DUBAI: Eros International, an Indian movie production and distribution company, was born in 1977. Today, it’s more than just that thanks, in part, to its OTT platform Eros Now, which leads the market in terms of engagement with 68 percent of its users indicating that they watch content on the platform daily, according to a 2019 study.
On the other side of the world, STX Entertainment was founded in 2004 by film producer Robert Simonds and businessman Bill McGlashan. The entertainment company, which produces mid-budget movies with big stars, has made inroads into China and Europe with investors including PCCW, Tencent, and Liberty Global.
In 2020, the two major companies combined forces to form ErosSTX, led by Kishore Lulla as executive co-chairman and Simonds as co-chairman and CEO. Arab News spoke to Simonds about the merger, future plans in India, the US, and potentially the Middle East, and the impact of the pandemic on the film and streaming industry.
Talk to us about the geographic reach of the new company and the distribution model in each.
We distribute our films in theaters in about 150 different countries. We run the international division out of London, and we customize the distribution depending on the territory. In France, for example, we did a complete buyout with Amazon, so Amazon handles all our movies in France. But, in Germany for instance, pay-TV is not as important as free TV so we have got theatrical as well as other revenue streams there.
Basically, we wanted to build a three-legged stool with the world’s biggest entertainment markets: the US, China and India. There’s massive value in Eros Now, which has the largest library of Bollywood movies and TV shows, including original productions. Eros Now is expanding rapidly in tier two and tier three Indian cities and is also available in about 90 different countries right now for Indian expats. We have about 36 million subscribers and 208 million registered users. We’ve got two goals: to grow it globally to 50 million subscribers as fast as possible and to launch something called Eros Now Prime, featuring English content, and start competing with some of the giants (like Hotstar, Netflix and Prime Video) in tier-one cities.
Do you plan to expand Eros Now to any other markets?
Our desire is to expand Eros Now into the Middle East and Indonesia – basically anywhere that Bollywood is relevant.
How did the pandemic affect the business?
It affected us in two ways: On the streaming side, because of Eros Now, our subscribers have been growing more rapidly than we could have hoped for.
On the movie and TV side, usually, our business model depends on an initial theatrical release followed by multiple other revenue streams each with their own windows and economics. But, with theaters being entirely or intermittently closed in different parts of the world, we needed to be very opportunistic on each project.
For example, we released “My Spy” theatrically in a couple of territories and then sold the movie directly to Amazon and it became the most viewed “Amazon Original.” We’re currently working on a sequel with them.
We released “Greenland” theatrically in 27 international territories and even though the theaters were at half capacity, we were able to outgross Gerard Butler’s previous hits like “Olympus Has Fallen.” So, internationally, we were doing incredibly well in the markets that were open. But because theaters were closed in the US we couldn’t release the movies in cinemas here. So, we did a completely different type of deal by selling “Greenland” to HBO Max on the condition that we would do a P-VOD, or premium video on-demand model, which means we were able to charge about 20 bucks per view. Quite honestly, “Greenland” blew all of our minds because this new model generated so much profit with so little risk.
What about the physical, on-the-ground impact of the pandemic? How did you manage to film through it and what did that cost?
First off, safety is important. We have to make sure that the people who are working with us are safe and safe at all costs. The additional expense of COVID insurance, testing and protecting people in bubbles has been pretty extreme.
In fact, we just finished shooting something with Jason Statham and Hugh Grant, directed by Guy Ritchie, in Qatar and have sent that to Turkey to finish shooting. We just finished shooting in Scotland with James McAvoy and Claire Foy before the UK went into their tier four lockdown. But we have to be nimble because if there’s a surge in cases, we need to be able to shut down and move; or if someone on the crew is infected, we have to be able to clamp down.
However, at least from our experience, I think the whole notion that the industry has come to a standstill is just blatantly untrue.
What has the monetary impact of that been?
We do mid-budget movies in the $20-40 million range and in that, we’re currently spending somewhere between and three and four million additional for COVID protection. There are a couple of movies where we are on the cusp of comfort with the budget, and that extra few million makes us uncomfortable. So, we are holding them back, because if we wait a month we might not have to spend that. There’s a lot of juggling going on.
You said earlier that you’re planning to introduce Eros Now to the Middle East. Do you have any other plans for the region especially for Saudi given its investment in entertainment as part of Vision 2030?
I do believe that there is an opportunity for somebody to build out a Saudi film business, but it has got to be somebody who has enough consistent volume that they can guarantee multiple movies and TV shows. If you do just one-offs, you end up with an industry with stop and start and are not building that critical mass as a hub of innovation and creativity. So, something like twofour54 (Abu-Dhabi's media and entertainment hub) might get a Tom Cruise movie coming through or a “Star Wars” or “Fast and Furious”, but you have no sustainable homegrown industry. It has to be a guaranteed pipeline of production, movie on movie, so that the people you’re training can attract and gain the trust of the world’s film makers.
Do you see that as a potential problem in Saudi Arabia too?
I think the guys in Saudi are really smart and global. They are in a beautifully complicated place, which has a massive young population who have more access to Twitter and Netflix than anyone else out there and an old guard with a deep religious responsibility to protect the two holy sites. So, you’re going to have a pretty intense cultural collision. The power of story is to connect people and I believe this is the perfect setting in which to build a global industry doing just that.
UAE doesn’t have the same issues as Saudi.
We would love to have a seat at that table in Saudi, but they’re not there yet. From my standpoint, it’s pretty simple: there’s no US studio better positioned in China and India. Would I like to be the best-positioned US studio in the Muslim world – and I don’t just mean Saudi; I mean the Muslim world? Yeah! You’ve got 500 million people who are not really being catered to. And if you’re going to do that, you do that with the biggest player – and that’s Saudi. So us hanging around the hoop is probably a smart thing, but in the meantime, we just need to get our Eros Now in there.