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OTT player Lukup Media applies for MSO licence
MUMBAI: Even as over-the-top (OTT) players look bent on luring subscribers away from traditional media companies, one OTT player is embracing traditional media to sell its services to consumers.
Faced with subdued response to its OTT service, Bengaluru-based Lukup Media has decided to bundle its OTT offering with traditional TV and internet service. Hence, the company has applied for a multi-system operator (MSO) as well as an internet service provider (ISP) licence to provide TV and internet service.
Founded in 2010, Lukup Media had launched its on-demand television service Lukup TV last year in Bengaluru. When it started selling its product to consumers, the company realised that it was difficult to convince them to pay for an OTT service over and above what they pay for cable TV or direct-to-home (DTH) service.
“We launched our OTT product last year. But when we started selling the product, we observed that OTT is viewed as a value-added service. Consumers want to have their TV channel on it as well. When we tell them that they have to buy an STB to view the TV channels, they think ‘oh we have to invest in both’. Hence, there is some hesitation,” said Lukup Media founder-CEO Kallol Borah.
Instead of taking a cable connection, a broadband connection and then subscribe for an OTT service like Lukup TV, subscribers can take one connection which will give them linear TV channel which can run on on-demand basis, internet access, and OTT service.
Deals with LCOs
Borah said that the company has already signed up with local cable operators (LCOs) to provide its services. Lukup has signed contracts with 200 operators with a total base of 1.8 million homes. “We started signing contracts with LCOs in October or November last year,” he added.
He also said that the company has started doing the trials and will be commercially available as soon as it gets the licence.
“We are starting the trials now. We want to ensure that things are running smoothly end to end from our headend to customer. We are expected to complete our trials with 30 LCOs,” he stated.
He also said that LCOs can provide these additional services without disrupting the existing services of the MSOs to which they are linked.
“If you look at the infrastructure, most LCOs have got six or 12 core fibres. If you have 12 core fibres, only one core is required for transmitting TV signals. A lot of them have four or five core free. While most MSOs are providing one-way RF feed, we will provide a two-way IP feed,” he stated.
Lukup has deployed a team of 15 members to work with LCOs.
Lukup Media will provide bundled service through its in-house product Lukup Player, which will allow users to stream content on more than one screen or device at a time.
“The Lukup Player works both as a router and an STB. It gives you content and internet access on multiple screens. Cable connection will link up to Lukup Player. The same cable will carry TV and broadband. The cable and internet connection will run through the same pipe,” Borah said.
He also pointed out that Lukup Player is a dual-HD product with a provision to record up to 500 GB of content. Additionally, the broadband router will also create Wi-Fi network in homes.
Though the Lukup player is available at a steep price of Rs 9,000, Borah said that it is quite competitive considering it will have multiple utility.
He also said that the company is in talks with a financing company to provide consumers an option to buy Lukup Player for an EMI of Rs 350–400 per month.
Borah also informed that the company is aiming to provide the bundled services for less than Rs 1,000 per month.
“As far as pricing is concerned, a single connection will be available at less than Rs 1,000 per month, which will include broadband and TV connection. We will provide broadband at 4 mbps speed with 30 GB download. Our target is to keep it below Rs 1,000 to make it affordable.”
According to Borah, the consumers will have to pay Rs 1,400 per month for TV, broadband, and the device.
“Today the option is you buy the device upfront and don’t pay anything for the OTT service. For the dual-play service, consumer can pay Rs 1,300–1,400 and the device will come for free because the device cost is included in this,” he explained.
Content to be stored on cloud
Borah also said that the content recorded on Lukup Player will be stored in cloud so that it can be accessed anywhere, anytime and on any device.
“People record a lot of content on their DVRs and store a lot of content on their devices. But DVRs at max offers 500 GB recording space and whatever is recorded cannot be watched on devices other than TV. The Lukup Player combines the connections and devices,” he said.
According to Borah, the challenge is to turn television into an on-demand medium, so that people can catch up on whatever they want to view at their convenience. “People today are connected to multiple screens and not just to one screen. With so many devices, why the STB should be connected to just one screen? Why can’t it be connected to multiple screens?” he stated.
Content deals with broadcasters
Borah also said that broadcasters have shown keen interest in the project since there is revenue potential from other services apart from the linear feed.
“Since our connection is an IP connection, we can provide much more than linear TV. We can provide catch-up TV, pay-per-view, electronic sell-through services, which essentially means that consumer can download content and keep it for eternity,” he explained.
For linear feed, the company is looking at cost-per-subscriber (CPS) deals, while non-linear feed will be on a revenue share basis.
Besides Indian broadcasters, Lukup has signed 15 contracts with international content companies. Discussion is on with other broadcasters.
As far as the rollout plan is concerned, TV and broadband services are going to be launched in Mumbai, Pune, Hyderabad, and Bengaluru in Phase I. Phase II will see rollout in Delhi NCR and Gujarat, while Phase III will cover 47 cities with over one million plus population.
Borah also said that the company has leased an entire national fibre network to provide steady broadband service.
He noted that the services would be rolled out in cities where cable TV digitisation has been implemented since LCOs in these cities have optic fibre through which these services can be provided.
Investment and fund-raising plans
Currently, the project is entirely funded by the company’s promoters including Lukup Media CFO Harsha Mutt and two other founders based outside India.
According to Borah, the promoters have already invested a lot of money in the venture. They will be pumping in another Rs 100–120 crore (Rs 1–1.2 billion) for rollout in the first eight cities. For rollout in the remaining 47 cities, the company will require funding.
“This year, we are looking at eight-city rollout. We will be really happy if we can roll out in eight cities this year and dig our heels and offer a great product,” he said.
Lukup had last year appointed KPMG to scout for investors to raise $20 million. Borah said that it is still working with KPMG but the ambit has been widened to $140–150 million. This funding is required for rolling out the services in 47 cities in 2016.
He said that the company first wants to prove the business model in the initial phase and then look at fund raising to scale up.