<font color="#ff0000">Special: </font> What's the Hungama all about?

This is not a story that set out to answer the question: ‘So, what is a media company?' However, one of the first questions that arose when we chose to do a story on Hungama was: Is Hungama a media company?

Hungama Digital Media Entertainment is a 10-year-old company that creates content for the PC, mobile, portable devices, IPTV and DTH. It also develops gaming, does online media planning, designs websites and promotional marketing. What started as a website is now a 700-employee global company (with earnings estimates from the half-a-dozen people we asked ranged from Rs 200-450 crore, though the company hasn't confirmed any figure) with a presence in 37 countries. What does Hungama see itself as?

Boom in the bust

"We were the poster boys of the internet era," says Neeraj Roy, the MD and CEO, as Hungama grew by acquisitions and tie-ups.

In 2000, the company acquired IndiaFM.com, a top resource on Bollywood. In the same year, it became the first portal to enter into a licensing agreement with the Indian Music Industry (the website was renamed Bollywoodhungama.com in 2007).

Then came the bust and Hungama decided to offer clients integrated services with on-ground activation thrown in. Event properties for brands such as Sprite, Kinetic Bajaj, Coca-Cola and Hero Honda were created. Hungama Promo Marketing was set up as a division in 2001.

"Hungama.com was a conduit between brands and consumers, but we decided that just banner ads won't do - you have to engage the customer," explains Neeraj. It also helped Hungama survive.

Entertainment media

The mobile value added services (MVAS) industry in India was worth Rs 5,780 crore in 2008, of which non-SMS services such as ringtones, caller ringback tones (CRBTs), games and other services contribute 47 per cent (source: IAMAI). To break it up further, it is estimated that 65 per cent is consumed in audio format (ringtones, CRBTs and full music tracks), 25 per cent is video and imagery (photos and wallpapers) while the rest is games and applications. In terms of revenue, the mobile operator keeps 60-80 per cent, the content owner receives 20-30 per cent, while the content developer/aggregator only keeps 10-15 per cent.

Hungama also developed the digital services business working with brands such as LG, Coke, ESPN, NIIT and Axe. By 2005, Hungama had two portals, a digital services business (internet and mobile) and a promo marketing business. At this stage, the company hit upon what would become a key business - digital distribution of music. Hungama announced a deal with T-series, acquiring the exclusive global licence for the digital content owned by the music company. The T-Series deal, which extends up to 2011, is at the heart of Hungama's success.

In 2005, Hungama also ventured abroad, sharing Bollywood content with networks such as SingTel, O2, MTN and Maxis. Hungama became the only Indian company to supply content on Apple's iTunes store in 2006. It developed content deals for South Asia with Sony Pictures International, Warner Bros, Paramount and FTV. International business contributes about 20 per cent to the revenues.

Since then, entertainment has been the core of Hungama's content business. The company claims it has the exclusive rights to over 500,000 music and video titles. Says Neeraj, "If you look at any media (with the exception of the internet) entertainment has always been the catalyst from a consumer perspective. To unlock media, entertainment plays a very big role. So, it is only logical that we move in that direction."

Growing canvas

In 2007, Hungama added gaminghungama.com to its list of internet properties. This was also the year Hungama tied up with a company called Mobile Magic to offer content in physical form on Media Magic cards which are preloaded memory cards for the mobile.

Hungama has also experimented with other digital platforms. In the US, it has a JV called Saavn (South Asian Audio Visual Network) which distributes content on VOD (video on-demand) and IPTV.

Hungama aims to reach 60 countries from the present 37.

Music to the ears

This year promises to be a memorable one for Hungama. In January, the company announced a new corporate identity (it was formerly Virtual Marketing (I) Pvt Ltd) and two major initiatives. The first is a tie-up with BSNL for a portal where the latter's broadband subscribers can download over 50,000 songs and 1,000 videos for a subscription fee of Rs 149 per month.

The second venture is what has Neeraj and his team excited. For the first time, Hungama is all set to retail to consumers directly. It is developing a portal where consumers will be able to shop for the latest albums, songs, ringtones, wallpapers and videos. This service will also be available on the mobile.

Neeraj adds, "We have internet and mobile properties which reach 16-17 million unique visitors (per month), but we have done little in terms of monetising them."

It is communication

But he cautions that companies which own inventory ought to be vigilant about being a media agency, which can cause conflict of interest.

Says Sulina Menon, a media and branding consultant and trainer, "Looking ahead, aggregation of content is going to be a big thing. Look at YouTube! It is the sign of things to come."

An entrepreneur working in the digital space feels that Hungama's model is "risky" because it pays upfront for the content. Siddhartha counters this by saying that aggregation is just 10 per cent of the business. "And unlike VAS companies, we don't just hand the content over to the operator," he adds. There are others who believe that Hungama is largely dependant on the T-series deal, but Hungama claims it works with over 300 content owners.

All-digital future?

While working with traditional companies, Neeraj understands that the role of Hungama may be "minimal at times", but he believes that the digital medium is vast and collaborative. "Once the digital distribution network is established, it doesn't restrict us from piping other content in that. We could do sports, lifestyle, devotion or education," he adds.

Siddhartha sees the digital services business at Hungama growing by up to 80 per cent year-on-year and expects the promo business to double in a couple of years. "We will have a more direct and engaging relationship with the consumer, leveraging our properties by bringing in social networking and other avenues," he explains.