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July Systems Expects Double Digit Million Revenues; Equity Deal With GCV

It’s been a busy, buzzing March for Bangalore based, Sequoia Capital funded July Systems: the company announced a fund raising of $7 million from Intel Capital, alongwith Sequoia Capital and Footprint Ventures, inked a deal with the Indian Premier League for powering their official portal, and brought on board the Wall Street Journal India as a mobile publisher.

Speaking with MediaNama, July Systems CEO Rajesh Reddy said that the company expects to do revenues in the “double-digit” millions this year (ED: July Systems operates on a Jan-Dec financial cycle). “This year, we’re expecting a 250% growth. But what’s more interesting is the foundation of growth. When we took over the NBA, they were averaging one visit and three pageviews per user per month. Today we have over 40 pageviews and 4 transactions per user per month across mobile web and app. That shift happened in the last 12 months. Additionally, there’s almost 500% growth in uniques. It isn’t not about selling to new customers, but the wave of mobile Internet and the nature of advertising market.”

July Systems has around 200 people in R&D and operations in Bangalore, and is looking to hire 100 more. One key component, Reddy says, is that the mobile device variations are significant, and they need separate teams running engines for specific platforms.

Not A Long Tail Play; Session Based Advertising

July Systems powers mobile Internet portals for major media publications in India and the US. “We’ve got 70% of the major media & sports brands in the US, around 80 clients including Viacom, Fox and Turner. They have access to consumers directly, and the content is not made for mobile. We provide the tools and technology for creating mobile content, working across all platforms, mobile web, touch devices…everything. The publisher doesn’t really need to understand these. ” A typical deal is on a 30% of all revenue share, and the monetization is through advertising and consumer paid content.

Reddy contests our assessment about July Systems looking at a long tail advertising play: “Our advertising is sold by media publishers themselves, as premium advertising, and long tail is not their strength; the approach is the opposite of the long tail model. Our hypothesis is that the consumer on mobile is not yet doing long tail based usage, and search is not the primary entry point in mobile, Apps are. The consumer on a small form factor device is showcasing a different usage pattern: users tend not to click on ads on mobile, there’s no time for you to take users elsewhere. You need to create an ‘immersive’ experience, and for brand marketing.”

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To create an ‘immersive’ experience, July Systems has patented an advertising concept: “For the duration of one user session, the entire advertising format, including banners, expandable ads, video post-roll ad, all will belong to one advertiser. All the advertising units are tied together, including the video units, and you and I could be seeing the same video clip with different ads. Each ad unit is looking at a user session ID, and is session aware.

Betting Big On India: The IPL Deal Has An Equity Component

A majority of July Systems’ revenue comes from the US, where the company offers a baseline rates for many of their ads at $20 CPM. But they’re betting big on India now: the company has acquired rights to host the official portal for the Indian Premier League on mobile, and this includes significant promotion for the property on Television.

But is it a minimum guarantee deal, believed to be the norm? Without sharing specifics, Reddy says: “It is a 2 year, extensible deal, but different from a traditional rights deal. We have an equity component, which creates more alignment between the rights owner (Global Cricket Ventures) and July Systems India. A small stake that aligns interest, as a part of the rights relationship. This is a very fast, evolving space, and there is a need for us to see how it goes after two years, and so we can choose to opt in.”

On Live Streaming, Freemium Model: Video Scorecard

The deal involves the official portal and video clips on the mobile. Reddy says that they’ve deliberately not chosen video streaming, because “We don’t believe that India is a mass market video streaming story. We’re offering near real time, typically within seconds, ball by ball, video clips which any user can click and download, and not have to wait for buffering. Our rights have been especially around the goals of our business. We’re not a rights play company at all: it’s not our business to buy rights and resell it. We run our own mobile Internet channel.”

But isn’t YouTube also able to host videos on YouTube mobile? Reddy disagrees. “They can’t do realtime video. They can only do last years footage. In fact, we will be giving them some of the clips from our service which will be shown as a preview, and be linked back to us. There is no other video clips provider for mobile.”

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July Systems is also in the process of launching a freemium model. “We wanted to wait for things to become stable before the paid section came up, and that will be primarily through operators. We’ve been very particular about keeping most of our services free to the consumer, driven by ad monetization.” The premium component is an almost real-time video scorecard, which has ball by ball commentary and a video clip. They intend to make it paid on operator decks, and free off-deck.

The IPL portal has three video formats: low resolution, high resolution and slow motion. The Cricket ball is almost invisible in both the low and high resolution clips, but Reddy says that they’re working on improving clarity. Their goal was to keep download time on GPRS/EDGE to below 10 seconds. They receive a separate feed of content, pick the right clips, optimize and put is out as quickly as possible.

— Dow Jones Launches WSJ Mobile App On Airtel
Apalya Gets IPL 3 Global Mobile Live Streaming Rights For 3 Years; Subscription vs Advertising
July Systems, Indiagames, GoBindaas Ink IPL 3 Deals; Complete List Of Mobile Partners
July Systems Raises $7 M To Fund Mobile Publishing; Advertising Future?

Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



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