Tips Music (TIPSMUSIC) Tips Music Limited Presents at Bharat Connect Conference summary

Company background and business evolution

• Founded in 1988, the company has built a large music library, expanding from regional to Bollywood content and entering film production in the late 1990s.

• Survived industry disruptions from piracy and digital shifts, with a major turnaround starting in 2008 due to ringback tones and later OTT platforms.

• Demerged music and film businesses in 2020, now operating as a pure-play music label with a 30%+ CAGR in revenue.

• Revenue is 75% digital (YouTube 45-50%, OTT audio 25%) and 25% non-digital (public performance, publishing, brand, TV broadcasting).

• Maintains a clean balance sheet, no debt, high EBITDA (65-70%) and PAT margins (~50%), and a payout ratio above 70%.

Content acquisition and investment strategy

• Invests 25-30% of revenue in new content, with INR 65-70 crores planned for FY25.

• Focus shifting from high-volume regional/devotional songs to 200-300 high-quality releases annually, emphasizing independent and film music.

• Uses a portfolio approach for content acquisition, targeting a payback period of 2-3 years internally, with a maximum of 5 years.

• Content costs vary widely: category A movie rights can exceed INR 30 crores, while independent artists may cost a few lakhs.

• All content is acquired outright and written off at release, with no ongoing royalty obligations.

Digital platforms, monetization, and Warner partnership

• Major digital revenue comes from YouTube and OTT audio; paid subscriptions are growing but still a minority of revenue.

• Warner acts as global distributor under a four-year minimum guarantee (MG) deal, covering both international and Indian platforms.

• MG deal provides upfront cash, protects downside, and allows for overflow revenue if streaming exceeds MG.

• Only a few regional YouTube channels are managed by Warner; the main Hindi library remains directly managed.

• Paid subscription revenue is growing at 50% CAGR industry-wide, with platforms increasing subscription rates.