Amagi brings new VAS revenues to MSOs

Approximately 50 MSOs across India have partnered with local television advertising specialist Amagi Media to bring in its patent-pending technology, work flow and business model to generate local advertising on satellite TV channels.

With digitisation of the cable TV industry in India soon reaching its sunset date, MSOs are making large capital expenditures to provide STBs (set top boxes) to their subscribers. However, with few significant revenue opportunities, VAS is becoming an important strategy by which operators increase their revenues and profits. VAS brings in multiple opportunities, some of them in the form of video-on-demand, video conferencing, local classifieds listing, TV-commerce, games, viewership measurement, and advertising.

To begin with, approximately 50 MSOs across India have partnered with local television advertising specialist Amagi Media, wherein the latter will bring in its patent-pending technology, work flow and business model to generate local advertising on satellite TV channels; this, in turn, will leverage the existing cable MSO infrastructure. The partnership includes names such as Hathway, InCable, Digicable, GTPL, Fastway Cable, and Manthan.

Explaining the process to afaqs!, K A Srinivasan, co-founder, Amagi Media, says, "Amagi provides city-level advertising on national TV channels. This is done by using its unique and patent-pending technology, and an innovative business model. It buys media inventory from TV channels, disaggregates and sells TV ad spots at city-level. For city-level targeting, Amagi partners with cable MSOs, places its technology box at cable head-ends, and delivers city-level advertising to advertisers."

"Amagi pays a share of the revenues to cable MSOs. There is zero investment from cable operators to enable this service and they get to participate in advertising revenues," he adds.

In India, ARPU (average realisation per user) of TV subscribers is the lowest in the world. This forces operators to explore opportunities outside subscription revenues for growth.

An MSO operator, on conditions of anonymity, explains that cable MSOs have significant advantage with respect to DTH providers in terms of local access, ability to provide reverse data path, and the possibility of multiple services (telephony, internet and TV) to be piped over the existing infrastructure. "By far, advertising is the most promising prospect, as it comes without large additional expenses. Advertising at regional level leverages the inherent benefit of local addressability that cable TV provides," he says.

Pinank Vin, vice-president, Gujarat Telelink Pvt Ltd (GTPL), says, "Given that ARPUs from subscribers are limited, it is critical for MSOs to explore other avenues to leverage their access to subscribers. This concept of generating local advertising for MSOs is new, but it is worth a try as it will help us generate additional revenues."

According to industry experts, this local advertising on satellite TV channels is a $6 billion revenue earner in the US, which is 15 per cent of all TV advertising revenue in the country.