TekChakra.com

I’ve been reading a lot about People Interactive aiming to go IPO in 2009 - either in the domestic market or on NASDAQ. The main reason their executives say is to have money to acquire other players in the area for faster growth… the goal is to finance acquisitions in the online classifieds and communities spaces with the funds generated.

I beg to differ. This does not seem to be a good enough reason, in my opinion. I’d like to know which other matrimonial and classified sites they wish to acquire for further growth? Are there any other players than the top 3 to 4 players who matter significantly and have a large membership base. Who are they? I see 95% of this market controlled by the top players… and I don’t see any other players “worth” acquiring for “significant” growth. Perhaps, I missed something? Are there huge thriving local community matrimonial websites that they plan to acquire?

I’m sure they are looking for more growth in the area - but something tells me that their market share and revenues in the matrimonial space are going to be gradually eaten up with new social networking models that are aggressively entering the Indian market - and as the popularity of the concept of Social Networking and dating grows - with the infiltration of western culture through electronic media. Yes, there is still a huge segment of families who strongly believe in arranged marriages, but this is changing slowly and will reduce dramatically in the next generation.

Further, I fail to see why people are equating the online matrimonial space to the job space (and Naukri’s highly successful IPO) - as the revenue potential and market size for matrimonials is nowhere near that of the job market or even the online travel industry. Matrimonial and classifieds is a distant last with hardly 1/10th market size in comparison. This is from a Business India article I read and clipped. (I’ll look for it and post the link here shortly).

Another main and very obvious reason to go IPO, is an exit for their VCs, and option to for the shareholders to cash in… yes! its finally payback time!

So, will online matrimonial sites suffer the same declining fate that match.com is experiencing? Time will tell. I invite all readers to pitch in their thoughts.

People Interactive also seems to have another trump card. That of Mauj - which is primarily a mobile content provider - developer and aggregator. They have a few basic models. One is to collect games, ringtone, wallpapers etc from other mobile content developers (overseas and local) and put them on wireless carrier decks - for consumers to download and purchase. They also do some direct mobile content development… but I believe this is mostly restricted to brands they license. For example - they’re known to have paid Rs 1.5 crores for the rights of the Bollywood movie KANK (Kabhi Alvida Na Kehna) and burnt away Rs 60 Lakhs as they were only able to recover around Rs 90 Lakhs in revenues by sale of mobile content. They also provide various promotion related services through their four digit short code 7007.

Being an aggregator may be something that works in the short run. I don’t think that Mauj has a long term business model that will be very profitable. Having moved quickly in the mobile space and having clinched deals with nationwide wireless carriers before overseas competition lands up on our shores , will only buy you so much time - IF your products are not up to mark. And this is their Achilles heal. Their mobile content - some of it although branded, is not up to mark when compared to international standards. Wireless Carriers today are enjoying stellar growth and hence the real picture of frustrated mobile consumers who complain of substandard quality - will not reflect in the figures or be felt or even heard. One can get away by pushing substandard (although branded) content in the market. This is where overseas more advanced markets differ. They do not tolerate substandard mobile content (games specifically). This is because the market has reached a high saturation point and consumers are more aware. A single call by an angry consumer costs them $3+ on average. Three calls, and your game is black listed and taken off the “game deck” of the carrier. This is unheard of in India. If a game doesn’t work on a paanwallah’s handset in Bihar and he sees it work on his friends handset - he is going to think there is something wrong with his phone - not the game. In reality the game has not been ported over properly. Forget about him calling and complaining. Consumer awareness is something he is unaware of.

So, the party, in my opinion will last only for a couple of years more, unless local mobile content providers clean up their act. The big players like EA Mobile, Gameloft, Digital Chocolate, Glu Mobile, amongst others - are all setting up shop in India. Their content is AMAZING and puts mobile content developed by companies like Mauj to shame. Branded and unbranded games have fantastic gameplay. They’re in it for the long run - and thats what I admire. They are thinking long term… they know a bad mobile gaming experience will stick in a consumers mind in the long run. Further, these mobile publishers don’t see the wisdom in the aggregation model, and are prefer signing direct content distribution deals with Wireless Carriers. Therefore, mobile content aggregation will take a hit in the long run as mobile publishers choose to go direct to carriers. Its true some carriers choose to work with select aggregators and publishers - but the quality publishers will be the ones who win and prove their games to be successful - therefore opening up direct channels with carriers. The middle man, as in many models, will eventually be displaced. Therein lies the danger in Mauj’s model - unless of course they focus on developing quality content and not just collecting a large quantity of mostly substandard content.

— Vishal Lamba    Filed under: Uncategorized