The Group divides its business into three main categories, consisting of 1) Core Business, 2) Related Business, and 3) Joint Venture Business, which are summarized as follows:
1. Core Business
The music business operates under the “Total Music Business” model, including artist selection, music production, marketing, music content management, music distribution in terms of physical and digital products, show business and artist management business.
1.1 Music Business
Physical ProductsPhysical distribution of products includes DVD, MP3, USB, and MP3 formats as well as box-set albums. Sales and distribution are carried out through traditional trade channels, modern trade channels, and kiosks as well as e-commerce and the call center.
Digital Music BusinessFast-developing technology together with changes in consumer behavior compels the music industry t0 find the best way to reach consumers and generate more revenue for the Company. The digital music business involves converting music content into a digital format for distribution through online music streaming platforms such as YouTube, iTunes, JOOX, Line TV or Spotify, where users can listen to music online, on-demand, or from playlists. Users may also download music for listening offline.
Rights Management BusinessManagement and collection of copyrights fees from business operators who use the Company’s music for commercial purposes such as radio operators, restaurants and karaoke operators.
1.2 Show Business
Organized concerts and music festivals generate revenue in the form of tickets sales, sponsorships and event organizing fees. In 2018, the Company was very successful in organizing many concerts, as seen from the “Sold Out” concert tickets during Genie Fest 19, PECK PALITCHOKE ''FIRST DATE'' Concert, MY NAME is NOOM KALA, Clash Awake Concert, OAT PRAMOTE SHOW, The Uncensored and Bab Bird Bird no. 11 DREAM JOURNEY, as well as music festivals including Nanglen Music Festival 3, What The Fest Music Festival and Big Mountain Music Festival 9, which captured the attention of audiences nationwide.
1.3 Artist Management Business
The Company has a policy to improve artist singing skills and acting skills with an emphasis on artist development to elevate to the real professional level. In this regard, the Company places importance on increasing income for artists in the form of live performances in pubs and bars, as well as other opportunities such as serving as product presenters, which leads to artists’ growing popularity over time.
1.4 Other Business
The Company also operates the space rental business for exhibitions, event activities and medium-sized concerts at GMM Live House, which is located on the 8th floor of Central World Department Store. Also, a music school called GR Vocal promotes the Company’s show business and artist management business while generating more revenue for the Company’s music business.
As a leader in the music business, the Company is committed to driving an industry that has changed in the new era under the influence of the digital age. And provides an opportunity for artists to reach out to audiences around the world and enables them to precisely capture the success of a hit song with a clear indication. In the past year, the Company has adjusted its music business model to keep pace with the competition in this new era and support the growth of music streaming, where consumers listen to music using mobile or computer applications. Creating playlists makes it easier to listen to music by partnering with music platform operators such as JOOX, Spotify, LINE, and YouTube. From now on, the Company's mission is to develop quality and robust content, which is a crucial success factor for any content provider.
2. Related Business
2.1 Movie Business
The movie business operates under GDH 559 Co., Ltd, a subsidiary of the Company. Films released in 2018 include "Brother of the Year”, “Homestay” and a documentary film “2,215” with the inside stories and unseen footage behind the historical fundraising phenomenon of ‘Kao Kon La Kao’ campaign. GDH559 aims to release 3-4 films each year to capitalize on its unique capabilities to produce a variety of high-quality films. GDH559 is well equipped in terms of production and personnel, comprising highly-skilled teams to create outstanding films that bring about differentiation and happiness for movie watchers.
In 2018, the Thai movie industry began to recover and experience renewed growth. Thai movies generate higher average revenue and thus higher market share, which results from more big-budget films being released compared to the previous year. Cinema expansion to suburban areas has also had a positive impact. However, the movie business requires high investment, while the degree of a film's success depends on the popular trends with audiences. In 2019, industry trends anticipate growth in advertisement spending in theaters following more branches opening, especially in the provincial market. New film line-ups from leading operators will drive the Thai film market to expand further, with a positive viewpoint from the operator with respect to production and presentation in Thailand and overseas markets. Several internal and external factors contribute to the success of Thai movies, including:
- Stories and scripts must be fresh and remarkable. Thorough research is needed to produce each story. The screenwriter must use effective writing skills and possess knowledge of movie language as well as conversational language so that the message is conveyed to the target audience in a relatable way.
- Branding: Film producers and studios must ensure moviegoers of the quality in all the movies they produce and that their films always receive grand receptions and are successful.
- Analyses are needed to truly understand target customers, determine the movie genre, and prepare proper scripts, actors and actresses, as well as the right public relations plans. These will help meet the demands of target customers.
2.2 Home Shopping Business
The home shopping business concerns the 24-hour distribution of goods through program channel “O Shopping", where customers can choose and purchase products from their home. O Shopping is managed by GMM CJ o Shopping Co., Ltd., a joint venture of the Company and CJ O Shopping CO., Ltd., a leading home shopping operator in South Korea. The Company aims to become the leader in Thailand's home shopping industry by creating a home shopping program that is fresh and unique under the concept "Be better, Everyday life”; the more you know O Shopping, the better everyday life.
In 2018, O shopping succeeded in selling beauty products, especially to female customers. The home shopping market is valued at more than 13 billion baht, which attracts more players. However, there's still potential growth in Thailand's home shopping market.
In 2019, O Shopping plans to expand its target consumers to a broader and younger base in response to consumer behavior, which has turned to buying products online. O Shopping will focus on strengthening its e-commerce business strategy by making O Shopping a new destination for online shoppers. The Company believes that the overall business of home shopping will continue to grow and that the Company could maintain its existing customer base as well as acquiring a new customer base, even with higher competition in the market. The Company is aware of these factors and has prepared to confront rivals to retain sustainable growth as follows:
- Creating exciting and reliable television content presented in formats that are easy to understand, which will induce consumers to purchase goods;
- Building confidence in the purchase of goods and services, including providing services as advertised, guaranteeing product quality, efficient delivery systems, and secure payment systems;
- An increasing variety of goods and emphasizing on popular products such as fashion goods, lifestyle goods and E-commerce goods offered to meet demand from consumers of all groups.
- Developing online, internet sales channels and applications on smartphones and social media.
2.3 Satellite TV Business
The satellite TV business can be divided into two main categories as follows:
- Satellite TV Platform
Sales of Set-top boxes (STB) for Satellite TV and Digital TV, Internet Protocol Television, Music Box, MP3 Player, and Karaoke Microphone to support the Company's main business include the products below:
- GMM Z STREAM is an internet protocol TV box with Android 7.1 operating system providing Ultra HD4K.
- GMM Z HD WISE PLUS is a newer model enabling high-definition Full HD with PVR system, time shift system, and multiplicative media playing function.
- GMM Z HD SMILE, the new look in white color comes with OTA system that adds a channel automatically, smart remote for simple use, and a newly-designed LED screen as well as simple button design.
- GMM Z Music Box Chill Out is a new music box with more than 10,000 easy listening hits.
- MP3 KARAOKE GMM Z STAR, free hit music from WE, Easy to connect with karaoke application. Applicable to both Android and iOS with 2-way speaker power and portable MP3 player.
- Satellite TV Media
Content production of “Fan Music” and “Money Channel” will be aired on satellite TV channels. However, the Company discontinued broadcasting “Money Channel” from 1 January 2019 onwards.
The satellite TV platform remains the television medium that has the highest number of viewers in the country coupled with the NBTC’s must-carry regulations imposed on digital TV, companies and media agencies, which continue to use satellite TV platform as a medium to reach their target market more effectively. However, the satellite TV industry has slowed down since 2018 due to technological advancements in communications. Media consumption behavior has also shifted from traditional media to digital and online media, which results in more intense competition. While the economic recession and advertising spending has slowed, the operating results for the satellite TV business continues to decline. Especially in the past year, business operators have adapted and expanded to online channels as well as cooperating with strategic partners to sell content on other platforms. The direction is likely to remain stable. For the Group, the satellite television business has an essential role in supporting the public relations of the Group such as the music business, offering greater exposure across the country.
3. Joint Venture
At present, the Company operates its Digital TV Business, Radio Business, and Content Creator Business under joint ventures (JV) in The One Enterprises Company Limited and GMM Channel Holding Company Limited. The details are as follows:
The One Enterprise Company Limited
Digital Terrestrial TV Business
The One Enterprise Company Limited operates a general category high-definition channel under "One 31". One31 aims to create high-quality content providing entertainment for mass audiences to become one of the top national television networks. One31 has a variety of program types including drama, variety program, competition, news, and entertainment news. In 2018, One31 had many popular dramas and programs in terms of response and ratings, for example "Wife 2018" "The Shining Stars" "You are my destiny" "Man is Not Real Woman" and programs such as "LOOKTUNG The Battle Project" "Top Chef Thailand 2" and "Roo Mai Krai Sode”.
GMM Channel Holding Company Limited
The company comprises Digital TV “GMM25” Channel, Radio Business and Content Creator Business as follows:
Digital Terrestrial TV Business
GMM25 is a general category channel with standard definition. The target audiences are young adults aged between 18-35 years old and Young-at-heart audiences aged 35 years old and older. In 2018, GMM25's popular drama and programs included "Roop Thong” “Khun Por Jom Za" "Club Friday The Series" and "Girl from Nowhere", a teen series which became a phenomenon on social media and reached a global audience on "Netflix", winning many awards locally and internationally.
This business includes the production of content or programming to be broadcasted through FM radio, website and mobile applications. In 2018, there were three radio stations, each with unique characteristics and strengths to reach and respond to the needs of the target audiences. Also, the Group operates Show Business to promote its Radio Business. In 2018, there were successfully “sold-out" concerts including "Sam Yak Pak Wan 3+1" "Green Concert #21 Dance Fever" and "Sao Sao Sao”, which was the first reunion of the girl group after 34 years.
Content Creator Business
This business is the production of content such as prime-time drama, series and variety programs to be aired on Digital TV channels as well as online platform. The goal is to strengthen the digital TV business of the Group. In 2018, this business under GMM Channel Holding created significant content including “Sotus the Series” “Wake Up Chanee the Series” “Toey Tiew Thai” “Happy Birthday the Series” and “School Rangers”.
The overall advertising expenditure for all media increased from 101,445 million baht in 2017 to 105,455 million baht in 2018, an increase of 3.8 % Y-o-Y due to an increase in advertising expenditures on Analog/Digital TV and Radio by 7.5% and 6.8%, respectively. On the other hand, advertising spending on Publishing, Newspaper, Satellite TV and Cable TV continued to decrease.
Source: AGB Nielsen Media Research (Thailand) Ltd.
Media Advertising Expenditures in 2018 is 105,455 million baht.
Source: AGB Nielsen Media Research (Thailand) Ltd.
In the past years, the advertising media industry has continued to grow. While the overall digital TV industry has remained stable, the majority of ad spending has been allocated to digital TV media. TV media has a strong viewer base and is able to reach Thai households throughout the country, which affects brand awareness. Also, the new leader in digital TV group has outstanding content and attracts viewers, resulting in media spending in TV to grow continuously. In 2019, the total value of the advertising market is expected to increase from improved economic and political support factors. While the situation of digital TV competition remains intense, each channel released a magnetic content to gain ratings. All TV station attracted the audience with premium quality content that was distinctive and characterized to interest audience to watch live programs rather than from the online platform. This was the variable of creating ratings for more advertising revenue, creating brand recognition among the audience.
The overall transition progress towards digital TV has made significant inroads this year with growing Thai audiences reaching digital TV. As of December 2018, viewers of terrestrial TV channels are evident from higher viewership at 89% and 11% for cable & satellite TV, respectively. By the end of 2018, viewers of terrestrial TV channels in the Bangkok metropolitan area was 93% and 88% (Source: NBTC). In addition, more upside to the digital TV industry in 2019 is derived from governmental aid measures, which can enhance the turnover of digital TV business further.
The Company has set the following strategic plan to create distinctive characteristics and promote digital TV channels to make them more widely known:
- Focus on content that is outstanding, interesting and has variety since viewers select a program based on content. Interesting programming will create an impression on viewers and make them remember the channel. The Company will produce and develop high-quality content in the form of drama, news, variety, and game shows that offer a new choice for the audience.
- Create broader audience awareness of digital TV under GMM 25 and One 31 Channel. The Company is planning a promotion through a variety of channels such as large advertising boards, online media, printed media and promotional activities at various locations and competitions, as well as running a campaign and participating in cross-marketing activities with partners to expand the digital TV audience base by engaging partnership clientele.
The Company intends to establish both digital TV channels as leaders in the Thai digital TV industry to be strong and have high quality.