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Balaji Telefilms: SWOT analysis - Views on News from Equitymaster
 
 
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  • Sep 24, 2007

    Balaji Telefilms: SWOT analysis

    In the previous article we had analyzed the company by applying the Michael Porter's model. In this article we shall analyze the company by doing a SWOT analysis.

    Strengths

    • Strong creative team: The company's serials accounted for 79% of the aggregate TRP of the weekday prime time shows featuring in the top 100 Hindi cable and satellite shows. Being the leader in the Hindi mass entertainment space, accounting for more than 40 of the top 100 programmes, some of its popular serials have been on air for years now but still dominate the TRP ratings. Balaji has also been very successful in regional programming.

    • Low overheads: Balaji's budgeting discipline is responsible for a strict control of costs. The budgeting discipline has the following priorities. Each programme is appraised as a profit center and costs are compared with the budgeted target across every episode, artiste, location, and people expenses. Secondly, project life cycle management comprises of a holistic perspective of shooting schedules, scene wise artiste requirements, ongoing shooting progress and final product delivery before shooting commences. Further, Balaji has invested in captive sets, wherein the company has in house sets, which helps in saving the hiring cost, and enhances production quality. Also, the company has reduced its dependence on vendor equipment by investing in sophisticated lights; sound recording equipment resulting in substantial cost savings. Balaji has two state of the art post production suites, which accelerates the conversion of recorded material into episodes and enhances the flexibility to review the produced content with the objective of revision and improvement.

    Weaknesses

    • Over dependence on key personnel: Ekta Kapoor is the creative director of Balaji and is chiefly responsible for the company's success. Although Balaji has a proper structured creative team in place, it still heavily depends on Ekta Kapoor. Balaji Telefilms evinces a lot of interest from aspiring actors who are eager to work with it. Initially the company doesn't have to pay high fees to these aspiring stars. However if any of their actors becomes very popular then high fees have to be paid to them. Besides this the popularity of the serial hinges on the performance of these key actors to some extent and their exit can hurt the TRP's of the show.

    • Difficult to sustain success: Balaji's programmes accounted for 79% of the aggregate TRP of the weekday prime time shows featuring in the top 100 Hindi cable and satellite shows. The tastes of the viewers are fickle and it will be very difficult for Balaji to sustain these high TRP's leave alone improving them. Thus Balaji's impressive track record may prove to be its bane in the future.

    • Lack of scalability: Production of entertainment software is not a very scalable business. The channels that Balaji services are limited in number. Besides, talented directors, technicians, artistes required for expanding operations are not easily available. Most of the other production houses produce only one or two serials at a time finding it very difficult to scale up their level of operations.

    Opportunities

    • Growth opportunities: The penetration of television sets and cable TV is very low in India. It is expected to increase due to the rise in incomes and a decline in the prices of television. Digitalization (CAS and DTH services) will increase cable penetration from 70 m homes in 2006 to around 113 m homes by 2011. The Indian television industry had a market size of US$ 3.24 bn in 2005 and is expected to reach US$ 9.34 bn by 2010, a CAGR of 24%. Advertisement spending in India is directly linked to the growth in GDP. In view of the country's projected GDP growth, the country's TV advertising market is expected to grow from Rs 66 bn in 2006 to Rs 123 bn by 2011. (Source: Balaji Annual report FY 07) All these developments will increase the broadcasters ability to spend on content, which augurs well for content providers like Balaji.

    • Entry of new players in the Hindi General entertainment space: The Hindi general entertainment space will get more competitive with the entry of NDTV, UTV, INX Media. The broadcasters would try to maintain or increase their market share by improving their quality of content. Thus the broadcasters expenditure on content would increase. INX media has requisitioned Balaji to produce a couple of shows for it. Balaji's programming hours would increase as well as its realisations per hour should also continue to increase in the future.

    Threats

    • Plummeting share of mass entertainment: Balaji has produced many successful serials in the mass entertainment genre. However, it has not been very successful in other programme genres such as comedy shows, reality shows, music contests that are getting increasingly popular and are telecast on prime time. In fact, the share of mass entertainment channels in terms of viewership and revenues is reducing (as seen from the table below). If this trend amplifies in the future, then it can adversely affect the profits of Balaji.

    Share of Indian TV viewership and advertising revenues
    (%) 2001 2003 2005
    Channnel genre Viewership Revenues Viewership Revenues Viewership Revenues
    Mass entertainment 54 59 36 47 38 41
    Regional language 35 15 40 18 37 25
    News channels 1 10 3 10 7 12
    Hindi film channels 3 5 4 5 8 6
    English Entertainment 2 4 2 4 2 4
    Sports 2 3 10 13 5 7
    Infotainmnet/Kids 2 2 3 2 2 3
    Music channels 1 2 2 1 1 2
    Total 100 100 100 100 100 100
    Source: TAM and ADEX
    • Competition from other production houses: Balaji is facing increased competition form other production houses such as Creative Eye Limited, UTV Software Communications Limited, Maverick Productions, White Leaf Productions. All these production houses are competing for the same prime time slots on limited number of popular Hindi channels.

     

     

    Equitymaster requests your view! Post a comment on "Balaji Telefilms: SWOT analysis". Click here!

    1 Responses to "Balaji Telefilms: SWOT analysis"

    Ajay Kumar

    Feb 8, 2013

    Thank you for the information. I am very happy by the analysis because it came to my use as an assignment. please keep on doing. Thanking you

    Like 
      
    Equitymaster requests your view! Post a comment on "Balaji Telefilms: SWOT analysis". Click here!
     

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