Head, Consumer Audio Business – India | 17 Jul 2004
“People have adopted FM in a fairly large way, and to that extent radio is quite clearly in people’s mind. So what we are saying is: You have in a way gone through radio, it’s time for you to evolve and upgrade yourself to satellite radio.”
As the head of the consumer audio business for Indian operations, Sanjay Ramakrishnan leads the development and implementation of WorldSpace's comprehensive marketing strategy. He is responsible for the overall sales, distribution, marketing and customer care initiatives for the Indian business. In his stint so far, he has been involved with a comprehensive repositioning strategy for the brand in India. Ramakrishnan has also spearheaded the launch of the World's Largest Music Store range of experience zones for consumers in Bangalore. In this conversation with Shubha Kumble of exchange4media.com, he speaks about what it means to be a satellite radio player, the need to re-launch the brand and more.
Q. Tell us what WorldSpace is all about.
WorldSpace is the world’s first satellite radio company. It was started around 12 years ago in Washington DC and has been operating in India for the last four years. As a company, it’s a satellite-based digital-to-home radio. It’s basically DTH in the radio space. That’s what WorldSpace is all about. Our satellite Asia Star beams music, news and information directly to people’s homes across India and the rest of the Asia circle. It’s a special radio that people need to buy and that’s what satellite radio is all about.
Q. Could you tell us more on your Indian operations?
Commercially our consumer audio business started in 2000 and it has gone through its share of ups and downs. We’ve had a fairly long test-marketing phase in the first two years in terms of figuring out a successful revenue model. The last six months have been very, very good for the company in India. Firstly, now we are very clear about the business model – it’s going to be a subscription-based business. Second, it’s going to be extremely content-led. So, our USP will be the kind of content we bring on to the table and as a music source, we would like to get into every household. It’s not about targeting XYZ in a household; the end vision for the company is to be a part of every household in India, at least the top floor, in terms of SEC A and B.
We have re-launched our services in Bangalore and the response has been very good. We’ll be covering the other four metros by September. The plan is to get into a national marketing campaign for the last quarter.
Q. With advertising spends on radio set to increase in a big way, how viable is a subscription-based model?
In the US, WorldSpace and its sister concern Exim Radio, which was launched a couple of years back, operate as a full-fledged satellite radio company in a market that is vastly saturated with FM and other music sources. Right now it’s been two years since the company was incepted and it’s the second fastest growing consumer durable in the market after DVD. Though the subscription fee is as high as $ 9.9 per month, they are growing at almost a million subscribers year on year. So, if the US can do that in the satellite market, it definitely will hold well across the world and more so in India. Look at what cable has done to the television business here. I believe that we are exactly in the same phase as cable was in the first three to four years of its venture into India. We have reached a point where we need to break into people’s mindset in terms of what the service is. So far, hardly anyone has come out and said our prices are high for the service we offer. So on the price front and the adoption of the subscription-based business model, there is absolutely no doubt. Our content and how we cater to our audience is going to be the key driver that will determine if we reach X or 100X.
Q. But the US market is saturated in terms of FM players, while that is hardly the case in India…
With regard to saturation, I was talking not in terms of industry saturation but purely the kind of media we have. In the US market, WorldSpace falls under the music industry, which in turn falls under the entertainment sector. The general audience in the US has enough and more opportunities to entertain themselves. They have innumerable vehicles of entertainment with music being just one of the sources, whereas in India the entire entertainment industry is in a nascent stage. So, when I say saturation, this is what I mean. Of course, FM is very new here and is still growing. People have adopted FM in a fairly large way, and to that extent radio is quite clearly in people’s mind. So what we are saying is: You have in a way gone through radio, it’s time for you to evolve and upgrade yourself to satellite radio. So while FM is always going to be there, there is a whole new experience available through satellite radio.
Q. At present your audience is still pretty niche in terms of SEC A and B. Are you looking at creating a mass appeal?
In terms of content, you normally define an audience to start a business and we are pretty much in the same phase. We have identified our primary audience and said that this is where the early adopters are going to come from. Even as we have earmarked that, we are very clear that at the end of the day our content needs to cater to everybody. If someone plans to bring WorldSpace to his home, it must cater to all the members of the family. The current content plan is to strengthen our regional offerings. This offers the mass appeal that you mentioned.
On the pricing front, we will definitely see to it that more and more people find it accessible. We have brought down our starting price by 60 per cent over the last six months and at present our entry level costs Rs 2,790. On the receiver front we would like to cater to every household in every category. With regard to content, it’s going to be as premium as ever with regard to the quality even as we give you the range that you need.
Q. Moving to your communication strategy, you launched WorldSpace in 2000 with a big-budget national mass media campaign that had fizzled out after a while. What was the reason behind this?
One of the biggest lessons we have learnt is the manner in which we ought to handle our communication. Earlier, it was a national campaign from Day 1. Today, we are still present nationally in that a person in Delhi or Mumbai can subscribe to us. But we aren’t doing any big marketing activity there. Whatever is happening is small and pretty much falls under BTL.
We are concentrating on each of the main metros and have started with Bangalore. We’ve spent considerable time here, we’ve seen and learnt, and will now move to Chennai. After that we will go to Delhi and Mumbai. So, we are picking up a specific area and are looking into it very, very closely. We were working with a budget of Rs 13 crore but most of the times this is not followed. Areas that need more investment will get it; we are constantly reworking on spends. At present we are looking mainly at Bangalore where the bulk of the spend is going into outdoors and BTL. We are eventually looking at a scenario where 60 per cent of our spends will go into mass media and 40 per cent into BTL.
Also, we have made a conscious move to be simple in our communication. Take the name of the company itself. Earlier we used to call ourselves WorldSpace Digital Audio Services Company. We thought this was the way to convey the business we were in. But it ended up being a bit too complicated for the regular consumer. After all, he or she doesn’t, and more importantly, needn’t know what the back end is. So we decided to convey our business in the simplest possible manner and we now call ourselves WorldSpace Satellite Radio.
Q. What other marketing initiatives have you adopted?
There are a number of organisations that offer music in their premises through WorldSpace. As part of our new marketing initiatives, we are approaching each of them and exploring the possibility of in-store/restaurant branding. Also, we have drawn up a list of places and organisations where WorldSpace would fit in, like gyms and cafes, and are approaching them.
Q. Are you receiving any positive response from the re-launch?
In Bangalore, since our re-launch in end-January, our subscriptions have grown month on month by around 20-25 times. We have targets set for each city and are confident of achieving them.
Q. How are you going about strengthening your distribution chain?
We started off in Bangalore purely through our stores, ‘World’s Largest Music Store’. We have three of them in Bangalore. If we approached dealers directly, we would be faced by the typical questions of how much marketing support we would offer. So instead of approaching them first, we decided to do the campaign and run it for three to four months. We did this quite successfully and then went up to a few dealers, showed them what we were doing, shared our plans and invited them to be a part of our distribution network. We started adding dealers in the last three weeks. Starting with four active dealers, we are today working with around 20. In fact, dealers are calling us and saying that they want to be a part of our network. Along with this we are also looking at getting into the shop-in-shop model. But of course, nothing has been finalized as yet.
Q. What kind of a dateline have you set for a breakeven?
We are hoping to achieve 1,00,000 subscriptions across the country by December. Breaking even is not something we want to discuss as of now. Our main focus is to constantly improve our content and cater to a wide audience.