Techzone MD Naveen Bhandari

2012 and Techzone:

The year was pretty good actually. We had some really successful alliances in 2012-2013 and have got some major companies on-board like Sony, Universal Music, NDTV, India TV and Radio City. We mostly had a lot of non-VAS companies on-board who had content and were not able to monetize on the telecom front. So we gave some new directions to them on how to monetize the content on the mobile front. For example, Radio City never monetized on revenues earlier, so we gave them new channels to monetize on revenue and a direction ahead for the next three years.

Profit margin:

Every deal that we sign, we are not on a short term play where we look at revenues from the first year. Infact, in most of our deals we do not make any revenue from the first year at all on any brand. It is a very rare case if we make revenues in the first year and it’s always a three game. The second year is actually when we start looking at revenues because the first half of year one is focused on building the entire technology platform for the brand, getting it established, making mistakes, correcting them, co- correcting them and thereafter getting the brand launched in a proper manner so that we can look at revenues.

The only brand which made revenues this year was Universal Music because it’s in year two of our continuation.  With all of the alliances we have now, we will be aiming for returns somewhere this year or 2014 as we are still in year one with most of them.

Ratio of investment and returns:

The ratio of investment is definitely more than returns, but I still feel that if you compare any other business then I don’t think anyone makes profit in the first year. It would only be year two when any in-house funded business would start giving returns unless it’s looking at VC funding or funding out from somebody else. Every other business would essentially give you returns on the second or the third year and so are we in the same situation. For the investment made for three years, the return is pretty ok. We are surely not on a risk factor, one because we are consciously clear as to what we want to do. Secondly, with the digital domain looking bright and clear in the future there is no way that the content will not be consumed and the consumer will also get specific as to what he exactly wants.

Growth:

Until the December 2012 quarter we have had a growth of about 237 per cent primarily because new acquisitions and year one investments are being paid off now, and certain international markets are also opening up.

Growth in VAS:

I would not attribute any share in our growth to the VAS industry. Infact VAS would eat up into the existing profits. I would attribute it to newer domains and overseas markets being added. We had our product Magic Voice - our in-house technology platform based on IVR which gave us returns in the first quarter itself in the overseas markets.

VAS industry is growing but we don’t attribute this year’s growth to it because all the brands that we acquired this year are actually going to give us returns by April-May, so the growth in that sector will come in.

Contribution of existing market will give us profits in 2013. That is where the current market will give us profitability.

Profitable service of 2012:

It is clear that all platforms like CRBT, RBT, IVR, WAP have all shown growth. There has not been any one service that has stood out. All have done equally well and the profitability has also been equal from all the platforms.  But if I still have to earmark one service, high growth is in the RBT area.

Potential in 2013:

The data services will witness light in 2013-2014. It just doesn’t mean browsing data but the content data which is uploaded. Consumers are going to get more specific regarding how the data they consume is presented to them. A good example would be the NDTV application, which had a story of rags to riches. The app has really taken off today and is a real benchmark on the way data is consumed.

Growth of MVAS in 2013:

I feel there might be de-growth in terms of VAS but that is a market co-correction, it is not permanent. 2013-2014 is the year of correction but thereafter it will be all the way up. This year the growth will go down but only for a short period, it will be temporary. But once that is co-corrected and the systems are set in and the new processes are in effect, there will be a clear cut market going ahead and thereafter it’s a positive year ahead.

Competition:

There is no competition at all. Infact in this space, every existing company is a standalone company and there is no competition as such. Competition only starts if two companies have the same movie. But its not like that, if we have A movie, the other company has B movie. All of us are able to monetize equally. I don’t see any competition in the existing VAS space; it would actually grow in the portal management and platform areas in 2013-2014 and we do see stiff competition ahead. Since we are available on all four domains –SMS, IVR, RBT and WAP every other company which is going to be in each of these platforms will be competition to us. We will be competing with existing players in the space.

Challenges:

The biggest challenge we see is expansion. We are not being able to cope up with it and with the team structure growing high, the new systems for the team is an internal challenge. We don’t have any external challenges. If we are able to scale up the operational part, it will be great.

Investment in app and advertising space:

We have entered both, apps and advertising space and have two companies which have already started operations. One is a company called Tap Mobi whose operations commenced about three months back. It’s a Bangalore based company that is into the application market with a team of 50 people. In the advertising space we have another company called Kratos with a team of eight people as the ad space does not need much people. These are both spin off companies and their first balance sheet will be out by March. We are betting very heavily on both.

Tap Mobi has been operational from the past seven months but the actual shaping up happened only around two months back. But they have been rolling out work to measure the weightage and potential of the market. The company is already earning profits. My personal interest in the app market is utility based products though my team differs from it and wants to be more on the entertainment domain. Its co-correction and they will add new verticals to the app market. So it will be content and utility both. They have already rolled out around 25 apps on the iPhone and android devices and Blackberry is on the cards and will launch soon. We got a brilliant response on the mobile apps. It was very easy for us to seep into the market because we already have the associated brands and companies who wanted an extension to the app market from us. It’s now like a one stop shop for them.

Kratos rolled out around 15 January and is high on technical grounds because of modality and structure of the platform. So complexities are very high. If the mobile advertising space gets even five per cent of the total overall ad spend, its a billion dollar industry by itself. Ours won’t be a product offering but an advertising platform on SMS, WAP, IVR and more.

Content expansion:

We just want to consolidate these companies which we have just started. We just want to integrate the content we have now. So 2013-2014 will not focus on any major acquisitions or brands, if something comes our way we will surely go ahead but primarily we want to converge.

Strategies:

Looking at the way our team has handled the brands which came on-board and the deliverables which were committed and are being delivered, I don’t think there would be any problem in beating the competition hands down. The team which has already delivered in 2012, its efforts will pay off in 2013-2014. The newer brands that we rope in, it will be easier for us to pinch the deal and walk away with it.