Amagi moves to tech-share business model

The business model of cloud-broadcast technology company Amagi has undergone a radical change over the last nine months. After Deepakjit Singh took over as CEO in March last year, the company has moved from a cost-based business model to a tech-share model that allows partners to share a part of their revenue with Amagi instead of paying up for using the technology. The company now functions on a 17-22 per cent tech-share basis. 

Following Singh’s entry into the company, Amagi’s co-founders Bhaskar Subramanian, KA Srinivasan and Srividhya Srinivasan have all immersed themselves into the research and development activities of the company. 

Singh said even though the initial stages of the restructuring was tough, Amagi has not lost any clients over the last nine months. “They understood what we are restructuring for. We were trying to cover up a flaw in the business model,” he said. 

He further added that despite seeing a short-term dip in the months of May, June and July of 2018, Amagi’s annualised revenue has not changed much. “On an annualised basis, we have turned the company around to be profitable. And we are expecting an increase in our revenue at the rate of about 50 per cent year-on-year for the next four years,” Singh added. 

Singh explained that the new business model reduces the conflict between the broadcaster’s ad sales team and Amagi’s ad sales team. Under the new model, Amagi’s ad sales representatives will sell spots in Tier 2 and Tier 3 cities with TV channels selling spots in Tier 1 cities. He explained that this will help channels now gain revenue from regions where they had a smaller footprint. This allows broadcasters to earn more money for the same spot. 

Singh said that he expects significant growth to come from Tier 2 and Tier 3 cities where ambitious entrepreneurs still see television as the primary reach medium. Therefore, Amagi is deputing a healthy number of ad sales representatives in smaller cities and towns. 

This tech-share model has also been implemented globally for customers of Amagi. “This model has been a very big success in the US. Amagi has taken off very well in the US especially in the digital-first market,” he said. 

In addition to changing the ad insertion business model, the traditional playout business which was cap-ex heavy has also been turned into a revenue share model with Amagi cloud technologies. “We have changed the entire ecosystem, it is now revenue driven and no longer cost-driven,” he said, adding that this model is being accepted globally as well. He said that with this change in the business model there is no room for customers to extract discounts from the company because everything is based on the revenue the broadcaster makes. 

Singh is proud that Amagi is a leader in this industry not only within India but in international markets as well. He said that Amagi will also be strengthening its broadcast feed monitoring services for all its customers irrespective of where they are located. Channels airing in the US and Europe will be monitored out of Amagi’s Bengaluru office. 

Another highlight of the restructuring is that the company will annually spend Rs 15-20 crore on research and development for the next 4-5 years. The team will be led by the company’s co-founder Bhaskar Subramanian. 

As of 2019, Amagi services more than 160 linear channels with deployments in over 40 countries. The company is also heavily geared towards providing ad monetisation solutions to OTT players in India. In August 2018, SonyLIV partnered with Amagi to grow OTT ad revenues with mid-roll ads. Since Singh took over in 2018, Amagi has been adding one new channel every 15 days and added a total of 28 new clients in 2018 alone.