IN DECEMBER 2012, Gopal Vittal, then director (special projects) at Bharti Airtel, was in Silicon Valley, meeting companies that could help the telecom giant find ways to sell data. SingTel, which owns 33% of Airtel, set up a meeting between Vittal and Vuclip, a mobile video streaming company based in San Jose, California.
That’s when Vittal, now CEO, dreamt up Airtel’s “video for Re 1” concept and Vuclip got a chance to tie up with the leader in the world’s second-largest telecom market. “It was a revenue opportunity from a growing base of users accessing video for the first time on their mobiles,” says Vuclip CEO and co-founder Nickhil Jakatdar.
The novelty of Vuclip, however, is not in creating sachets of video. YouTube and other video streaming sites have similar products. The difference is that Vuclip streams video on any device and on any network, without buffering. “Anyone can create the video products. But not everyone can deliver them on an Internet-enabled feature phone on a 2G network. That is where we score,” says Jakatdar. Vuclip has technology to compress multimedia content without compromising on quality, and ensures that networks do not get clogged even if traffic goes up. For Indian operators, whose bread and butter business comes from 874 million voice customers, technology such as Vuclips’s does exactly this.
As of November 2013, Vuclip had over 100 million monthly users, of whom India accounted for 20 million. There are no numbers to specifically indicate the share of video revenues, but mobile value-added services in India constitute a big market.
A Ph.D. in electrical engineering and computer sciences from the University of California, Berkeley, Jakatdar has 46 patents in his name. Initially, he was only an investor in Vuclip. In 2008, with the iPhone launched, and YouTube offering an app to access 20,000 videos, he sensed that the future of multimedia consumption was in mobile devices, and joined the startup as CEO.
One of his earliest decisions was to focus on the medium of access. Unlike YouTube, which started on PCs and moved to mobile, Vuclip was always about mobile. But delivering high-resolution video on a mobile is a challenge because of the small screen, low battery life, processing limitations, and small bandwidth. Add to this a fragmented ecosystem, with an array of operating systems and models. So Vuclip started working on technologies to overcome these hurdles.
The company did not want to be restricted by the number of videos or own huge capacities to store them. So it took the route of creating an index of all non-copyrighted videos on the Web, which could be accessed just like one would run a Google search (this makes the number of videos double what’s available on YouTube).
This indexing method and the multiple mobile platforms call for optimisation of content to play it on various devices and across formats. Vuclip’s technology instantly optimises a clip into the format required for a particular device. For copyrighted and regional content, it sourced rights to stream the content and viewers would pay per use.
Competitors such as YouTube, BoxTV, and Apalaya do the optimisation in advance, convert the files into various formats, and store them. When a request is received, the optimised file is searched and delivered—a process that not only takes time but also involves storage.
Jakatdar’s next goal is to convert users into paying customers (at present 20% of its customers pay for a service which provides advertising-free, premium content). Its $10 million annual revenue largely comes from 50 operators in the form of advertising revenue share and data access fees.
Advertising is a key revenue generator. Vuclip has consumer goods companies such as HUL, Nestlé, Cadbury, Procter & Gamble, and others in its kitty. Jakatdar is eyeing a slice of TV advertising budgets and not just digital ad budgets. But unlike banner ads, Vuclip is giving advertisers an opportunity to bring videos to viewers just like they do for TV.
Vuclip also provides customised solutions such as apps for content creators like UTV and Sony Entertainment Television for the Nokia App store. “These are strategic relationships. As the market grows and TV viewing habits change, we will be prepared [to catch the wave],” says Jakatdar. The Re 1 model is exclusive to Airtel in India but Vodafone and Tata Docomo offer free as well as paid Vuclip-powered videos.
“In the emerging world, Internet-connected mobile devices will likely be the first screens for multimedia, and we have to catch that wave,” says Jakatdar. He knows video clips alone cannot add up to a substantial revenue unless volumes are huge. There is also the fear of fatigue and a scenario where users would prefer to watch a full cricket match or a movie on their mobiles. The video sachet is preparation for such a phase.
Vuclip has what it takes to leap into the big league, but Google will be closely watching any player trying to break into YouTube’s territory. While Vuclip is a perfect acquisition target, its investors may choose not to sell out.