With another extension, is Saregama stretching its Carvaan brand too thin?

Disco Dancer is one those cult films that only an eighties kid can get. Mithun Chakraborty dancing to Bappi Lahiri’s ‘I am a Disco dancer’ is part of the 80’s nostalgia package; just like Anil Kapoor movies, Nazia Hasan and George Michael. Disco Dancer with all its kitsch comes alive later this year at the National Sport Complex of India in Mumbai and at the Jawaharlal Nehru Weightlifting Indoor Auditorium in New Delhi. The 40 people Broadway-style musical produced by Saregama’s Carvaan Musicals has been reimagined by music composers Salim-Sulaiman. Also on the anvil is another show by  Carvaan Musicals, based on another iconic eighties film that Saregama owns the music rights to, Subhash Ghai’s Karz.

And that begs the question: What are the limits of brand extension? 

In 2017 Saregama launched Carvaan, a device with 5,000 old songs loaded in. It became a huge hit selling over two million units so far and rejuvenating India’s oldest music company. Then came the variations, in Tamil, Marathi and other languages and Carvaan Minis around special themes such as Gurbani or Bhagwad Gita readings.

In 2019 came the phone-shaped Carvaan Go with 3,500 songs and Carvaan Lounge in association with Amazon Prime Music. “Carvaan Lounge is about new singers giving a twist to old songs,” says Vikram Mehra, managing director, Saregama India. Think of it as a Coke Studio kind of platform that renders versions from Saregama’s most precious asset, its library of 120,000 songs across 18 languages. In 2019 it also began to offer Carvaan Wifi giving curated access to non-Saregama music, podcasts and other pieces of content. Earlier this year came Carvaan Earphones and a content partnership programme. And now the stage productions. Has Saregama stretched the brand Carvaan too much?

 

 

“It hasn’t,” says brand strategy consultant, Lubna Khan. “A lot depends on how you define your brand and the brand promise. It is perfectly fine to redefine the brand when you are looking to grow and look at adjacent categories. But it is important to check what the new extension would borrow from the core brand or what would it build back in the brand,” she explains. 

“Carvaan  is a music brand that stands for convenience, for the 35 plus age group and for nostalgia and it has a premium image,” says Mehra. And everything it has done so far is true to that, he contends. For instance many people in the target group would love to attend a music concert. But the experience is often disappointing. Bad loos, uncomfortable seats or poor food make live events in India a mixed bag that many older people prefer to miss. Carvaan Musicals is an attempt to offer the same mix of nostalgia and convenience in music. Khan agrees, “Nostalgia, convenience, simplicity with regards to access to music is what the core brand (Carvaan) is about. They (Saregama) have tried to bring it out through other things.” The key to successful extension lies in sticking to what the brand is about, even if there is a lucrative opportunity to extend it, says Khan.  

This then begs a second question. What do these extensions mean for the top line and bottom-line? The answer is a complex one. 

Saregama had been meandering along, even stagnating in some years till 2017 when it launched Carvaan. From Rs 231 crore in FY2017 the firm’s revenues have grown to Rs 601 crore in FY 2019. Music accounts for  Rs 489 crore of this amount. The rest is from producing TV content, films (under the Yoodlee banner) and publications (Open magazine). Over the same period overall margins have more than doubled. 

The Rs 489 crore from the music business comes from Carvaan, licensing income from OTTs, music platforms, TV firms and just about anyone that wants to use Saregama’s library. Plus there are ad revenues from its thriving YouTube presence. 

Carvaan arguably brings a larger proportion of music revenues, but it comes at a price. The licensing business on the other hand is profitable since much of its earnings go straight to the bottom-line. But Carvaan has helped create a virtuous circle. The music library generates revenue, which is invested into new businesses and which, in turn, helps strengthen the library. This makes the licensing business even more profitable. With wheels under its feet, it is going to be a while before Saregama stops spinning Brand Carvaan.