Entertainment for millennials

As more people shift online, through its aggregated network of channels and artists, Culture Machine is changing the way people consume entertainment in India

What if Batman really was from Chennai? Did Virat Kohli blush during Anushka Sharma's performance at the Indian Premier League opening ceremony? What do the two-and-a-half men have to say about Vogue's My Choice video?

YouTube is the one place where you can find the latest. The video-sharing site, which turned 10 this year in February, changed the way we watch videos. Anyone, a student, a politician, a celebrity, or even a terrorist, can upload a video for free and garner millions of views in days.

Given the large number of videos it hosts, attracting billions of viewers every month, YouTube gave birth to a new wave of entertainment - the multi-channel network (MCN).

MCNs are aggregators of digital video channels and are not owned by YouTube. While MCNs are a much more mature market in the US, with players such as Maker and Fullscreen, in India, it is a nascent sector with players such as Culture Machine (CM) making its mark in the country.

Sameer Pitalwalla, chief executive officer and founder of CM, said, "It's not a niche industry. Depends whom I'm talking to. Consumers and advertisers do not need an explanation. It is the media and investors who need to be spoken to."

Recently, CM raised $18 million in Series-B funding from Tiger Global, Zodius Capital and Times Internet.

Entertainment for Internet generation
Co-founded by Pitalwalla and Venkat Prasad, former Disney and YouTube executives, respectively, CM is a digital video firm that not only creates its own videos but curates content and hosts channels across a variety of genres such as beauty, comedy and music.

The content is based on trending topics and viewership patterns that CM identifies through their own home-grown technology. Using big data, CM identifies user profiles on a large scale and indicates what programming would engage audiences. It then advises its content creators on what videos to make, targeted at a young generation of global South Asians.

This technology sets CM apart in India. "What differentiates Culture Machine is its ability to adapt to whichever video broadcasting platform is available and trending. It leads brand and advertising sponsorship because of its ability to place content to the right audiences," said Gautam Patel, managing director at Zodius Capital and one of the lead investors in CM, on why he chose to do so.

But CM is more than about curating and creating content. "We build brands using videos and have been able to migrate to Facebook, which is heavily reliant on other media formats such as images and text, besides video," said Pitalwalla.

Last year, CM created a video for Havell's brand marketing campaign, #RespectForWomen. Unilever and Procter & Gamble are some of the brands CM has worked with.

He added that unfortunately, CM's business is looked at as a YouTube-only business, which it is not. CM has built itself as a company that is platform-agnostic, and they have been able to do so, thanks to Facebook and Twitter, which have launched their own video services.

What also enables CM to merge this technology with versatile storytelling is the expertise of the two founders. Pitalwalla's strengths lie in the media business, Prasad looks after the finances and data analytics.

Business model
CM earns its revenues from the brands it has tied up with, the syndication of its programming and from YouTube, Twitter and Facebook, which sell ads against the viewership the firm generates. Mobile being a major contributor to its revenues, 55 per cent to 60 per cent of its traffic comes from this medium, CM will also launch its own mobile phone application.

Patel said audiences are able to access CM's content because it uses mobile technology to seek viewership.

Social media is where the audiences are and, hence, CM's advertising efforts are focused on that space. "[But] this year, as our IP builds out, there's no reason why we won't go offline as well to promote our marquee products," says Pitalwalla.

Challenges
Finding the right people and training them to create relevant content is a hurdle CM has had to address. There is an entire generation of people trained in the traditional television system and a much younger set of people who do not have the skills to generate the right content, said Pitalwalla.

Besides personnel for content, finding the right marketers posed a challenge. This is because digital in India is not properly understood; it is usually equated with social media.

"There are people who understand it but not at the broader organisational level," he added.

However, with more and more people getting on to the digital video bandwagon in India, there is greater recognition of the space.

As video consumption rises, there will be demand for high-quality content, which monetises better. Patel says to attract advertisers, CM must be able to fill the gap with the right content.

He also states that although mobile engagement is on the rise, there is still a lack of bandwidth for high-quality user experience. With the verdict still awaited on the Telecom Regulatory Authority of India's consultation paper which could see telecom firms charging for accessing websites like YouTube, it remains to be seen how this might affect CM.

Road ahead
"Every 10-15 years, a baton is passed in the way media works. One thing is true in technology; there are certain inevitabilities that have to happen," says Pitalwalla. Once, TV dominated but made-for-internet content is slowly catching up, and CM intends to be part of that boom. The digital space is as yet unregulated.

Patel said CM plans to become a global brand in three years, targeting the Association of South-East Asian Nations and Chinese market. He also sees it owning and operating digital video content across mobile, web and TV. "We want to dominate internet culture with our ability to create video content programming. We want to be the media network of the internet for South Asians globally," said Pitalwalla.

FACT BOX
Name: Culture Machine
Founders: Sameer Pitalwalla (L) and Venkat Prasad (R)
Investors: Zodius Capital, Tiger Global, Times Internet
Viewership: 85 monthly views
No of channels: 350 overall

EXPERT TAKE

  Culture Machine is essentially an MCN, and like any of the major players such as Maker Studios and Machinima, it intends to become one of the top ones in India. The currency for any MCN is the number of channels and creators they have partnerships with, and this is where the main battle for the company is going to unfold. It will prove a litmus test.

CM's data science division is stellar and a notch above others. Although its data and analytics service puts them at pole position, such services in the MCN business can be commoditised and easily acquired by any major player.

With regard to the business model, generating profits is a challenge in the MCN business. Most firms are taken over by bigger media companies, and this then becomes a valuation game. However, CM, because of the YouTube system, has proven a cog in the wheel in the MCN industry.

The writer is Arunabh Kumar, CEO (creative experiment officer) and founder of The Viral Fever (TVF) Group, an online entertainment network for youth