“Advertisers need convincing that CTV is the next gen television”: Amagi’s Baskar Subramanian

Amagi Media Labs, a cloud-based SaaS technology company for broadcast and connected TV (CTV), announced its entry into South Korea yesterday. It has set up a sales and customer support team to serve customers in the region.

The Bengaluru-based firm, which turned into a unicorn in March this year, has a presence in New York, Los Angeles, Toronto, London, Paris, Melbourne, Seoul and Singapore. However, less than a per cent of its revenue comes from India.

Currently, 75% of its revenues come from the US, 20% from Europe and 5% from Asia.

In an interview with afaqs!, Baskar Subramanian, founder, Amagi, talks about the low rate of adoption of technology in the Indian media landscape.

Amagi enables content owners to launch, distribute and monetise live linear channels on free ad-supported streaming TV (FAST) and video services platforms.

Subramanian says that the consumers are ready to make the shift to CTVs, but the advertisers still need to be convinced. It will take about 12-18 months for the advertisers to come on board.

“The biggest stumbling block is the lack of advertising money. A lot of work is needed to convince the advertisers that this is the next generation television. We have a fairly decent number of consumers right now. At least in urban regions, CTVs are growing. Last year, we reached around 10 million households. We need to reach around 20-25 million households to attract the advertisers. But that will happen organically,” he says.

Currently, the ad spends for CTV come through the digital budget, which is typically allocated to YouTube and social media platforms. Meanwhile, television budget remains with the big broadcasters.

Subramanian says that a shift needs to happen to make it a serious opportunity. He expects it (to happen) within the next one or two years.

In India, Amagi is in conversations with content owners - television networks and content studios - to create the FAST ecosystem. It is also in discussions with device manufacturers, as it believes they have an opportunity to become the next set top box.

“As an ecosystem, we need to put in more effort to get the advertisers. I think we are not doing a good job here, both as a company and as an ecosystem,” mentions Subramanian.

Baskar suggests Indian media companies follow an omni-channel strategy and an aggregation model to be profitable.

“The cost of customer acquisition is the hardest problem. We have been recommending our customers to follow an omnichannel strategy, whereby the content is freely available everywhere. Also building your own content on your own D2C platform is an expensive strategy. Going non-exclusive across multiple platforms is the fastest way to make money,” he says.

Amagi was launched in 2008 by Srividhya Srinivasan, Srinivasan KA and Baskar as a cloud-based geo-targeted TV advertising company. In 2015, it changed its focus to become a SaaS-based broadcast and connected TV, largely focussing on the US. Subramanian says Amagi saw a ‘Goldilocks’ situation emerging there.

“Cord-cutting was beginning to happen. CTVs had crossed 30 million households in the US, which is about 1/3rd of the country. More content producers were coming in to create their own platforms. Device manufacturers, like Roku, Samsung and others, were becoming content distributors themselves. The biggest change was that advertisers started coming in,” Subramanian explains.

The next growth markets for Amagi are India, Singapore, Korea and Australia. “The Asia growth rate will be much higher. It is starting at a smaller base, compared to the US,” he says.

In India, Amagi’s clients are Zee, Viacom18, NDTV, Times Network and Shemaroo. Amagi helps them take their content across the globe.

In March this year, the company raised around $95 million in a funding round. Till date, the company has raised nearly $250 million. A large part of the funding will be used for mergers and acquisitions (M&A).

Amagi proposes to go for tuck-in acquisitions. It will acquire small technology companies that can help it do things it has not done before. To increase its revenues inorganically, it will acquire companies that have won accounts and customer interactions. It also proposes to move into complementary areas like education or corporate communication, where it can leverage its technology for videos.

“We truly believe that it is a one-time opportunity for a company like ours to be able to build the next largest media tech company in the world. But we can't build everything internally. So, we are going through an active M&A strategy,” Subramanian says.

After growing more than 100% in the last financial year, Amagi has set itself up for at least 80-100% growth in the current fiscal. The profitable company also proposes to go for an initial public offering (IPO) over the next 24-36 months.