Thursday, January 12, 2006

The world's listening

MORE than 100,000 subscribers, 130 countries, two satellites, and `over 40 stations, one radio' as its ad says. WorldSpace, the $420-million satellite-based digital audio broadcaster, has come a long way since its launch. In the last year and more, the Nasdaq-listed company has stepped up its India activities in marketing, content and technology — more channels, greater local content, cheaper and better receivers, series of advertising moves and below-the-line marketing campaigns and so on. As a result, WorldSpace recently achieved the 100,000-subscriber milestone.

Andy Ras-Work, COO, who has been in India to kick-start special promotional activities, says the growth came mostly from India. Until December 20 this year, WorldSpace had more than 50,000 subscribers from nine cities, while the rest came from other markets in its coverage area including Europe, West Asia and South Africa.

He says it was possible because the festival period was synchronised with a series of marketing activities and special promotions the company conducted. "It was possible also because we have very good partnerships and distribution channels here. It requires a lot of activities to be put in place as we build this new category here."

Ras-Work, who is bullish on India, says the Indian customer is very amenable to this kind of service. "We are offering them phenomenal content on this platform uninterrupted (without commercials) and at the right kind of price points."

WorldSpace is present in nine cities — New Delhi, Chandigarh, Mumbai, Pune, Ahmedabad, Bangalore, Hyderabad, Chennai and Kochi. "With that we can treat each local market with the level of focus that it needs," says the confident COO. WorldSpace ended the third quarter of 2005 with 75,071 subscribers, up 300 per cent from 18,725 subscribers that it had at the end of the third quarter of 2004.

In addition, in October alone, the company added over 12,000 new subscribers as part of its increased marketing efforts and holiday promotions.

"As we add cities to our market rollout in India, we are also focused on the quantity and the quality of our retail points of presence where our service is sold. We added more than 400 stores since July this year. Because the consumer electronics distribution in India is significantly more fragmented, we are approaching retail and distribution on a city-by-city basis. We complement these networks with our own Experience Stations," explains Ras-Work.

He said WorldSpace plans to dedicate significant resources to its current business strategy to support its marketing and outreach efforts, developing its product offerings in India through cost-effective partnerships and agreements and demonstrating the power of its business model.

The company recently completed its initial public offering in the US and mobilised close to $221 million. In addition to that, it issued XM Satellite Radio Holdings Inc (another satellite-based audio broadcaster in the US) shares worth $25 million. In connection with this transaction, WorldSpace entered into a global satellite radio cooperation agreement with XM pursuant to which both entities agreed to cooperate on receiver technology, terrestrial repeater technology, OEM and third party distribution relationships, content opportunities and new applications and services. In addition, Gary Parsons, Chairman, XM, was elected to the WorldSpace board.

The company's CEO, Noah Samara, recently announced that in addition to the $200-million investment in India so far, WorldSpace will invest another $150 million in technology development and marketing in India. It recently tied up with Webel Mediatronics Ltd for modern broadcasting equipment including gap fillers and other accessories. "Some elements of manufacturing and development are also contemplated in this venture," says Ras-Work. Webel Mediatronics is an established company that builds infrastructure for government entities in India. "This is a partnership we are quite excited about."

Commenting on specific investment plans on technology, he says that after infrastructure and marketing, another key area of investment is technology. "We will continue to work with BPL here. Being a domestic player, BPL understands the market from the Indian perspective. We feel it's also important to invest in R&D here for the new generation of receivers, new functionalities of the receiver, to make it more affordable.

WorldSpace at present has two satellites to broadcast its audio content. It once planned to launch another satellite, but shelved it. "We currently have enough satellite capacity to cover some of the biggest markets. Given that, there is no real need for another satellite right away. Having said that, we have a third satellite that is currently on the ground that could potentially be used to augment new markets. We have judiciously decided to launch it only when we are ready to tackle the new markets."

On gaining a respectable share of the radio market in India, WorldSpace's COO says the company will continue offering the best content, doing so in a convenient fashion and making it available at a good price points and technology.

As Ras-Work explains, "We are a completely different category from FM. Our numbers are radically different in terms of expectations. As far as we are concerned, we are on track to achieve overall market penetration. Our share could be a mere fraction of what FM players could gain in the market, because ours is a niche product. It's not something that all Indians from all walks of life would be interested in buying."

However, WorldSpace plans to step into rural markets too. "With such a wide variety of channels and wide variety of languages, we are very positive about gaining good number of listeners there. There sure is a considerable size of people who can afford and appreciate our service."

It also plans to increase the points at which consumers can experience the WorldSpace service by ensuring its presence in malls, colleges, theatres, coffee shops and other places.

In India, WorldSpace offers 36 channels, including seven regional languages — Hindi, Tamil, Telugu, Malayalam, Bengali, Punjabi, Kannada. In addition to that, it also has a Gold package which offers five additional channels - Bloomberg (financial news), Fox News, Talk Sports (UK-based sports channel), Infusion (information) & BBC Global News. According to the company, the Gold package is targeted at expatriates in India. Subscription for the Silver package is Rs 1,800 a year (Rs 2,400 for two years). It recently launched spiritual/wellness channels — Moksha and The Art of Living with Sri Ravishankar.

In India, WorldSpace's advertising is handled by O&M. According to Ras-Work, during the third quarter of 2005, blended cost to the company per gross addition (per subscriber) was $407, compared with $128 during the third quarter of 2004. Blended CPGA includes subscriber acquisition costs and other marketing expenses such as advertising and point of sale materials.

Any plans to enter the FM business? No, he says emphatically. "This is a different business model altogether. We have decided to continue our efforts to offer excellent content from the consumer standpoint. We are quite content with the way our service is being accepted in the Indian market."


WORLDSPACE uses its two satellites - AfriStar and AsiaStar - launched in October 1998 and March 2000 respectively. The satellites are positioned in the geo-stationary orbit more than 35,000 km above the equator. Each satellite has three beams covering 14 million sq. km. each. Every beam can send up to 80 channels directly to portable satellite receivers on the ground. So these two satellites together can beam up to 480 channels.

WorldSpace receivers use a proprietary chipset designed to decode signals bounced earthwards by the satellites. Each satellite has fuel to perform for 15 years. After that they have to be replaced.