Why did Times Internet pay Rs 1,000 crore for MX Player?

The acquisition of the South Korean media player for $140 million is probably the biggest acquisition by an Indian media company outside the television space. An explanation for why Times Internet found the deal compelling.

Online video is easily the hottest space in the media business and one of India's largest media companies, The Times of India group, has not been able to find a toehold in this segment... perhaps until now.

The group launched an OTT (over the top) service, Box TV, in 2013. It, however, never really took off and was finally shuttered in 2016. This was indubitably a frustrating time for the Times' management; even though the online video space was turning red hot, their venture was reduced to mere cinders.

YouTube had traditionally owned the space, but the drop in data prices with the launch of the telecom service Jio in September 2016, motivated a number of OTT services to press down hard on the accelerator.

Sony LIV was the first off the ground, about five years ago. Hotstar, from the Star Network, came in early 2015 and Voot from Viacom 18 was launched a year later. Zee, which took its time was a late starter but hit the ground running with Zee5, earlier this year. Even the telcos got in the act.

Among the overseas players, Netflix and Amazon Prime both launched in India in the first half of 2016. And then there were independent players like Eros Now and AltBalaji which were picking up the pace. Throughout all of this, it seems like, Times, a media group known for its restless innovation and enterprise, was behind the proverbial curtain, planning something big.

Their recent and rather surprising purchase of MX Player has the industry pondering their next move. So what exactly is MX Player and how does it fit into Times' scheme of things?

For those coming in a little late, MX Player has been a rather major app development for video watchers on the go. Allowing users to watch pretty much all video formats, MX player often substituted pre-loaded Android video player apps. While there are many media players, including the VLC app, MX is still rather popular with over 500 million downloads of which more than two-thirds of the users are based in India.

With rivals pulling ahead, Times was presumably looking for a move that would catapult it back into the race and perhaps MX Player, developed by J2 Interactive, a South Korea-based Android developer, is the linchpin. Its huge base could very well form the foundation for Times to launch a major assault on the ever-expanding Indian online video market.

Times' content will become available to the millions of users (a base growing rapidly) of MX Player through an app update.

Speaking to afaqs!, Karan Bedi, CEO, MX Player, claims that the app is being downloaded by 1.2 million users every day. Bedi has been in the online video space for several years.

Karan Bedi

Satyan Gajwani

"We will be introducing our streaming platform within the app. Our user base is huge and focused on consuming video. We hope to enhance their viewing experience by adding a whole new world of content to the existing functionality," Bedi explains.

As expected, the company will concentrate on young Indians who form the core group of heavy consumers of online video, almost entirely on mobile phones. Bedi opines that today's users, especially the younger audiences, are looking for high-quality content that is relevant to them.

Satyan Gajwani, MD, Times Internet and Bedi's boss, underlines the same point in an interview with TechCrunch.com: "A lot of people aren't happy with Indian TV. There are a lot of soaps and it is not focused on young people. The MX Player audience is exactly the opposite of the Indian TV demographic."

In a press release, Times Internet claims that it will upload 20 original shows and over 50,000 hours of content to the Indian consumer in the very first year. Where they will get this volume of content and still maintain quality, is as yet unclear.

Both Amazon Prime and Netflix are subscription based, even if the fees they charge are vastly different: the former goes for as little as Rs 999 per year while the latter has rates to the effect of Rs 500-1,000 per month. Still, the fact that they are subscription based has given heart to local players, most of which are trying the 'freemium' model - much of the content is free, but the special stuff has to be paid for. Bedi says that they might want to go the pay route in the long-term, but will take the ad-supported route, to begin with. He expects to launch in the next few months.

Bedi is excited that their "scale and ambition is very large" and indeed it is. But does he feel daunted by the lead that other players have built up? Apparently not! He points out that the OTT space in India is still young.

Bedi has a point there. Per capita data consumption on the mobile has grown 10x between 2015 and 2017 and millions of users are still coming on. The game has only just begun.