A novel revenue model
What is the revenue model like for Sportsfix? Luer explains that it will be a subscription model, but it is based on micro-payments. “We will go as low as a weekend of sports, catering to an audience that do not have big chequebooks. If we went purely monthly, we would lose a big chunk of the customers we’re going after. Sports is very weekend driven, so a weekend could be as low as RM3 to RM5 ringgit. It’s a ringgit a game in that sense. We know that a few people will be watching games together on a single mobile device. It’s super-affordable, I will steal that tag line from Tony [Fernandes of AirAsia]: ‘now everyone can watch sports’. No one should ever say ‘I can’t afford to watch this’.”
He adds that TSA likely won’t go beyond a monthly subscription, because the habit in Asia right now is not to buy a 12-month subscription so they get it cheaper. “It doesn’t quite exist yet. Hence, it’s a combination of transactional subscription as well as recurring subscription models,” he says.
How do sports fans pay for the Sportsfix service? “We work very closely with telcos, so you will be billed via your telco service. In Malaysia, about 60% of mobile users are prepaid and 40% are postpaid. If you go to Indonesia, about 90% are prepaid. Postpaid is easy because you pay the bill after, so adding RM10 is no big deal. We know that the wallet size of the prepaid customers is small, so that’s where the sachet model is important. RM2-4 ringgit is fine because they have that on their cards.”
“I think in that sense, when Astro looks at what we do, eventually there could be some conflict, but for now we’re complementing and filling the gaps they are leaving out there. Similar gaps exist in other Southeast Asian markets. Every market has slightly different dynamics, but the underlying principle of going directly to the consumer through telcos, that model has been fairly well proven by providers such as iflix. Research has shown that if you make niche content accessible and you charge a reasonably amount no one really bothers to find the illegal streams on the Internet.”
According to Luer, TSA is currently building a web-based platform for Sportsfix which will roll out in July in Malaysia. The plan is to have the mobile app live for Android and iOS devices by August. “The reason we’re starting in Malaysia is because we’re based here and it has a lot of low-hanging fruit, it is a great test market and what we learn here we can then roll out in other markets.”
“The app is where some of the features I talked about earlier will come alive. The web based platform will provide seamless viewing. The next thing is to create the ultimate stadium experience, like being there live but with all the other things that sports is all about such as statistics and social media,” he says.
While he declines to disclose specific rollout plans for Southeast Asia, Luer says ‘there’s a big roadmap now from where are to where we are going to be by the end of this year’.
He explains that most of the development for Sportsfix has been outsourced, such as to Brightcove and Accedo. “The intellectual property rights are with us, but there are certain over-the-counter IP that is their IP, but we are building very unique elements that are catered to our audience. The difference between us and Netflix and iflix is that we provide live content. So we’re a non-linear live platform that is again very different from what video-on-demand platforms are doing.”
Luer shares that to date, Sportsfix has been funded internally. “We’ve just concluded our first round of seed funding. We raised US$1.5 million and we will come back in the market probably in September for the next round,” he adds. He declines to disclose how much they plan to raise in the next round.
Are they going to offer multi-device support for the Sportsfix service? “You can watch it on your computer or tablet because of the web platform, to connect your phone to your TV you can do already now anyway.
“Eventually we will deliver to smart devices as well, such as smart TVs but honestly when it comes to the penetration of mobile devices in this part of the world, that is much more exciting. There are about 300 million phones in the hands of 600 million people in Southeast Asia, which means there are still 50% who are still not fully engaged. Out of that 300 million, more than half of that already have smartphones. If you were to compare that to how many people have a laptop, tablet or smart TV, the latter is a small fraction.”
According to Luer, TSA has signed on with two telcos in Malaysia so far for Sportsfix and is in discussions with telcos in the other Southeast Asian countries.
Which are the most promising markets in Southeast Asia right now? “I think Malaysia is definitely exciting, it’s small in terms of population size, but there are some unique elements that makes why starting here makes a lot of sense for us. The larger the population size of course there’s more volume and if you go to Indonesia, there’s one telco that has 170 million customers. If we get a little piece of that puzzle by delivering content in that space, then that can get very exciting. The larger the markets and the larger the telco operators in these markets, the more interesting it is for us too.”
He adds: “The telcos love what we’re doing, we are delivering content that has a high demand for data. The telcos have another big challenge, their model is losing money, voice and SMS. Both of them are dead in principle so all they can do is drive data. The heaviest usage is when you watch video, telcos love that part.
“Live content is what the telcos like, because it is going to eat data like crazy. If you’re a real sports fan, you’ll watch it while it’s live wherever you are. U Mobile and webe are giving unlimited data packages, which goes well with what we’re doing. That’s truly where the world will be heading and what will drive consumption even more.”
Luer believes the timing is right for Sportsfix, what with 4G and 3G being prevalent now. “Technology is getting better, the infrastructure is there, people have these mobile devices connected to them all day long and there is hunger for the content. Content is still king. If you can deliver that content in an inexpensive fashion, which is the ultimate experience for the consumer.”
He adds that they have very ambitious scaling plans from a regional rollout and a content rollout, some of which they do not have all the answers to yet. But he believes they can scale very quickly, citing the example of iflix. “There’s no reason why we can’t do something similar,” he concludes.
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