vamshi-reddyLast week, Apalya Technologies announced the raising of $3 million from two investors: IDG Ventures India and Qualcomm Ventures. Apalya is a Hyderabad based company started by Vamshi Reddy and Shive Bayyapunedi, which aggregates, optimizes and streams video content for mobile.

Apalya has deployments with various telecom operators, and competes with the likes of Aksh Optifibre (MTNL deployment), ROK Entertainment (plans), Zenga TV (IPL Rights), among others. Speaking to MediaNama, Apalya CEO Vamshi Reddy declined to comment on how much stake Apalya had diluted. The Mumbai Angels, from whom Apalya had previously raised an angel investment, remain vested.

Reddy spoke to MediaNama about where they intend to invest the money that they have raised, readiness for mobile video on 3G, revenue models and whether the money that they have raised is for survival or growth:

Where do you plan to deploy the $3 million that you have raised?

We have established ourselves as the leader in the mobile video delivery platform space, primarily with our mobile video delivery system, the relationships we have built and deployments we have done with almost all the mobile operators. However, that was more on the 2.5 EDGE networks.

We wanted to raise money so that for 3G deployment. We have already rolled out with MTNL and BSNL, but have to put infrastructure in place. We also have to upgrade ourselves from a capability stand point for delivering from an interactivity and personalisation standpoint. We are also going to spend on building up a team, because we are a pretty small team, and need to bring in expertise so that we are ready for the 3G operations.

So what kind of interactivity are you looking to incorporate?

Giving the user more personalized content, and then letting them rate the content. Even polling on the content. We are building all those features so that as an end consumer you can get a chance to interact with the content, advertising, read the content and comment.

mimobi-mobiletvWhat are your key costs? How much are you looking to invest in infrastructure?

Our key costs are primarily spread across R&D and infrastructure, and most of our expenditure will be on network, infrastructure deployment for the 3G rollout and R&D. Out investment on 3G rollout depends on when 3G takes off. We are loking to invest anywhere between 25 to 30% of the money raised in the next one year.

How long will this particular round of funding last you?

With the position we have in the market, we are hoping that these funds will last us for a long time

You’ve only deployed for 2G so far?

The service that has been commercially launched with BSNL and MTNL is, in fact , ours. MTNL did the commercial launch last week in Delhi and with BSNL its already been a few months.

So if you have already done the 3G deployment with MTNL, what do you need the money for ?

When you look at MTNL and BSNL, it is a phased rollout. For MTNL Delhi, we were able to support that with the type of infrastructure we have, but when we start deploying across the board with private operators also looking at the market for interactive products. That’s where we need to invest more.

Is most of your investment is essentially going to be around the GSM 3G side?

We have already tied up with Reliance and Tata, so we are already on the CDMA platform. We are definitely going to expand this to the next generation CDMA networks like the EVDO networks.

apalya-mimobiHow does the revenue model work in this space because there doesn’t seem to be much of a market for video streaming on the mobile as of today, at least on the consumer front. MTNL and BSNL hardly have any consumers on 3G, and on 2G there is a huge issue with the quality of streaming, and the low number of frames per second (fps). Are you still holding out for revenues?

Our solutions are currently live with all operators in India, besides a few new entrants. We are able to sustain. If you are looking at working on a focused area like 2.5 Edge on Mobile TV, you will not get the volume. But the growth is going to be triggered by 3G. Even from MTNL and BSNL’s perspective, the main challenge is that the networks are not completely rolled out as yet, and unless you have a seamless experience you really cannot go out and push the service.

In six months time BSNL has plans to improve the service throughout India, and once that happens you will see a lot more traction. When the private players roll out the service, then it will become a different play because they have the infrastructure in place already.

Going back to the question, how does the revenue model work in this space?

Revenue models are purely on a revenue share: there is a share between us and the operator, and we, in turn, have all the agreements with all the content providers. We have currently a partnership with almost 70 TV channels.

Is the capital you raised essentially (until 3G) for survival or growth?

We were in a good shape and we are today, and we are only raising money because we see that 3G is becoming a reality, and the timing is right.

What do you think would be the size of the mobile TV market in India right now?

If you look at today it’s not big enough but we are expecting that to dramatically change with 3G coming in. With our scale we are able to sustain. We are a team of almost 40 – 50 people in Hyderbad and we have a whole backbone set-up in India where we are delivering the content to operators. It is not minuscule, but definitely not big enough for what we foresee with with 3G coming in. In fact if you look at the recent Champions League, Mobile ESPN which has been the perimeter brand involve there and the commercials were running of mobile ESPN was completely powered by us .

Why did you go with Qualcomm?

Qualcomm has invested more in terms of a venture fund than as a company but definitely there is a lot of expertise there. When you look at mobile TV technology in the world as such, Qualcomm has a big stake in it, especially from a MediaFLO standpoint. If you look at the broadcast standards, there are many but predominantly there are two, DVB-H and Media-FLO in the US and there is DMB . What we are looking at is that they have a lot of expertise with multicast technology, and in the 3G space. We want to make sure that we are aligned with technology innovation, so Qualcomm’s expertise definitely helps. If you are looking at the 3G spectrum, it is still not capable enough to deliver to the full mass base, and you are talking about 5-10 million subscribers.

Are you looking beyond India?

Yes we are looking for opportunity to work outside India also, and we will start looking at the Asian and Middle-East markets for a start. That’s going to be our focus: markets where 3G rollouts are taking place.

Related:

— TTML Launches MobileTV With Apalya
— Mobile TV Co Apalya Raises $3M From IDG Ventures & Qualcomm Ventures