Vanita Kohli-Khandekar: Selling entertainment on the net

The question is now getting serious. Across the world, film, music and TV companies are struggling to find ways of harnessing the power that internet offers as a medium — in reach, interactivity, width and depth. Google’s YouTube, for all its success and ownership, is still struggling to make money from music videos. The same goes for every major TV and film company in the US, the petri-dish market for almost everything to do with the internet.

In India, the question is of interest if you know two things. Firstly, the broadband population — people accessing the internet at 256 kbps and above — is finally galloping, not crawling. From 47,000 in 2005, the number of broadband subscribers grew to 2 million in 2007. By January 2009, it had risen to a whopping 5.65 million. That translates to roughly 28 million users or just under half the total population of net users of 61.2 million.

That’s a large chunk of people who could watch or download films, TV shows, music videos and other things that require higher bandwidth than say music or ringtones. Clearly, all that competition between telecom companies for last-mile access — to offer Internet Protocol TV (IPTV), direct-to-home TV (DTH) or broadband access — is helping increase penetration and reduce prices.

The two interesting Indian examples that I came across — Rajshri.com and Nautanki.tv — had a common pattern: The growth coming from small-town India and the popularity of independent content. Whether it leads to profitable entertainment businesses on the internet is as yet unclear.

Rajshri.com (a part of Rajshri Films) was launched in November 2006, with the release of the Barjatya Movies’ Vivah in theatres and online simultaneously. Over the last two years, Rajshri has added all kinds of TV, film and other content to its site, totalling up to over 25,000 hours. From a paid model, it has recently moved to a more sophisticated model, like streaming that depends only on advertising. The composition of its audience — 2 million visitors a month — is changing too. From a 70:30 split in favour of overseas traffic sometime last year, the figures are now 64:36. And, “the Indian figures are creeping up,” says Rajjat Barjatya, managing director of Rajshri Media.

The average time spent is relatively high at 20-25 minutes per session. Barjatya claims that the CPM or the cost per thousand that Rajshri.com commands is anywhere between Rs 50-500. Though cash flow break-even was expected by March 2009, the slowdown has pushed things back.

Nautanki.tv (in which Hungama owns a majority stake), began in 2006 like Rajshri, but with a different model. It works a bit like the video version of Google’s Ad Sense. Instead of waiting for people to visit its site, it takes content (through widgets) to 11,000-odd websites, blogs or social networking forums such as Rediff, YouTube or Hulu. It claims to generate 30 million video views of about 5-6 minutes each. This translates into an average CPM of Rs 800, claims Nautanki.tv Networks’ founder and CEO Sunil Nair.

Nautanki’s independent channels — Saptrangi for Marathi poetry, literature festivals or Mirch Masala for independent film-makers — generate 35 per cent of the traffic. The rest comes from popular content from established TV channels.

Of those 30 million video views, 45 per cent are from India, 30 from the US and UK and 25 from the rest of the world. Of the Indian traffic, more than 60 per cent is from Tier-II cities (where BSNL is pushing broadband penetration). This, incidentally, is true for many mainstream media sites in India. For instance, more than one-third of the traffic on NDTV.com in 2008 came from Tier II and III towns, and FTV is more popular in small towns.

So both Rajshri and Nautanki, which started with a NRI focus, are slowly discovering the gold in the long tail of content for metro-India and popular content in small-town-India.

This is firmly pushing their focus back to the Indian market. As the broadband numbers keep going up, expect a lot more entertainment options to explore the medium. That should soon lead to sustainable businesses, just like it did in news or other specialised content sites.

The writer is a media consultant . vanitakohli@hotmail.com