Winning with mobile

How Vuclip aims to help broadcasters and telecom operators benefit from mobile video
Jakatdar is optimistic about growth in the region, especially Saudi Arabia.

For broadcasters, mobile video often appears to present more of a headache than an opportunity. While it might increase the potential audience for any given content, it also opens up numerous challenges, from potential cannibalisation of core revenues to the logistics of distributing and monetising content effectively over mobile networks.

But for most broadcasters in the Middle East, the importance of mobile as a platform for content distribution and consumption is in no doubt, and the debate is swiftly moving on to the issue of how to make content work on mobile, rather than vain attempts to protect content from mobile.

For US-based Vuclip, which specialises in delivering video content over mobile, broadcasters and mobile operators have everything to gain by focusing on delivering video seamlessly on mobile devices and networks. Vuclip, which sits between broadcasters, content providers and mobile operators, helps its partners to monetise video content by making it more accessible to the end user.

Once Vuclip has acquired content from a broadcaster or content owner, it formats it for mobile devices, tags it with the relevant metadata that allows it to be searchable, and then delivers it from its platform which uses algorithms to reduce the amount of bandwidth required.

Vuclip, which was established in the US in 2007, currently works with broadcasters, content providers and mobile operators in high growth markets including the Middle East, Africa, South East Asia, India and Latin America.

The company has adopted a model whereby it allows subscribers to search and watch video content on its platform, with about 70% of content available for free, and the remaining 30% premium licenced content available through a paid-subscription. This model has proved successful, allowing Vuclip to grow a large subscriber base of some 100 million users, of which about 7% pay to use the premium service.

Nickhil Jakatdar, CEO of Vuclip, said that the company developed this model as it sought to find a means of building loyalty and a large subscriber base, including a segment of subscribers who would be willing to pay for premium content.

“We will always give about 70% or so of our content for free because that will attract the consumers and keep them there for a long time, but then for a certain 20-30% of our content we will ask them to pay for premium,” Jakatdar says. “If they choose not to pay, no problem, they can continue watching the free stuff, but we will keep trying to upsell them on relevant paid content depending on their free content consumption.”

He adds that the free contentis advertising supported and the paid-for content is available via a subscription type model. “If a consumer says look I don’t really want to pay, then they effectively pay for it by watching adverts, but if they finds the ads irritating and want uninterrupted view and premium content, then they have the option,” Jakatdar adds.

While the Middle East only accounts for a relatively small proportion of Vuclip’s subscribers, it is one of its most important regions. “Markets like Indonesia and India have a high volume low ARPU, while the Middle East is lower volume and higher ARPU,” the CEO says.

Jakatdar has numbers ready to highlight the importance of the Middle East. “Today, 400-500,000 out of our 7.5 million paying users come from the Middle East, which is about 6-7% of our paid users. However the Middle East accounts for about 20% of our revenues.”

Not surprisingly, Vuclip has been particularly active in the Middle East, signing a succession of agreements with partners in the region in the past year. For example, in November Vuclip formed a partnership that will allow it to showcase the biggest blockbusters from El Sobky Film Productions. The agreement, with content provider Digital Zones, distributor of El Sobky films, is in line with Vuclip's plan to expand its selection of Arabic content.

In August, Vuclip signed a partnership with the World Wrestling Entertainment (WWE) Ltd. The partnership is aimed at enabling WWE fans in emerging markets of the world to access video clips on their mobile phones. Vuclip will make WWE’s video clips available on the Vuclip service in the markets of India, Africa, Middle East and South East Asia.

Through this arrangement, WWE fans can stream the following mix of video clips on their mobile devices: match highlights such as Slam of the Week from both RAW and Smackdown; The Vault, a flashback to a monumental match; WWE Classics from legends of the past; and WWE Countdown which shows favourite superstars and match moments.

And prior to this, in April, Vuclip agreed a mobile content deal with the brand management department at MBC. The deal gave Vuclip subscribers the opportunity to watch some of the Middle East region’s most popular reality TV shows such as Arab Idol, Arabs Got Talent, The X-Factor and The Voice.

The partnership included anytime, anywhere access to premium drama, lifestyle and sports content from the leading Arabic entertainment studio, in addition to the latest Turkish drama series dubbed in Arabic.

These kind of deals have been important for Vuclip to develop is paid subscriber base in the Middle East.

“In the Middle East we had to go get the content that was relevant there, so from the Egyptian TV stations or from the likes of the MBC. We then make that available to consumers on mobile because that at the end of the day is what they come to watch,” Jakatdar said.

But developing this side of the business was not easy; there were many different content owners in numerous different countries who each needed to be encouraged to come on board. “One of the things we realised early was that content is going to be very fragmented, there isn’t this one big person who has everything. You have to work with a lot of different content owners which is a lot of work,” he says.

However, Jakatdar adds that the real work begins after the content deals are struck, as that is when the content must be prepared to the Vuclip experience, and that means details such as digitisation, metadata andsubtitles. “The biggest bottleneck is that once you do the deals with the content owners, how do you actually ingest all of that content that they have generated over the years?

“Some of them have it all digitised but many don’t, so how do you ingest that content even after you acquire it? A lot of the content is without metadata to make it searchable. There aren’t subtitles for all the content in all the languages, so we have to go figure out the whole digital content operation after acquiring it and ingesting it into our systems. We look at how to make it more digital friendly, more searchable and to ensure the content works across devices.”

This task, in so many different regions, is quite labour intensive to the extent that Vuclip has a team of about 100 people around the world working on data acquisition and preparation alone. However, far from being a burden, Jakatdar makes clear that it is in fact a strategic differentiator that helps give the company its raison d’etre.

“Over time we have made a very conscious decision that we need to make this a strategic differentiated product and so we have gone and picked out more than a 100 person team,” he says, adding that the total workforce is about 300 people.

Local tastes are important, even for something as simple as curating content for the home page in different countries. “We have significant content operations in India, but while they can do a certain set of things the local sensitivities about which content deals to go do or what content to curate or the front page in Egypt versus front age in Oman or Kuwait has to be done locally, so we have teams sitting in many of those countries even in Dubai, Egypt, Africa, South East Asia, about 12 or 13 countries,” Jakatdar says.

Another key aspect of Vuclip’s business strategy has been working with mobile operators. This is a key pillar of Vuclip’s strategy, as it leverages the operator’s billing relationship with customers to charge them for the premium service. The is critical in Vuclip’s main markets including the Middle East, where credit card penetration is low and even those with credit cards are unwilling to hand over details to subscription services such as Vuclip. In this scenario, the mobile operators offer the perfect partnership, as they can provide the billing service as well as the data connection required to allow the user to watch mobile video.

“We realised that the best mass billing approach is mobile operator billing because they already have a relationship with the consumer through the prepaid cards or post-paid users, so we started integrating into billing pipes of mobile operators in all these regions. We started with India but in the Middle East we tied up with Du and Etisalat in UAE and then similarly with their counterparts in the other countries,” Jakatdar says.

He adds that the operators are happy with the relationship because Vuclip’s service is another draw for their customers and it also helps to reduce the burden of video on their networks because it makes it work more efficiently.

With the billing model in place and the strategy of offering a free service and paid-for premium proving that the service can be monetised, Jakatdar says that the next phase is to “build scale in the OTT world”.

“While today we have about 100 million consumers who access the free service and about almost 7.5 million consumers who pay for the service, we still feel this is just the tip of the iceberg,” Jakatdar says.

“We are building up with aim that the 100 million customers should start approaching 1 billion, and the 7.5 million paying customers should go up to 100 million. What is already beginning to change and will start accelerating more is that almost every consumer has a mobile device and more importantly they are getting comfortable with data.”

Jakatdar’s plans may sound ambitious, but the fact thatHong Kong-based PCCW is now the sole investor in Vuclip adds significant credibility to the company’s aims. Jakatdar adds that one of the reasons that Vuclip wanted the backing of an investor of PCCW’s stature was the experience it could bring to the company. “This is going to be a game where you need that backing, knowledge and know-how about how these parts of the world work because the US and Europe are not our focus, it is South East Asia, India, Middle East, Africa, Latin America,” he says.

Vuclip inks deal with Digital Zones

Vuclip formed a partnership that will allow it to showcase the biggest blockbusters from El Sobky Film Productions.

The agreement, with content provider Digital Zones, distributor of El Sobky films, is in line with Vuclip's plan to expand its selection of Arabic content.

The partnership with digital zones will enable consumers to access and enjoy content from one of the region’s largest and most well-known production houses. Vuclip will offer a selection of blockbusters such as Egyptian hits El Harb El Alamya El Alamya El Talta, Aesh El BolBol, El Haramy Wel Abeet, Tatah, Abod Mota and many more.

Arun Prakash, COO, Vuclip, said: “For us, tapping into El Sobky content marks another important step forward in our continued efforts to bring the best diversified content mix to our customers in the region. The Middle East represents one of the most diverse regions in the world, with great opportunities for us. The current audience responds to not only the visual quality of content, but also the language in which it is delivered. With El Sobky’s extensive list of Arabic titles, our customers are can enjoy more regional content.

Mobile video in numbers

Use of social networks and instant messaging platforms for mobile video sharing continues to increase rapidly, according to a survey from Vuclip, a premium mobile video on demand (VOD) service for emerging markets.

The report, which provides insights into consumer behaviour associated with sharing videos on mobile, revealed that:

• 38% of respondents indicated that they share videos at least once per month.
• 36% of respondents reported a preference for sharing via Facebook. Twitter and Whatsapp came in at 27%.
• Consumers in the UAE reported a higher preference for sharing videos on Twitter than other markets where Whatsapp and Facebook dominated.

Furthermore, the report also indicated that the quality and calibre of content was critical to sharing patterns on mobile.

Consumers in the UAE reported the top three key criteria for sharing video:

• High quality videos (57%)
• Quality of content (28%)
• Celebrity appeal of the content (26%)

Music videos top the list for sharing when it comes to professionally created content: Music videos are most frequently shared, followed by movie trailers and comedy clips.

Not surprisingly, smartphones are driving the trend forward:

• 48% of respondents reported to be using Android OS based devices.
• 25% of respondents reported to be using iOS based devices.

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