The Group operates its business under the philosophy to work creatively in complete range with global quality contents and embrace up-to-dated technology to deliver unlimited happiness conform to customer's changing behavior in media market. The Group divides its business into 2 main categories as follows:
- Core Business consisting of
- Music business comprises sale and distribution of physical products, Digital content, Copyright management, show business, and artist management
- Digital Terrestrial TV (Digital TV) Business comprises 2 channels; GMM 25 under standard definition and One 31 under high definition
- Other Business which supports and extends the main business, for sustainable growth of the Group over the long
term, consisting of
- Radio Business
- Movie Business
- Home Shopping Business
- Satellite TV Business
The details of each business as follows:
1.1 Music Business
Music business operates under the "Total Music Business" model, including artist selection, music production, marketing, music content management, and product distribution in term of physical products and digital products, focusing on variety of music production to satisfy the customer demand. The Group has more than 300 artists, singers, actors, and actresses under management, and more than 40,000 songs in its music library. Music Business can be arranged into 5 sub business as follows:
Physical Products and Distribution BusinessIn 2015, the Group released string, country songs approximately 299 singles and 452 albums covering every consumer target group, namely pop, rock, alternative, country (songs for life), R&B, soul, and compilation of top hits during the year. Sales and distribution is carried out through modern trade channels (superstores and discount stores), traditional trade channels (wholesalers and retailers) throughout the country.
Digital Content BusinessFast developing technology together with the changing of consumer's behavior caused the music business to develop new channels of distributing the product to respond to consumer's behavior and generate more revenue to the Group. Digital content business is to convert music content into a digital form for distribution to mobile telephone networks, the internet and entrepreneurs, with categories of download services, such as ringtone, ring-back tone, full song and full MV, in both a la carte and subscription services through channel application 123GMM on both iOS and android, website www.gmember.com and iTunes Store. Also included are the services for listening music on the internet without the needs to download "Music Streaming" through an application on computers and mobile phones which enable customers to enjoy the hot music tracks worldwide. We also expand the method of reaching the content of the Group via GMM Grammy Official Account on YouTube.
Copyright Management BusinessThe Company manages and collects copyrights fees from food operators, restaurants, radio operators, karaoke outlets, and karaoke booths and other operators who use the Company's music for commercial purposes.
Showbiz BusinessIn 2015, the Group organized 22 large-scale concerts, including Lor Mak Mak Concert, Feather and Flowers - The Original Returns Concert, The One & Only Concert 10 Years of Aof Pongsak Concert, Bodyslam 13, 10 Years of A-Time Showbiz, etc. it also organized 3 music festivals, namely Jimlai Music Festival 2, Big Mountain Music Festival 7 and Gannes Film and Music Festival 6. Beside generating revenues from the sale of tickets and sponsorship, this business also generates additional revenues from the sale of media recordings of Concert too.
Artist Management BusinessThe Company has a policy to train and develop both Music and Non-music artists to enhance their capabilities in singing, acting, and dancing. In addition, it also tries to expand revenue channels for those artists in the forms of live performance in pubs and bars, as well as employment opportunities as product presenters according to the Idol Business Model in order to extend the revenue stream.
Advances in technology that lead to changes in consumer listening behavior represent a major challenge to the music business. Being able to adapt quickly to all types of changes in consumer behavior is an important factor to succeed in the business.The Group has seen customer expansion in Digital Music market and tried to penetrate this segment together with finding a strong partner in order to strengthen the company. In addition, it also developed services that are more up-to-date, especially by providing digital or internet music services. This includes the partnership with a mobile phone service provider to provide a music streaming service through an application that allows customers to listen to more than 10 million songs domestically and abroad. From a good response, the group decided to cooperate with "Line Music" to provide music streaming service through an application in order to tap on existing 33 million of Line application users with sales of songs in digital form through the iTunes Store and telecom operators, and a YouTube service from which the Company earns income through a share of advertising revenues and the number of viewers. In addition, the Company has an auditorium, Muang Thai GMM Live House, on the 8th floor, Central World to host shows, events and medium-sized concerts, which supports the Show Biz business and also brings in additional revenue for the music businesses.
1.2 Digital Terrestrial TV Business (Digital TV Business)
The Office of the National Broadcasting and Telecommunications Commission (NBTC) held an auction of 24 licences for commercial digital TV frequencies from December 26-27, 2013, separating the channels into 4 categories: 3 channels for children's and family programming, 7 news channels, 7 variety standard definition channels, and 7 variety high definition channels. The Company bid for and won 2 licences
The overall advertising expenditure in all media increased from 118,159 million baht in 2014 to 122,319 million baht in 2015, or growth by 3.52% of all expenditure. Digital TV is the major increasing with the growth rate of 143.91 follow by Cinema Advertising, Out of home media, and Radio. While, major spending on Analog TV, Satellite TV, Cable TV and publishing decreased by 9.80, 16.27, 10.46 and 6.33 respectively.
One year since the digital TV industry was launched, plans to promote its audience fell short of expectations, including the network expansion and the distribution of digital TV coupons. As a result, the industry's revenues were below expected while competition intensified, and each channel actively adjusted its programs, especially for "Drama and Series" becoming highlights of the digital TV war in its second year of broadcasting.
Thailand encountered the economic slowdown, which hampered consumers' spending power, resulting in the recession of media advertisement industry. Besides, new digital TV channels triggered aggressive competition, posting challenges on entrepreneurs. The industry might not prosper as expected during the transition period, but it was considered having high potential that is continuously improving. The Company sees positive and supportive signs, driven by the National Broadcasting and Telecommunications Commission (NBTC)'s measures, including the cease plan of analog broadcast television systems and public relations plans nationwide. The NBTC also proposed regulations, which would organize and prioritize television services. Digital TV channels had to be set with the same numbers, regardless of their broadcast networks, in order to maximize convenience for consumers, provide them with quality TV services and promote fair competition. In the meantime, the Media Agency Association of Thailand (MAAT) conducts a standard rating practice that covers comprehensive channels, the move that reflects evolution. Therefore, the Group is ready to invest in the thorough development of the two digital TV channels.
This year, the overall digital TV industry is expected to recover and grow again, thanks to state investment projects and stimulus measures in the property sector, along with other stimulus programs. Those stimuli will help boost capital circulation in the country's economy and raise consumers' confidence in spending. As a result, product owners will be encouraged to increase their spending in advertisements, which will consequently improve spending on advertisements on digital TV.
To support the transition to digital TV, the NBTC distributed 13.57 million coupons last year. Among these, 8.49 million coupons or 62%, were redeemed in 56 provinces. Four multiplex providers also cooperated in the digital network expansion resulting in target transmission coverage achieved. It now covers more than 80% of the country, reaching more than 18 million households. The transmission expansion is entering the first phrase of its third year aiming to cover 90% of the country by June, 2016. (Source: NBTC)
The Company has set the following strategic plan to create distinctive characteristics and promote the digital TV channels to make them widely known:
- Focus on content that is outstanding, interesting and has variety since viewers select program based on content. Interesting programming will create an impression on viewers and make them remember the channel. The Company will create and develop high quality content in the form of drama, news, variety and game shows that offers a new choice for the audience.
- Create wider audience awareness of digital TV under GMM 25 and One Channel. The Company is planning promotion through a variety of channels such as large advertising boards, online media, printed media and promotional activities at various locations and competitions.
The Company intends to establish both digital TV channels as leaders in Thai digital TV industry that is strong and has high quality.
2. Other Business
2.1 Radio Business
Production of contents or programs to be broadcasted through radio stations requires the frequencies that have to bid from various state enterprises. In 2015, the Company has 3 radio stations, each station has strong features and differentiated format to cover target customers.
There are 506 radio stations in Thailand; 313 stations broadcast on the FM band and 193 stations on the AM band. Seventy six radio stations are located in Bangkok. (Source: The National Telecommunications Commission) All radio frequencies are owned by state enterprises, and managed and arranged by the NBTC in order to create free and fair competition as well as to allow public sector to play a part. Private radio station operators have to work with state enterprise who own the frequencies in the forms of concessions, joint production or time rent, etc, considering contributions to the frequency owner, format of programs, and financial status of the operators.
In 2015, advertising expenditure for radio was 5,675 million baht, increasing by 50 million baht from 2014, or approximately 0.89%. Its market share accounted for around 4.64% market share of total advertising expenditure.
At present, radio is considered as one of the main forms of media that can reach a wide group of consumers. Expenditure on radio advertising had not significantly changed for several years. However, radio business was continually developed, for example, new opening of several radio stations. Each radio station is adapting itself in order to attract listeners and maintain customer base. The result is the higher competition in this business. Radio operators need to have proper strategy to maximize the access channel to the station and gain more attention, for instance, expanding the platform through online channels such as computer, smart phone applications, social media channel. In addition, the radio operators should continuously develop format and content to be up-to-date, innovative, and distinctive together with developing the marketing plan such as creating ongoing activities e.g. artist meet-and-greets and small concerts to build relationships with customers and listeners. The development of staffs and DJ should prepare them and make them adaptable to the changing situation. These are the important factors in maintaining long-term competitiveness.
2.2 Movie Business
Movie Business of the Company operated under GTH Co., Ltd., a subsidiary of the Company. In 2015, 2 films were released: Freelance and May Who?. Both films were very popular and were in the top-ranked Thailand box office earning. Notwithstanding, for the effective operation in the future, the company has cease operation of GTH Co., Ltd., on December 31, 2015 onward, revising the shareholder structure and establishing the new company under the name GDH 559 Co., Ltd. GDH 559 Co., Ltd. aims to continue producing 3 - 4 quality films a year with its own uniqueness. It is well-equipped in terms of production and personnel. It has skilled teams ready to create outstanding films and bring a happiness for movie watchers.
2015 was another challenge year for Thai film industry as it faced with unrecovered economic situation. Industry earnings (box office only) in 2015 were approximately 5,134 million baht of which international movie took more than 70% of share.
63 Thai movies were released in 2015, almost the same as 2014. Although, the total revenue of Thai's movie was not good, the positive thing were the vast varieties of Thai movies that provided more options for moviegoers.
However, the movie business is a high-risk business because of the high investment required. One movie requires a combined investment for production and promotion of 50 - 70 million baht. Production time is relatively long, taking approximately 8 - 18 months from script to release in theaters, while the degree of a film's success depends on the popular trends with the audience, which cannot be predicted in advance. Moreover, international films receive more popularity than Thai films due mainly to a better screenplay and advanced technology of production.
For 2016, it is expected that there will be increased competition in the film industry due to the opening of new movie company and studio. Moreover, international film producers are planning to release a large number of blockbusters, with more than 50 Thai movies also expected to be released. There are several internal and external factors that 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 writing skills and possess knowledge of the movie language and conversational language in order that the message is clearly conveyed to the target audience.
- Branding: Film producers and studios must ensure moviegoers of their quality in any movies they produce, and that their movies always receive great receptions and are successful.
- Analyses are needed in order to truly understand target customers, determine the movie genre, and prepare proper scripts, actors and actresses, and the right public relations plans. These will help meeting demands of target customers.
GDH 559 Co. Ltd. pledges to apply appropriate operating strategies so as to produce the works that will impress the audiences and gradually increase its popularity.
2.3 Home Shopping Business
Home shopping business is a business of 24 hour distribution of goods through program channel "O-Shopping", where customers can choose products, even from their own residence. The business is managed by GMM CJ O Shopping Co., Ltd., a joint venture company of GMM Grammy Pcl and CJ O Shopping Co., Ltd., a leading home shopping operator in South Korea with international footprints in many countries including Thailand. With high market potential and business expertise of CJ O shopping from South Korea, the Company aims to become the leader of Thailand's home shopping business by creating a phenomenon of interactive home shopping programs that are superior, fresh, novel and unique, offering knowledge about products in a straight manner in all aspects, called Shopfotainment Channel (shopping, information, and entertainment), creating a family entertainment as well as a new alternative for shopping. The company focuses on variety of product selections with high quality, standard, well-known and widely accepted by customers, as well as free-of-charge fast delivery service all over the country. The company also provide multiple payment options as may be deemed appropriate by the customer, such as credit card or cash on delivery.
In 2015, home shopping industry presented continually growth rate, with the market value of 8 billion baht, while the value of the total retail market was approximately 3 trillion baht. Home shopping business accounted only 0.3% of total retail market. Though, it is expected to reach 30 billion baht or 1.0% of total retail market within 5 years. Therefore, more operators are entering into the market, from SME businesses to large businesses in joint ventures with foreign companies expert in TV home shopping, meaning that competition is likely to become more intense. The Company is aware of these factors and has prepared to confront the competition in order to retain sustainable growth as follows:
- Creating interesting and reliable television content that is presented in formats that are easy to understand and 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;
- Increasing variety of goods and emphasizing on trendy products such as fashion goods, lifestyle goods and E-commerce goods offered to meet demand from consumers of all groups. It targets to increase number of goods from 600 items at present to more than 1,000 items.
- Developing online, internet sales channels and application on smart phone.
- Tuning brand communication to create customers awareness that O shopping will be household assistant alike "A Trust Neighborhood"
2.4 Satellite TV Business
Satellite TV business can be divided into 2 main components.
- "GMM Z" Satellite TV" Platform launched in March 2012 and is responsible for the sale of satellite TV set-top-box
(STB) to consumers. GMM Z has a variety of products for the target audience of all levels.
- GMM Z HD for high end – level customer group who prefer a high definition with Dolby Digital 5.1 sound.
- GMM Z HD Lite the new model enabling high definition transmission with digital TV compatibility for customers who want to watch a high definition in an affordable price.
- GMM Z Smart for middle-level customer group, available for both C-Band and KU-Band satellite systems.
- GMM Z Mini for customers who have limited budgets but want to switch from antenna to satellite television.
- GMM Z Mini Gold is a latest product with gold color façade and handy remote control.
Moreover, Z Trading Co., Ltd., which is the subsidiary of GMM Grammy Pcl, and Loxley Public Company Limited ("Loxley"), jointly distribute the digital TV set-top-box "GMM Z Zeason by Loxley." Under this collaboration, Loxley is in charge of production, development and quality control of the product to meet high quality standards. All items are assembled in Thailand and approved by the NBTC. The product's key features include quality, efficiencies and high durability. Furthermore, the software used in "GMM Z Zeason by Loxley" has been newly and specifically developed in order to ensure stability and effectively support all functions such as allowing to switch the channels faster than the others boxes.
- Satellite TV Media is the production of TV shows to be aired on satellite TV channels. Compared to the
past, this business requires relatively low investments due to good domestic and international coverage of
satellite signal, mitigating the need to install additional receiving towers. All it needs to operate this business
are television channel licenses and good contents for broadcasting.
By the end of 2015, the Group has produced free-to-air television programs for audiences of every platforms transmitted via Thai-Com altogether 2 channels as follows;
The satellite and cable TV business is the television medium that has the greatest number of viewers in the country. In 2015, the satellite and cable TV viewers accounted for 73.4% of total 23 million households in the country (source: AGB Nielsen Media Research (Thailand)). Product owners and advertising agencies are therefore interested in the satellite and cable medium as an efficient method to reach their target groups. Since there is a large number of Free to air, and the transition towards digital TV, viewers have a greater choice of programming. Advertising rates, which were already low, are now being pressured even further. The intensity of competition for ratings and advertising in satellite and cable TV business has multiplied accordingly. For the Group, the satellite television business has an important role in supporting the public relations of the other businesses such as the music businesses, giving them greater exposure across the country.