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TRANSCRIPT
Corporate Presentation
December 2019
PAGE 2
Agenda
Eros Now: #1 SVOD Platform for Indian Content
Eros Today
Financial Overview
PAGE 3
Senior Leadership Team
Kishore Lulla
Group Executive Chairman and CEO
⚫ Pioneer in global Indian film and
entertainment industry
⚫ Cultivated and developed many of
Bollywood’s leading talent over
many years
⚫ Over 35+ years experience in the
media and film industry
⚫ Indian Film Academy Award in 2007
for contribution to Indian Cinema
⚫ Featured in Variety list of top 500
influential business leaders
⚫ Global Citizenship Award 2014 by
the American Jewish Committee
⚫ Executive Board member of the
UCLA school of Theater, Film and
Television
Prem Parameswaran
Executive Director, Group Chief
Financial Officer and President of
North America
⚫ Former Global Head of Media and
Telecommunications Investment
Banking at Jefferies
⚫ Deep experience (23+ years) in
global media & telecom having led
over 300 transactions at Salomon
Bros, Goldman Sachs and
Deutsche Bank
⚫ Boards: Columbia University
Alumni Trustee Nominating
Committee; Program for Financial
Studies Columbia Business School
⚫ Appointed to President Trump’s
Advisory Commission on Asian
Americans and Pacific Islanders
⚫ Columbia University, BA, MBA
(Honors)
Rishika Lulla Singh
Executive Director, Chairman of Eros
Digital
⚫ Chairman of Eros Digital, which
covers all digital initiatives for
Eros
⚫ Creator and Leader of largest
global Indian OTT platform –
Eros Now
⚫ Grown Eros now to 177.7 m
users and 23.5 m paying
subscribers globally in less than
4 years
⚫ Winner of “Youngest
Entrepreneur of the Year” 2016,
featured in Top Women CEOs by
India Today among other awards
⚫ One of ‘40 under 40’ 2018 BW
Businessworld Awards
⚫ UCLA, BA
Mark Carbeck
Chief Corporate and Strategy Officer
⚫ Former Media banker in
Citigroup’s Global Investment
Banking Division covering
European and emerging
market media companies
⚫ Responsible for M&A,
corporate finance, investor
relations and group strategy
⚫ Over 18 years of experience
in corporate finance with
strong experience in the
Media sector
⚫ Involved in over 80
transactions in the global
Media sector
⚫ University of Chicago, BA
Over 80 years of combined industry and management expertise. Supported by senior industry executives
organized by business unit, and over 420 full-time employees operating in India and around the world.
PAGE 4
Culture of innovation and partnerships with leading international talent
Eros Now strategically positioned to capture large digital opportunity in India
Highly attractive market opportunity driven by secular tailwinds
Eros Highlights
Largest content library of Indian language films with over 12,000 digital rights
4
5
3
2
The global leader in Indian film entertainment with #1 box office market share1
Experienced management team with track record of execution6
Eros: Leading From The Front
1
PAGE 6
Source: World Bank, IMF, OECD, Euromonitor International, United Nations, Wall Street Research
1. As per FICCI – EY Report
Massive PopulationFast Growing Economy
India: Leading Economic and Population Growth
Strong Growth in Entertainment MarketIncreasing Annual Disposable Income
7.4%
2.6%
1.3
0.3
India USA
Projected GDP Growth Rate 2019E (2017, Billions)
More Movies Made, and More Tickets Sold in India, Than in
Any Other Country1
$1,559
$1,753
$2,027
2012A 2014A 2016A
(India, USD)
~18% of
World Population
1013
2
32
3$ 14
$ 19
2017A 2020E
TV Film (Theatrical) Digital Media
(USD in bn)
PAGE 7
Eros International Plc
FY 2019 Revenue: $270.1 mm
FY 2019 Adj. EBITDA: $103.8 mm
Adj. EBITDA Margin: 38.4%
Financial Summary
Overview of Eros
Global, Multi-Channel Monetization
177mm+
Registered
Users
23.5 mm+
Subscribers
12,000+
Digital Film
Rights
Largest
Share of
Indian OTT
Film Content
World’s Leading Indian Digital Entertainment Platform
(Subsidiary of Eros International)
3,000+ Film
Library
100,000+Audio
Tracks
27%+ Box Office
Market Share
GlobalDistribution
In-House Production /
Co-Production
Film Acquisition /
Distribution
India’s #1 Film Studio
OTT PlatformFilm Studio
Theatrical
Freemium Pay Per View Subscription
Advertising
Bundled Services
TV Syndication
AD
$$$ $$
PAGE 8
1. Eros PLC delisted from LSE AIM market and commenced trading its ‘A’ ordinary shares on the NYSE
Key Milestones
Pioneer and Innovator in Indian Film with 40+ year track record
2007–
2008
Founded; began
acquiring
international IP
rights for Indian
content
Early adopter of
VHS distribution
1977
1981
Launch of
first digital
Bollywood
TV network
1982–
1998
First Indian media
company to list on
AIM
Adoption of
vertically integrated
mode
SVOD agreement
with
Launch of
Channel
2015
Expanded
distribution
partnerships in
India + Overseas
15.9mn+ Eros now paid
subscribers (Dec-2018)
Eros Now registered
users over 142mn)
Investment from
Reliance Industries
2017
2006
2016
2018
Established
global distribution
network outside
India
Launched Digital
distribution channels:
Listed EIML
on the
Listed Eros
PLC on
Announced Techzone
acquisition
(1)
Eros Now official
marketing launch
(Jul-2015)
5mn+ Paid
subscribers of Eros
Now (Dec-2017)
80mm+ registered
users on Eros Now
(Dec-2017)
2010–
2014
PAGE 9
Film Diversification
Films produced across
languages, genres and
budgets to capture the
larger market share and
maximize cash flows
Film Slate in FY19 and
FY20 is structured with
a focus on diversification
across budgets and
languages
Disciplined Green
Lighting Process &
Risk Sharing Contracts
with Talent
Extensive evaluation of
films before green
lighting by a committee
led by senior
management and
business heads
Pioneered risk sharing
contracts with talent in
Indian film industry
Monetization Across
Global Platforms
International distribution
presence across 50+
countries
Extensive monetisation
of movie assets for 12
months after the
theatrical release date
through multiple
channels
Monetization Across
the lifecycle of a Movie
Proven pre-sales
monetisation model to
mitigate new production
risks
Licensing of television,
music and other
distribution rights prior to
a film’s completion
enhances revenue
predictability
Business Strategy
Effective Risk Mitigation Framework Underlying the Business Strategy
Source: Eros International Plc filings, Management
PAGE 10
New Film
Mix 40–50 Films
Each Year
• Hindi
• Regional
Language
• International
Agreements
Co-Production Acquisition
Premium Content Library
3,000+ Film Library
12,000+ Digital Film Rights
5,000+ into Perpetuity
Digital Premiere Window
100+ Originals over next 18 months
4,400 Short-form Videos
9 IIFA
Awards
1 Filmfare
Award
12 IIFA
Awards
1 IIFA
Award
1 TOIFA
Award
1 TOIFA
Award
1 IIFA
Award
Released
Jan 2018
Deep and rich content library – underpinned by long-term rights to premium content
PAGE 11
Deepest and Richest OTT Library including Largest Box Office Hits
1. Represents % of total estimated Indian OTT library of ErosNow, Hotstar, Amazon Prime Video, Netflix and Zee5.
2. Full list of films in Appendix
Indian Film OTT Library by Platform
Over the last 10 years Eros has been responsible for 36 of the top 110 highest grossing box office films in India2
22%
16%
19%
16%
12%
2%
12%1%
41%
22%
16%
5%16%
31%
3% 7%
20%
39%
11%7%
10%1%
14%
1%
12%4%
2%
18%
32%
19%5%
11%
10%
1%
21%
15%
65%
6%
10%
10%
6% 3%
5%
% of Total OTT Library1
PAGE 12
Reliance Industries: An Industry Defining Partnership
Source: Eros International Plc filings, Press reports
Reliance: Eros Investment Adds to Significant Media & Telecom Presence in India
A Mutually Beneficial Strategic Partnership with India’s Largest Conglomerate to Consolidate Indian Content
$150mmJoint production and
acquisition fund
⚫ Leading LTE mobile network in India
⚫ Over 215mm subscribers and ~48% wired &
wireless broadband market share
⚫ Leading Indian news and entertainment
network
⚫ 60 channels with presence in 27 states and 12
languages
5% Minority Investment
in Eros (Completed
August 2018 at $15.00 /
share)
Symbiotic relationship with Reliance’s Jio to create high efficient unit economics for the Eros Now OTT platform
Reliance’s production expertise to further bolster expansion and development of Eros’ original and short-form content
CapitalDistributionContent Engagement
Investment to dramatically scale Eros’ capabilities in content production, marketing, and distribution
“We are pleased to join hands with Eros, as it will bring further synergies into
our plans, making for a win-win partnership”— Mukesh Ambani, Chairman, Reliance Industries
~78%
JV with
⚫ Leading Indian film production and
distribution studio, with leading OTT platform
⚫ 40-50 films per year, library of 3,000+ films, with
12,000+ digital rights5%
⚫ Leading Indian scripted TV production studio
⚫ Produced over 17,000+ hours of television
content and 34 movies~25%
Eros Now
Distribution
PAGE 13
Extensive Talent Relationships
Select Leading Actors
Select Leading Directors
Amitabh
Bachchan
3 IIFA Awards
4 NFA Awards
Shah Rukh
Khan
5 IIFA Awards
Salman
Khan
1 IIFA Award
2 NFA Awards
Ranveer
Singh
3 IIFA Awards
Deepika
Padukone
4 IIFA Awards
1 NFA Award
Priyanka
Chopra
3 IIFA Awards
1 NFA Award
Anushka
Sharma
3 IIFA Awards
Sanjay Leela
Bhansali
4 IIFA Awards
2 NFA Awards
Anand
L. Rai
1 BIG Award
1 Stardust Award
Kabir
Khan
1 IIFA Award
1 NFA Award
Raj & DK Anurag
Kashyap
2 IIFA Awards
Sujay
Dahake
1 NFA Award
Note: IIFA = International Indian Film Academy. NFA = National Film Awards.
PAGE 14
Eros Presence in China: the World’s Largest Film Market
Shanghai Film Group
Corporation Fudan UniversityChina Film Group
Corporation
High Budget Indian
Film Hit in China
$45mm+China Box Office Gross
(Since Release)
#5Indian Film in China
$47mm+ China Box Office Gross
(In First Four Weeks)
#3Indian Film in China
iQiyi Partnership
1,000+Indian language titles
licensed to streaming
platform iQiyi
500mm+iQiyi Monthly
Active Users
Film Distribution Partnerships
11.6%2016-21E Growth
$10.7 BillionChinese Movie Market1
54,165Total Screens in 2018(2)
80,000+Screens Count by 2021
Chinese
EntertainmentMarket
100+Wasu Media covers
over 100 Cities in
China
Wasu Media
Partnership
125mm+Wasu media
consumers in China
Eros Now: Leading OTT Platform2
PAGE 16
Eros Now: World’s Leading Indian Digital Entertainment Platform
135 Countries incl. India
177 M+ Registered Users
23.5 MPaying Subscribers
12,000+Digital Rights
✓
✓
✓
✓
Our Addressable Market is a Quarter of the World’s Population
6.5M
North America
Target Population
5M
Europe Target
Population
16M
Middle East
Target Population
1.3B
India
Population
423M1
Pakistan + South
East Asia Target
Population
0.8M
Australasia Target
Population
Key Markets
Note:
1. Includes Pakistan, Bangladesh, Malaysia, Bhutan and Nepal
PAGE 17
52%
21%
11% 10% 4%
Jio Airtel Vodafone Idea BSNL
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.
Strong Mobile Internet User GrowthA Young, Technologically Savvy Demographic
India: Compelling Digital Trends, Underpinned by Mobile
Video Dominates Mobile Internet Usage in India A Handful of Telcos Control the Market
27.6
37.9
481
829
2017A 2021E
Median Age Millions2
Video
49%
Web and Other
Data
39%
Streaming Audio
10%
File Sharing
2%
Mobile Internet Usage in India (2017E)
→ 75% by 2021E
27% Internet
Penetration1
87% Internet
Penetration1
Wired & Wireless Broadband Market Share (Aug-2018A)
96% Wireless Subscribers
In December 2017 India Reached 1.2 Billion Mobile Phone Subscribers, with Only 25% Smartphone Penetration
PAGE 18
1. Paying subscribers means any subscriber who has made a valid payment to subscribe to a service that includes the Eros Now service either as part of a bundle or on a standalone basis, either directly or
indirectly through a telecom operator or OEM in any given month be it through a daily, weekly or monthly billing pack, as long as the validity of the pack is for at least one month
Eros Now: #1 SVOD Platform for Indian Content
12,000+Digital Film Rights
5,000+Into Perpetuity
Multi-Channel
Customer AcquisitionWAP APP Web
Rapidly Growing Paid Subscriber Base…
2.1 2.9 3.75.0
7.910.1
13.0
15.9
18.8
21.1
23.5
FY'17A Q1' FY'18A Q2' FY'18A Q3' FY'18A FY'18A Q1' FY'19A Q2' FY'19A Q3' FY'19A Q4' FY'19A Q1' FY'20A Q2' FY'20A
Eros Now Paying Subscribers1
(mm)
Reached FY19 guidance of 16m paying subscribers early - in less than nine months. Now targeting over 50 million
paying subscribers in 3 years.
PAGE 19
Both partnerships will help Eros Now platform enhance and strengthen its
reach globally and drive consumer engagement.
▪ On Sep 19, 2019, Eros announced a
commercial partnership with Microsoft
▪ Transform the content streaming
experience for consumers globally
▪ Help Eros Now develop a new intuitive
online video platform through Microsoft
Azure
▪ Create new interactive offerings for
consumers including video and voice
search for content across multiple
languages
Eros Now: Key Strategic Partnerships to Fuel Growth
▪ On Nov 18, 2019, Eros announced a
collaboration with YouTube Music India
▪ Unique subscription package to bring
extensive Eros Now movie and music
catalogue to YouTube Music consumers
▪ Competitively-priced offering to appeal to
broad mass market in India
▪ YouTube music is currently one of the top
sources for streaming music in India
PAGE 20
Cutting-Edge Eros Now Originals Support User Acquisition
PAGE 21
Image Source: theverge.com
New Distribution Channel – Apple TV+
Announced on March 25, 2019 at the latest Apple Event
PAGE 22
Source: Company Filings, Company Websites
Unique Combination of Expansive Content and Proprietary OTT Platform
Studios OTT Players in India
Co
nte
nt
Original Content
Production ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Leading Library
of Indian Films ✓ ✓ ✓ ✓
Pure-Play Media
Company ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Pla
tfo
rm
Proven OTT
Platform ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Scaled User
Base ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Subscription
Platform ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
(Hotstar)
PAGE 23
Customer Acquisition Strategy –B2B Partnerships
239mm Subs 224mm Subs 346mm Subs 217mm Subs
Source: Eros International Plc filings, Bloomberg. Market data as of January 9, 2019, Subscribers data as of August 2018 - TRAI Press Release No. 107/2018
Note: Vodafone India and !dea Cellular merger pending completion
1. Calculated using latest reported basic shares outstanding multiplied by share price. $ in billions. 2. Vodafone Idea have merged into a single entity but they still operate as different telecom operators
Major Indian Telco Partnerships Underpin Sustainability of Eros Now’s Moat: Distribution capability for Eros Now and access to the largest and linguistically most diverse digital Indian film library for telcos
Parent Company
Market
Capitalization1 na na
Eros Now SVOD
Long Term
Revenue Sharing
Agreements
✓ ✓ ✓ ✓ ✓
Long-Standing
Relationship ✓ ✓ ✓ ✓ ✓
$100bn$53bn
$19bn
Major Indian Telco Partnerships
113mm Subs
(2)
Total Wireless
Subscribers
PAGE 24
Unique Distribution Model –Direct to Consumer and Other
TELCO / ISP WALLETS
International
OEM
(Partner Channel)
STREAMING
OTHER
PAGE 25
Free
Premium
Pricing Strategy Key to Monetization
✓ Immediate access to exclusive new content and full
library
✓Offline viewing; Multi-screen / multi-member
✓Ad-free
✓HDTV
India International
Tier 1 Average Pricing: RS. 50/month (c. $0.80)
Tier 2 Average Pricing: RS. 100/month (c. $1.60)
✓ Immediate access to exclusive new content and full
library
✓Streaming service; No download
✓Ad-free1
2✓Sample user experience – encouraging users to
upgrade to premium services
✓Delay in accessing new content available to
premium subscribers first
Average Pricing: $7.99 / month or $79.99 / year
Sophisticated Free → Premium conversion strategy
Financial Overview
3
PAGE 27
Conservative Balance Sheet
Select Balance Sheet Items Strong Liquidity Profile – Cash Balance
($mm) 30-Sep-19
Total Cash & Cash Equivalents $99.4
Gross Debt(2) $212.0
Net Debt $112.6
Shareholders’ Equity (Book value) $701.5
Total Capitalization (Book value) $913.5
LTM Adj. EBITDA $75.3
Net Debt / LTM Adj. EBITDA 1.50x
Total Debt / Total Capitalization 23.21%
258 315 270 294303 277
Current Debt Facilities
Indebtedness as on
Sep 30, 2019
Senior Convertible Notes 53.8
Retail Bond 61.5
Term Loans 25.6
Working Capital Loans 71.5
Unamortized Cost (0.5)
Gross Debt 212.0
Declining Leverage
3.2x 3.1x
4.3x4.8x
3.5x
2.7x2.3x
2.8x
1.4x 1.6x 1.7x
2.8x2.4x
1.4x 1.5x 1.5x
FY14 FY15 FY16 FY17 FY18 FY19 Q1 FY20 Q2 FY20
Gross Debt / Adj. EBITDA Net Debt / Adj. EBITDA
113 161
120 158
189 145 140
113
145
154 183 112
88 136
81 99
FY14 FY15 FY16 FY17 FY18 FY19 Q1 FY20 Q2 FY20
($mm)
Net Debt Cash Gross Debt
281 221 212
PAGE 28
(1) Paying subscribers means any subscriber who has made a valid payment to subscribe to a service that includes the Eros Now service either as part of a bundle or on a standalone basis, either directly or
indirectly through a telecom operator or OEM in any given month be it through a daily, weekly or monthly billing pack, as long as the validity of the pack is for at least one monthNote: Fiscal year end March-31. $ in
millions.
Growth from Successful Execution of Renewed Strategy
Revenue Growth
Declining Net Debt
158
189
145
FY17 FY18 FY19
($mm)
(1)
253261
270
FY17 FY18 FY19
($mm)
Adj. EBITDA Growth
5683
104
FY17 FY18 FY19
($mm)
Declining Receivable Days
367 355297
FY17 FY18 FY19
(#days)
11% 4%
22%17%
10%
67% 79% 90%
FY17 FY18 FY19
($mm)
High Medium Low
Greater Mix of Medium and Low Budget Movies
Exponential Growth in Eros Now Paid Subscribers
2.1
7.9
18.8
FY17 FY18 FY19
Total Paying Subscribers(1)
(#mm)
PAGE 29
Group Structure
Note: Company structure and holdings as of December 31, 2018.
Eros International Plc
(Isle of Man)PublicFounders Group
31.13% 68.87%
Other International
Subsidiaries
100.0%
Eros Digital Private
Limited (India)
99.9%
39.66%
22.72% 37.62%
Eros Worldwide
FZ-LLC (UAE)
100.0%
Eros Digital Limited
(Isle of Man)
100.0%
Eros International Media
Limited (India)
Other Subsidiaries
NYSE Listed Entity BSE Listed Entity Other subsidiaries
Public
Eros Digital FZ-LLC
(UAE)
100.0%
PAGE 30
This presentation contains “forward-looking statements.” These statements include, among other things, the discussions of our business strategy
and expectations concerning our market position, future operations, margins, profitability, liquidity and capital resources, tax assessment orders and
future capital expenditures. All of our forward-looking statements are subject to risks and uncertainties that may cause actual results to differ
materially from those that we are expecting, including, without limitation, the factors discussed in our most recent Form 20-F filed with the U.S.
Securities and Exchange Commission on July 31, 2018 (the “20-F”), including under the sections captioned “Risk Factors.”
The forward-looking statements contained in this presentation are based on historical performance and management’s current plans, estimates and
expectations in light of information currently available to us and are subject to uncertainty and changes in circumstances. There can be no
assurance that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations
due to changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors, many of which are
beyond our control, as well as the other factors described in the 20-F under the sections captioned “Risk Factors.” Additional factors or events that
could cause our actual results to differ may also emerge from time to time, and it is not possible for us to predict all of them. Should one or more of
these risks or uncertainties materialize, or should any of our assumptions prove to be incorrect, our actual results may vary in material respects
from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of
our forward-looking statements. Any forward-looking statement made by us in this presentation speaks only as of the date on which we make it. We
undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except
as may be required by applicable securities laws.
We use market data and industry forecasts in this presentation. Unless otherwise indicated, statements in this presentation concerning our
industries and the markets in which we operate, including our general expectations, competitive position, business opportunity and market size,
growth and share, are based on publicly available information, periodic industry publications and surveys and reports by market research firms. We
have not independently verified market data and industry forecasts provided by any of these or any other third-party sources referred to in this
presentation, although we believe such market data and industry forecasts included in this presentation are reliable. This information cannot always
be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process
and other limitations and uncertainties inherent in surveys of market size. Management estimates are derived from the information and data referred
to above, as well as our internal research, calculations and assumptions made by us based on our analysis of such information and data and our
knowledge of our industries and markets, which we believe to be reasonable, although they have not been independently verified. While we believe
that the market position information included in this presentation is generally reliable, such information is inherently imprecise. Assumptions,
expectations and estimates of our future performance and the future performance of the industries and markets in which we operate are necessarily
subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the 20-F. These and other factors could
cause results to differ materially from those expressed in the estimates made by the independent parties and by us.
Disclaimer