India's mobile TV scene is plagued by challenges such as high subscription and data fees as well as poor network speeds and, thus, bad user experience. Additionally, revenues tend to be contested by the telco, broadcaster and mobile TV service provider, and this confusion further strangles industry growth.
This is why Zenga TV, a local service provider of content such as entertainment and news programs, have decided to offer its service free to its subscribers while ensuring the broadcast is of good quality, said company CEO Shabir Momiim.
The executive, who's also one of the co-founders of Zenga Group, told ZDNet Asia in an interview that as long as mobile TV services in India are offered free, it will grow. This is seen in the company's healthy profits, he added.
"Our revenues are in the region of INR 150 million (US$3 million) now...[and] we are expecting it to increase to INR 515 million to INR 618 million (US$10 million to US$12 million) by March 2013, " he stated, adding that the company broke even in the second year of operations between 2010 and 2011.
To achieve these figures, the company is targeting to increase its India subscriber base by 50 percent to 70 percent, Momiim revealed. In other words, this means bringing it up from the existing 7 million to the region between 10 million and 12 million customers by March next year. It then aims to double that to 25 million in 2014, he said.
The company has an additional 2.5 million subscribers outside of India, in countries such as Pakistan, Sri Lanka, Bangladesh, and the Middle East. It receives 55 million video views in a month, with the average viewing time at 12 minutes, he added.
This growth in customers has not been through advertisements though, the CEO noted, saying the company has chosen to "grow by word of mouth" as a sign of confidence in its service.
Tapping on cloud benefits
His confidence stems from the belief that Zenga TV is addressing the gap in mobile TV delivery currently by using its technology to deliver a mobile TV experience optimized according to the type of device and the network used to stream the content. The technology is based on cloud computing, which allows it to provide good quality video streaming over 2.5G networks and above.
Going cloud also cuts down on capital expenditure, Momiim noted, saying most other mobile TV operators in India have to spend on procuring content as well as invest in hardware infrastructure.
"If you ask the telecom operators to pay you [for your service], they will ask you to put up at least five dedicated servers. This pushes up capital expenditure drastically. Moreover, the operators will not share your risks. They will always ask you to maintain over capacity," he said.
Additionally, since Zenga TV is cloud-based, it can handle any spikes in demand, the executive said. For example, it managed the Indian Premier League Web site in 2009 and there were 500 million users accessing it then. "It would have been impossible for us to meet such stupendous increase in viewership if it wasn't for the cloud. It would have taken us weeks to procure more servers to meet the demand."
Monetizing through ads, partnerships
When asked how Zenga TV makes money when it offers its product for free, Momiim said while it does not charge for its service, the company has three different sources of revenue. The first one is from partnership with handset manufacturers, in which its service is embedded within the devices these vendors produce, he elaborated.
Secondly, advertisements, such as the live ads on its Web site, help generate revenue too, while the third source is through third-party agreements, the CEO said.
"We distribute content and earn a fee on it," he said, citing the example of MTV and Nokia, which had organized live concerts that were streamed via Zenga TV.