RCom, Hungama in talks to ink digital service deal2 min read . Updated: 13 Dec 2009, 08:58 PM IST
RCom, Hungama in talks to ink digital service deal
Mumbai: India’s second largest mobile phone company Reliance Communications Ltd, or RCom, and Bollywood entertainment portal Hungama Digital Media Entertainment Pvt. Ltd are in talks to sign a strategic agreement to create a digital delivery infrastructure that will allow users to download licensed audio and video content.
The development was confirmed by Vrajesh Shelat, head (wireless data business) at RCom, as well as by Hungama’s managing director and chief executive officer Neeraj Roy.
“The RCom–Hungama alliance believes that piracy can be curbed by creating an infrastructure that offers convenience and value anywhere anytime," Shelat said in an interview. RCom’s telecommunications network currently spans 24,000 towns and 600,000 villages.
Like other telecom companies such as state-owned Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd, and Bharti Airtel Ltd, the country’s biggest mobile phone company, Anil Dhirubhai Ambani group-owned RCom is attempting to leverage its network to offer full-version and fully licensed audio and video downloads.
Neither Shelat nor Roy would comment on the impact on their respective revenues.
“We are expected to launch soon. For us, it is a natural progression as we have rights and access to (a) whole lot of content in forms of music, videos and movies," Roy said, adding that RCom users will be able to access content through Internet, mobile and IPTV (Internet protocol television) once the agreement is finalized.
“Moreover, the significant thing is that we are legalizing the content at competitive terms," Roy told Mint.
Much like the software industry, illegal Internet downloads and piracy have been the bane of the entertainment industry worldwide for some time now, including in India. A March 2008 study by Ernst and Young and US-India Business Council (USIBC) revealed that as much as Rs16,000 crore and as many as 800,000 direct jobs are lost annually because of theft and piracy in India’s entertainment industry.
USIBC is an industry group that represents American companies investing in India as well as Indian firms, with offices in both countries.
Jehil Thakkar, head of the media and entertainment practice at audit and consulting firm KPMG, said downloadable entertainment is the future and that physical delivery “will go the way of dinosaurs".
“Though these are early days as India is still way behind in terms of digital infrastructure and broadband connectivity, telecommunication companies have to have differentiated products since the Arpus (average revenue per users) are coming down consistently in the voice segment," he said. “Music and videos are going to drive the growth."
RCom’s Shelat said content will be designed to offer audio and video formats on PCs and mobile phones. If finalized, RCom will launch the service in two phases; the first phase will cover 20,000 towns.
Hungama will manage operational capabilities of the service. The pricing, Shelat said, will be in three tiers: one-time downloads, limited subscriptions and unlimited rental models.