Avani TV Solutions offers an in-car entertainment service, offering liveTV broadcasts, video on demand and content from companies like Network18,  STAR, Times Global Broadcasting, ETV etc, as well as Internet sources such as YouTube. Unlike En Route Media, which provides packaged content to cabs, Avani TV streams content to cars over 3G connections, and targets high end users with a subscription model.

It is available in 25 cities in India including Mumbai, Delhi, Pune, Kolkata, Cochin, Bengaluru and Chennai. We spoke with Ishwar Jha, Founder and Chief Executive of Avani TV, who was previously with the Zee group, about the service, its business model, distribution strategy, funding and monetization:

MediaNama: What does the service offer? Which segment of the market are you targeting?

Jha: Avani is an out of home entertainment service. We came with this concept after observing that most professionals spend time out of home, in transit and TV viewing time is increasingly shrinking. We came out with a solution where in without making any alterations to the car, one can install a simple set-top box, which is powered by a 3G/EVDO USB internet dongle, to offer a buffer free video stream of live tv and video on demand content.

We offer a selected bouquet of around 40 channels from broadcasters such as Star, Network18, Times Global Broadcasting, ETV, Jaya, in addition to other entertainment and regional channels. We are talking to a couple of others for sports channels. In addition to this, we also offer a set of movies, on demand, and access to YouTube videos. We are only targeting 60-65 channels in the car.

We are targeting customers from the top end of the market, who want an in-car entertainment system installed in their personal, chauffeur driven cars. We have registered around 2,500 cars using our car TV product.

MediaNama: How is your service different from any other mobile based TV streaming service?

Jha: We offer a buffer free experience, and since we use specialized hardware for video, the experience is better compared to other software based solutions. We only went live in a city when we could guarantee a 98% service up-time.

MediaNama: How is the service priced?  What is the cost of the hardware and installation?

Jha: We offer the complete kit for Rs 20,000, which includes  a set-top box, a USB internet dongle, and HDMI/AV connectors, in addition to an year’s subscription to the service, which is otherwise chargeable at Rs 200 per month.

MediaNama: So with every signup that you have done…

Jha: I have already taken the revenue for the first year, and it is all prepaid. We wanted to simplify the business, and rather than asking the customer to pay each month. Most of our customers say that they want to pay for a year, because for this segment, Rs 200 is like a convenience charge. We bundled it like this, that the customer feels that one year he gets the dongle for free, and getting the USB dongle as a part of the system, and we go to them with a complete package. You give the car, and in one hour, we’ll complete the installation in an hour.

MediaNama: But the data card fees is separate?

Jha: data transfer costs or rentals are separate and have to be paid by the subscriber. We have tied up with Reliance Communications to bundle a USB data dongle, and offer discounted data plans. For example, the customer usually pays Rs 1100 for a 6GB data transfer in a month. 6GB, 30 days validity is enough for 90 hours of viewing, is normally for around Rs 1100, and we offer the same plan at Rs 700. The USB modem is a recurring cost. The customer can also use the same data dongle for browsing the Internet on their laptop as well.

The kit does not include a screen, which is mostly pre-installed in high-end cars or can be separately purchased by the customer. Screens are available in the market, priced between Rs 5000 and Rs 50,000, and between 7 to 9 inches in size.

MediaNama: So the cost to consumer, apart from the device is Rs 200 in subscription fees and Rs 700 in data – a total of Rs 900 per month, apart from the initial installation costs of around Rs 20,000?

Jha: That is right, but the customer is also using the data card for Internet, right?

MediaNama: Do you give a revenue share to telecom partners for subscription fees as well?

Jha: No, we don’t give any commission on the subscription fees to telecom partners, but we’ve negotiated a good deal for customers for the data card. We want to provide a class experience on the move in the car, rather than focusing on signing each operator, getting on their deck and then talking about revenue share.

MediaNama: How are you distributing the product?

Jha: We have our city sales managers in all the cities, and we have a network of distributors and after-market retailers, mostly high-end car accessories outlets. Many car dealers are also selling our product in their showrooms, like Honda and Innova showrooms. Apart from the direct to customer route, we are also serious about reaching OEMs, for pre-installing the system in cars.

MediaNama: Instead of looking at individual customers, why didn’t you take the route that En Route media took, and tie up with cabs?

That is not live TV, and it is a difficult business to do. The problem is that you go to a cabs company, and it says that I am giving you a footfall, and says that you give me the money. Today, even if you do one car setup, your cost is Rs 20,000, and no customer is willing to pay Rs 20 in a cab to just switch on a TV (in a cab), and the way to monetize is only advertising. The footfalls in these cabs are at max 4 to 5 in a day. Why would an advertiser pay for reaching out to a limited number of people? We believe that a fringe experience is not a good experience. So, we’ll stay out of it.

MediaNama: So how do you monetize it for customers? How do content providers monetize?

Jha: We monetize through the monthly subscription revenues, in addition to product margins at the time of selling the kit. Cutting out distribution expenses of about 30%, we are left with a margin to stay in business (laughs). Our margins are at par with the prevailing margins in the auto industry sector, not as per IPTV or VAS mobile TV segment.

There are three ways for channels to monetize: firstly, we share subscription revenue with each provider, then we also have a differential advertising system in place, which we are not using at the moment. Once we reach a good subscriber base of 15,000-20,000 it will make sense, and we can use location info and have advertising based on geographic segmentation. The other way content providers benefit is through brand recall among people who matter. Our clientele comprises of high net worth individuals.

MediaNama: Why use a set-top box? Why not use an application in a USB dongle, like in case of Tata Photon and Tata Photon TV?

Jha: To give a good video experience, you need hardware intelligence, which we have built into the set top box. My software on the box can play 45 audio and video file formats, and the customer can connect an MP3 USB stick or a movie USB stick and watch his personal media. He can connect his personal SD camera. My applications aren’t only Live TV, but there are many applications. I am building some smart applications so I can access my GMail account or Skydrive, do teleshopping inside the car. We are building those additional applications. The USB dongle can’t give you the power or processing capabilities.

MediaNama: How much money have you raised?

Jha: Prakash Bhalerao (ED: Chairman and CEO of Verismo Networks) is an angel…he’s a kind of a super Angel, helping with grow the business, strategic directions. We have a committment for a good amount of money, so money is not an issue. Funding is not an issue, and we are well funded.

MediaNama: You must be waiting for 3G connectivity in the country to improve

Jha: It will, and I’ll tell you, that we’re all waiting for Reliance Industries to change the way the country is looking at wireless.

MediaNama: You’ll be independent of data bearer?

Jha: Yeah, of course. I can switch from an EVDO dongle to 3G dongle and then move to a WiFi/WiMax dongle. As long as your USB stick is able to connect, I’m able to connect. My positioning is that I am an open system, not tied up with any network. We are protecting the return on investment for the customer.