to collaborate on. Many of Eros owned filmed Intellectual Property Rights will be considered for adaptation for the television format and vice versa for Endemol owned IP.

The production house, which holds IP rights for various scripted and non-scripted formats, had entered the film production business last year taking the re-make rights for Sujoy Ghosh?s Kahaani.

Endemol India had last year sold 49 per cent stake in the company to Peter Chernin?s CA Media. The strategic investment was raised with the intention of acquiring small production houses and producing films in multiple languages.

Eros recently entered into a deal with HBO for creation of a premium television channel housing English and Hindi movies. "Eros gets associated with two strong brands like HBO and Endemol. But how much of a revenue jump it gets remains to be seen. Endemol, on the other hand, gets a foothold into the Bollywood market. But it is not an exclusive alliance and the confirmed commitment at this stage is for three co-produced movies," says a media analyst.

  MUMBAI: HBO Asia has partnered with Bollywood movie production major Eros International to roll out two premium ad-free channels for the Indian pay-TV market, a move that many in the industry believe can be a game changer if audiences decide to subscribe to expensive content.

The channels, HBO Defined and HBO Hits, are priced together at Rs 100 and will arrive in the Indian digital market in the first quarter of 2013. Both will have a mix of premium Bollywood and Hollywood movies to to make them attractive for Indian audiences.

HBO?s existing formats will also be sourced for development as well as creation of original content for the Indian television market and international distribution.

The two channels will be home to Eros? new Bollywood releases and big-ticket Hollywood titles. Though Eros will not have equity in the venture, it will have economic interests by making its rich movie pipeline available exclusively to the two channels.

?We are not going to invest any fresh capital in this. We are monetizing our movie catalogue and have worked out a revenue share arrangement with HBO by giving them an exclusive window. India has 75 million digital subscribers, going up to 175 million digital subscribers in 2016. The channels 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,? says Eros International executive chairman Kishore Lulla.

The revenue to be shared by both the partners has a two-layered structure. The three movie studios ? Paramount, Warner and Eros ? will take away 16 per cent each of the distributable income (45 per cent of the subscription income collected by the distribution platforms will go to the broadcasters). The balance revenue will then be shared equally between HBO and Eros after taking care of the operating costs.

Eros can make its movies available to other broadcasters after the first screening window is exploited by the two HBO channels. The existing library which Eros has sold to other broadcasters will also fall into the HBO lap after their contractual period expires.

?We will be wholly owning the two channels. We will not only have Eros? Bollywood content. But Eros will drive the Bollywood content which will roughly amount to a ratio of 30 per cent. The balance 70 per cent will be Hollywood content,? says HBO Asia chief executive officer Jonathan Spink.

Spink believes that Indian audiences love both Hollywood and Bollywood content. ?The opportunity to work with Eros is tremendous and together we will aim to deliver a first class cinema experience. We are excited to work with Eros in developing compelling original content for the Indian audience,? he says.

When asked the reason for having hybrid channels, HBO South Asia country manager Shruti Bajpai said that the aim is to expand the genre. ?Most Indians watch Hindi movies and Hollywood. We do not want to segment the audience. Some of our content will be dubbed in Hindi. Going forward, we will look at other languages if it makes sense. These channels are one of a kind. A team from HBO and Eros International will take decisions pertaining to the two channels.?

Bajpai adds that the current HBO channel that is also available on analogue will continue to carry ads. ?Just because the environment is changing, it doesn?t necessarily mean that you shift from one business model to another.? In terms of new movies premiering, she notes that some movies will premiere first on the ad free channels but others will premiere at the same time as HBO.

Cable and direct-to-home (DTH) companies said the cost of the channels will not make it possible to place them as part of a bundle in their channel package tiering. They also admitted that such channels can only lift their low ARPUs (average revenue per user) but the evolution of the market will depend on how many consumers subscribe to them.

HBO Hits

HBO Hits is more broad-based and will focus on action and adventure oriented content. It will also air content in genres like horror, thriller, crime and science fiction.

The action driven block, Prime Cuts, starts at 8 pm. Some of HBO?s Original Series will air on weekends at 1 pm. The series will be available in dual language ? English or Hindi.

Hollywood premieres will take place on Friday at 10 pm.

The channel will also feature Bollywood movies from Eros premiering for the first time on Indian television ? straight after its theatrical run (4-6 weeks after theatrical run).

HBO Defined

HBO Defined will offer a more refined experience similar to what exists in the US. Most of HBO?s Original Series will premiere on this channel shortly after airing in the US. They will air on weekdays at 9 pm.

Sunday nights at 10 pm will be the destination for award winning films as well as HBO?s movies and documentaries. Essentially this channel targets a more discerning viewer and will allow HBO to showcase more of its own content compared to the past.

Premieres will be shown on Saturday nights at 10 pm.

HBO defined will deliver top blockbusters to India first through exclusive output licensing deals with major Hollywood studios.

The channel will also have Bollywood movies from Eros premiering for the first time on Indian television.

The channel is subtitled in English. Selected programmes are also available with dual language options of either English or Hindi.

How the industry perceives the deal

According to Times Television Network CEO, English Entertainment Channels Ajay Trigunayat, success would depend on how much the consumer is willing to pay. ?One has to see how they go about tackling distribution. Will the channels be pushed aggressively? Will there be a lot of marketing? I am also not clear about their TG. A hybrid channel, however, can work if you get it right,? he says.

So will Movies Now follow a similar strategy? ?This is not going to be our strategy. A lot will depend on the titles being brought both by HBO and Eros. Also how much content will be dubbed? I think that the third year is when the revenues will start coming in,? he replies.

Many industry experts feel that subscription is the way forward. Says Maxus business head Jigar Rambhia, "Premium audiences dislike ads. If you offer quality at a slightly extra cost without ads, there are enough people willing to pay for content. Already people record on DVR boxes from DTH service providers like Tata Sky and forward ads when they view the content later on. For the premium international channels, subscription revenue growth is very important."

Asked whether the new channels will cannibalise the existing channel HBO, Rambhia replies in the negative. "People will buy channels genre wise. It is not that you take two channels in a genre and drop one. Also while some people will pay a premium for the new channels, other people may not and be satisfied with the existing HBO channel."

Some HD channels like Discovery World HD carry a very limited amount of ads. But Discovery India VP marketing Rajiv Bakshi says that for the proposition to rely mostly on subscription to work, the content has to be unique. "You cannot have an HD channel with limited ads and expect to be carried by affiliates if the content is not unique. The content cannot be the same as what is being shown on other channels. Selling a channel mainly on the basis of no ads has some advantage for a viewer but in my view that advantage is limited. Discovery World HD is programmed differently from Discovery Channel."