Message from the Managing Director
Dear Shareholders, Greetings
It gives me immense pleasure to welcome you all to the 31st Annual General
Meeting of your company. Over the last few years, your company has been recording
consisting growth in Income and Profits. I now take the privilege to comment on the
company performance during the financial year 2011-2012.
Business Model
Mediaone's business model consists of the following distinct business propositions:
Production of films
Distribution of films
Exhibition of films
Production of films
Mediaone's business model in production of films is unique that draws on the
competencies of its management in project and financial management, understanding of the
entertainment landscape and expertise in film production management.
The company only acts as a producer to produce the film on behalf of investors and
Multi-national companies, for a fee and percentage of the profit. Thus the company
effectively mitigates risks, which are generally associated with the success or the
failure in the production of films. The company has entered in to a contract to produce
films for Eros International, UK (company listed in AIMS) to produce films for them on
turnkey basis.
Distribution of films
Mediaone acts as a Distributor to Multinational companies/ corporate houses working for
a fee which is a percentage of the collections. Thus the company effectively mitigates
risks involved in distribution segment of the business.
Exhibition of Films
Mediaone aims to carve a unique space in mass access using theatre infrastructure to
deliver entertainment. Mediaone owns a chain of theaters in Kanchipuram, Achirapakkam,
Thiruvalengadu and manages BIG cinemas chain of 34 theaters in Pondicherry,
Vellore, Salem, Madurai, Sivakasi, Dindugal, Tanjore, Chengi, kallakurichi, Thiruporur,
Manali etc. Mediaone takes over run down theaters on lease and spends money to modernize
the theatres including the digitalization.
Strategy
Mediaone's strategy is to build an asset based integrated entertainment company
focusing on:
Acquisition of Multiplexes in the malls in around Chennai city and other major towns of
Tamilnadu.
Buying / Leasing old theatres predominantly in monopoly centres, to modernize them into
Digital theatres, with state of art sound and light system, with good facilities.
The strategy is to become a theatre chain company having presence in all categories of
theatres including Malls, Multiplexes, Cineplexes and stand-alone theatres. Mediaone would
acquire theatres on outright basis/ long lease basis and improve the infrastructure to
bring it at par with world-class standards to offer high quality viewing experience.
Mediaone would convert films in to Digital, transmit these films using satellite medium
to various theatres in a secured encryption mode. Using digital rights management,
Mediaone would exhibit the films in digital mode without physical film prints. This would
also help to kill pirated CD market as new films can be released simultaneously across
many places.
Location is as critical as content for the success of a multiplex business. While
selection of right content helps in reaching out to the right target, selection of right
location results in attracting higher footfalls. All our multiplexes would be located in
high traffic commercial business districts or in the midst of affluent residential areas,
which would provide us with a competitive advantage
Uniqueness of the Business Plan
Perceived as a volatile business due to the traditionally unorganized stamp that the
film industry has earned over the years, companies like Mediaone have had to redefine the
rules of the game by adopting a derisked strategy for its business in the following ways:
Production: Mediaone offers pre-production, production, and post-production activities
for the Investors/ MNCs for a fixed fee and profit sharing terms. The Investor/ MNC will
invest the money for the movie production, and will reap the entire profits from the
operation. The Investor/ MNC also bear the risk of poor performance at the box office.
Mediaone will use its industry experience to produce a commercially viable movie in a
local language. Depending on the financial outlay and the risk appetite of the Investor/
MNC, Mediaone will offer a choice of high star power movie (higher cost, lower risk,
immense upside potential and immense downside potential) or a low star power movie (low
cost, high risk, limited upside potential, limited downside potential). Mediaone will work
on all stages of the movie making, right from script selection to cast selection to actual
production up till the movie is ready for release. In return for its services, Mediaone
will earn a fixed fee which is generally a percentage of the cost of the movie and also
profit sharing as per pre-agreed terms.
Distribution of films: The distributor acts as a cushion between the producer and the
exhibitioner. While the exhibitioner will not be interested in paying upfront for a movie
whose performance is uncertain, the producer's funds get locked up until the movie
performs. Hence, the distributor acts as a link and takes up the movie either on an
outright basis or a profit sharing with or without minimum guarantee basis from the
producer, and circulates the movie for distribution among theatres in the area. Mediaone
follows a strategy of only distributing films on prefixed percentage on collection basis
without minimum guarantee.
Exhibition: The Prime focus is acquiring theatres in Bl and B2 centers of Tamil Nadu
and converting them into modern digital theatres with state of the art viewing experience.
The idea is to extend the innovative approach in screening of new movies simultaneously in
Bl and B2 centers at par with A centers and providing an opportunity to viewers across
various categories of centers in Tamil Nadu and encashing on the initial publicity.
Flowing from its goal of emerging as one of India's lead studios, Mediaone has focused
on creating a brand name, which is synonymous with quality and successful cinema. To
continuously strengthen its core competencies, Mediaone has indigenously evolved a series
of processes that are periodically fine-tuned and are applicable to a project from idea to
release.
Projects to date:
1. Production of Movies:
Mirattal (2012-2013) starring Vinay, Sharmila music by Praveen Mani Directed by Madesh
Chikku Bhukku (2010-2011) starring Arya, Shriya Saran; Music by Colonial cousins;
Directed by Manigandan
Dhaam Dhoom (2008-2009), Tamil starring Jayam Ravi, Kangana Ranawat; Music by Harris
Jayaraj; Directed byJeeva..
Provoked ( 2006-2007) starring Aishwarya Rai , Oscar award winning actor Miranada
Richardson, Music by AR Rahman Directed by Jag Mundhra .
RAMJI LONDON WALEY (2004-2005) Hindi Film starring : Madhavan, Samita Bhangargi Music
Vishal Bhardwaj DirSanjay Dayama.
2. Distribution of Films:
Mediaone has distributed recently successful films like Nanban, Kadhalil Sodapuvathu
Yeppadi, Thadayara Thakka, Mirattal, Maattrraan and Thuppaki in Tamil, English Vinglish,
and Student of the year, Agnipath, Housefull 2, Cocktail, Vicky Donor and Ra One in Hindi.
In both Tamil and Hindi, the blend of films have been between small, medium and big
budget. Also Films like Kadhalil Sodapuvathu Yeppadi in Tamil and Vicky Donor in Hindi
have been niche successes. The company selects films for distribution based on content,
star cast and budget and it is a risk free model since the distribution is on pre fixed
percentage on collection basis without minimum guarantee.
Industry Outlook
The Indian film industry has recovered from a two year slowdown in 2011. A steady
increase in average ticket price on account of the growing multiplex culture, increasing
content with mass connect, star-power and digitization facilitated countrywide releases,
all contributed their part in this turnaround.
The Indian film industry was estimated to be INR 93 Billion in 2011 indicating a growth
of 11.5 percent vis-d-vis 2010. Quality content combined with the revival of films with
mass connect improved the occupancy rates which in-turn increased domestic box-office
collections.
Indian production houses such as Eros, Reliance and UTV along with joint ventures of
foreign media houses such as Fox and Viacom 18 have brought in increased sophistication
across the industry value chain through processes such as stricter financial discipline,
regular audits, scientific methods for marketing and distribution and developing new
talent. In addition, they continue to explore additional monetization channels to tap
latent demand for Indian films. Production houses are getting involved right from the
scripting stage till release for large budget films to control costs, where as they
continue to directly source quality smaller budget films from independent producers.
There is an increasing trend towards opting for co-productions in the Indian market as
it seen to provide a win-win situation for both the production house and the studio. Each
get's to leverage his strength the production house get's to focus entirely on the task of
producing a good quality film with the studio simultaneously exploring and implementing
the best distribution and marketing strategies for its release.
With best wishes
SURYARAJ KUMAR
Managing Director