MBA ENTREPRENEURS(4)……AMAGI

MBA ENTREPRENEURS(4)……AMAGI

When Television Goes Local

After leaving SiRF, a Bluetooth technology company in 2008, engineers Baskar Subramanian, Srinivasan Karapattu and Srividhya Srinivasan (all in their late-30s) wanted to start a new business. “We looked at solar, media and various other things. We then thought of creating technology that would help DTH and cable companies,” says Subramanian. 

“We also thought we could do content-independent advertising with the use of technology on television,” says Karapattu. The whole idea was to take the set-top box and make it recognise local advertisements on national television channels. In 2008, the trio approached IIM-Bangalore’s NSRCel, the entrepreneurship and mentoring wing of the institution, and convinced the mentors there that their idea would work. IIM-B incubated the company, Amagi, for 18 months, and it was here that the three engineers homed in on their business model.

Amagi’s key message was to explain the benefits of local advertising to television channels and cable and DTH operators. In June 2008, the trio purchased a set-top box from the US for $5,000 only to realise that it used an archaic analog technology that used cables and was  server-based. But they decided to make it work on chipsets and consumer digital signal processing. So, they decided to create something that would not only be easy to install but would also be easy for the DTH and cable operators to adapt their set-top boxes to. Once the technology was sorted, they had to sell the idea. 

The business model was simple: buy inventory from television channels and sell that to local advertisers. Amagi initially started with retail, jewellery and real estate, and currently works with regional FMCG brands and SMEs who need regional (state-wide) advertising. There are 160 million television sets in India and 600 million viewers, with cable and DTH covering close to 120 million homes. “Geographic targeting in advertising is the future; and not language changed ads,” says Srividhya. Their IP is in the software that goes in the advertisement insertion devices of the cable operator and the software on DTH set-top boxes. They have started licensing their technology to international television networks as well. For television channels, say Amagi’s founders, it would be better to target an audience with regional advertising. They have taken their technology to Asia-Pacific, Europe and Latin America. In India, the company has sold more than 8 million ad seconds, has sales offices in 22 cities, and has tied up with 12 television channels including UTV-Disney, TV-18 and Times TV networks. 

It’s evident that Amagi breathes technology: its data is stored on the cloud, and it interacts with sales teams through cloud-based applications. The founders think their’s can be a billion-dollar company this decade, especially since television advertising is increasing.

Infosys co-founder N.S. Raghavan is the sole investor and has pumped in around Rs 37 crore,  which is being used for increasing sales and channels tie-ups. They have already filed four patents for their technology, and have 1,000-plus advertisers on board. 

They are now focusing on the Hindi-speaking market where there is no regional television option. This means that instead of city-level advertising, they are doing region-level advertising. This has changed the profile of advertisers. And taken Amagi national. 

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(This story was published in Businessworld Issue Dated 03-09-2012)