AMAGI: Pioneering cloud transformation for broadcasting

Abstract

It had been a year since Srinivasan KA, Co-founder of Amagi, had relocated to Los Angeles to setup the company’s new business lines on account of recent changes in the existing business landscape. Amagi’s primary business of geo-targeted advertising in India, over the last two months, had suffered a serious jolt with the Government’s decision to demonetize high-value currency notes in the country. In the short-term, it had created a cash-crunch impacting consumer demand, with small-medium businesses drastically reducing TV advertising spends. Amagi was in a precarious position- it had committed to multi-million-dollar ad inventory purchases from TV broadcasters but was facing poor demand from advertisers for geo-targeted ad spots. “This ain’t working. We need to insulate our company from situations where we neither have control nor influence [over the key business metrices]. We need to find a way out very soon,” said Baskar Subramanian, Co-founder and CEO of Amagi, during the management review meeting. “We are a technology company. Cloud is in our DNA. But what are we doing selling ad spots?” Srinivasan asked himself. Amagi, founded in 2008, is a technology company started by Baskar Subramanian, Srividhya Srinivasan and Srinivasan KA, after exiting from their first venture, Impulsesoft. They ventured into cloud-based geo-targeting technology for broadcasting (Exhibit 1) which enabled splitting of single television (TV) broadcasting signal at a particular date or time and replacing the original content for that region only. This technology was envisaged primarily for enabling geo-targeted advertisements at a regional level. However, Amagi saw a potential for the technology to replace program content and not just ads. Amagi started assisting a few broadcasters in customizing their content based on viewer preferences, broadcast regulations and content rights obligations. Buoyed by the initial success, the company wondered what it would take to support a 24x7 channel. After all, if it can replace a few hours of content, why not look at the entire 24x7 program wheel? On one hand, with the growing size of its geotargeted ad business, Amagi came in direct competition with its partner broadcast networks for selling advertisements to large corporates, limiting the scope for business expansion. On the other hand, the traditional TV broadcasting industry had started exploring cloud solutions to overhaul its broadcast infrastructure, with Over-thetop (OTT) and streaming services starting to gain more traction with time. Traditional TV networks were looking at ways to move away from their Capex-based business model to a softwareas-a-service (SaaS) -based operating model. They were looking to expand into new markets, offer new channels, attract new advertisers while decreasing their costs. New-age streaming and OTT platforms were showing tremendous promise as viewership was climbing consistently. The industry was at the cusp of a cloud-led technology transformation. “Why not pivot the company to lead this industry transformation? After all, we are cloud-born and have the best chance to be the industry leader!” Srinivasan dialled Baskar and Srividhya to embark the company on a new growth trajectory.