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

Company overview and business evolution

• Founded in 1988, the company has grown from a regional music distributor to a major Bollywood content acquirer, holding a 60%-65% market share in new content during the 1990s-2000s.

• Entered film production in the late 1990s and went public around 2000; faced industry challenges due to piracy and digital transition but rebounded with the rise of ringback tones and digital platforms.

• Digital transformation accelerated from 2013-2014 with OTT and YouTube, leading to a demerger in 2020, separating music and film businesses.

• Revenue is now 75% digital (with YouTube as the largest contributor) and 25% non-digital, with a 30%+ CAGR in recent years.

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

Content acquisition and investment strategy

• Invests 25%-30% of revenue in new content annually, focusing on quality over quantity, with recent years seeing 200-300 new songs per year.

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

• Uses a portfolio approach, targeting a payback period of five years for content investments, but aims for two to three years internally.

• Acquisitions are outright, with content costs written off at release; no ongoing royalty payments.

• Library exceeds 31,000 songs, with 10%-15% of FY24 revenue from content acquired in the last three years.

Revenue streams and platform dynamics

• Digital revenue breakdown: 45%-50% from YouTube, 25% from OTT audio (Spotify, JioSaavn, Amazon, Apple), and 25% from non-digital (public performance, TV, publishing, brand partnerships).

• Paid subscriptions account for 10%-15% of digital revenue, with the rest from free streaming; paid subscriptions are growing at a 50% CAGR industry-wide.

• Major growth drivers include digital advertising, rising paid subscriptions, public performance compliance, and increasing digital penetration.

• Margins are consistent across digital and non-digital segments due to the cost structure.