WorldSpace – R.I.P.

I was shattered to receive a mail on Christmas Day - Friday the 25th Dec., from WorldSpace Inc. – that they will discontinue their services in India w.e.f. 31st Dec. 2009. More than the subscription money lost, I was pondering over the inability of such a service to sustain, especially in India. WorldSpace Corporation was founded in 1990 by Noah A. Samara, Chairman and CEO, with a vision to provide digital satellite audio, data, and multimedia services primarily to the emerging markets of Africa and Asia. To implement this vision, WorldSpace conceived and built the first ever satellite radio infrastructure in the world. In the past 12 years the company has built three satellites and launched two to provide audio, data, and multimedia broadcasting coverage to Africa, Asia, The Middle East and Western Europe. With the global headquarters in Washington D.C., Worldspace created the initial proprietary technology and programming infrastructure that both WorldSpace Satellite Radio and XM Satellite Radio are built on. In fact, 2003 saw WorldSpace Satellite Radio technology become the fastest adopted new consumer media in America since the DVD player. Until today, WorldSpace Satellite Radio provides 5% of XM Satellite Radio programming. JVC, XM Radio, Hitachi, and Panasonic are registered marks used with permission. In 2006, AR Rahman, India’s first Oscar award winner (2008) and Brand Ambassador of WorldSpace created a signature tune for the brand which was used extensively in its marketing and communication efforts.

Although I subscribed to their service only in March 2009, I first heard WorldSpace way back in the year 2001 when I was working for RPG Retail. There was an exclusive arrangement between both the companies to play their music across the Foodworld stores in the country. While the idea was to familiarize shoppers with the concept of satellite radio, it was also a great advertising opportunity for the service provider. If one may recall, that was also the year when the Private FM Operators started their commercial operations (until then, the Govt. owned Prasar Bharti was operating the FM channels exclusively) across the key cities in the country and even today, only the Govt chanels can provide “News” content – a monopoly that the private operators are trying their best to break. There was (and still continues to be) intense competition among the Radio channels that today, people prefer to keep their personal radio on their mobile phones, their cars and homes tuned in all the time.

WorldSpace was, according to me, one of the best things to have happened in the field of entertainment. Using Satellite technology, one can carry the receiver anywhere within the country and to certain countries abroad, keep the antennae facing a certain azimuth (an angle at which the antennae receives signal from the satellite) and bingo – hear live content being played 24 hours a day… Of course, the antennae must always be facing the satellite in a particular direction and hence, it cannot be heard while on the move (like in a car). But WorldSpace had been working closely with FIAT in Italy to provide such a solution which was to be unveiled sometime next year. Until, it all fell apart. WorldSpace filed for bankruptcy in the US in Oct. 2008 and has now officially announced that it would be shutting down its services in India.

The crux of WorldSpace was its subscription based listenership. At the moment, India has over 300 radio channels (and increasing every month) which play regional languages as well as Hindi and English 24/7/365. As per the existing Govt. norms, the ad space should be around 20% of an hour’s airplay - that’s approx 12 minutes of advertising and the rate per minute varies for every city and the radio station. Assuming the average duration per song is 5 minutes, not more than 12 songs could be played an hour – but the stations modify the song (reduce the overtones) and create a playlist of 10-13 songs including advertising in between. For large cities like Delhi, Mumbai, Chennai and Bangalore, this makes so much sense as the traffic during the peak hours is very high and in effect, listeners get hooked to their private radio sets. Cut to contrast, WorldSpace offered over 55 minutes of music interrupted only by the voice-over of the RJs who explain almost every song – the lyricist, the composer, etc.

I believe the main reason for such a service to die an unnatural sudden death – is simply timing. Satellite Home Television has picked up in India in the recent years and has two dominating operators – Tata SKY and DISH TV with the new entrants Airtel, BIG and SUN entering the fray aggressively in the past 18 months. Viewers have realized that the reason to switch over from conventional Cable TV to the Satellite form is not just novelty, but actually the purpose – of no-interruption and absolute clarity while watching. What we haven’t realized is that we still pay for the subscription but are done to death with the advertising content – especially during festive days and special events like cricket matches and entertainment shows. The difference – WorldSpace was creating and hosting most of its programmes itself without any advertisements while the Satellite TV marketers buy the content from established TV Channels including the advertisements. And people have accepted the pay and use over the years while with WorldSpace, consumers were never fully convinced to pay for such a service.

One reason why WorldSpace is facing this destiny today in India where over 90% of its subscribers are based, is its positioning, the others being its location of hosting and points of sale. Clearly, the product (or service as you may call) was positioned as a one-up above the Radio over the years and there was probably not too much of an effort to take it to the middle-class masses. Unsurprisingly, Satellite TV marketing companies are selling their products at leading Retails stores in the country. A great example in recent times is SUN Direct Satellite TV. While they have done it to the extreme, by making the pan-wallahs and mom-and-pop grocers as their distributors, the strategy has somewhat paid-off. Contrast to WorldSpace, which made almost no major Retail presence except for a handful of distributors here and there ans some in-store Demos. I am not sure if they underestimated the power of Organized Retail today, but surely one didn’t see that approach. While subscribers to the service were acting Brand ambassadors (like me) who preached the greatness of the service, a new wanna-be subscriber never knew where and how to buy. Simply speaking, it was not available off-the-shelf at a Retail store nearest to you. And they were hosting the service from the US – I got to know this recently and am somewhat confused why they chose not to host from India.

I would assume that there is still a rebirth possible, provided the Brand takes a new approach and aligns itself with modern Retailers in India. There are over 5,000 Organized and semi-organized Retail stores in the country today and millions of shoppers visit these outlets every month. And that’s the opportunity. Whether WorldSpace (if and when it is reborn) or someone else in a similar segment will grab this opportunity is yet to be seen. Until then, WorldSpace – Rest In Peace.

Gift vouchers and spread smiles this festive season…

It’s very Indian to gift – we actually do not need a reason to gift. Be it a birthday or an anniversary, new addition in the family or a new job, gifting is a given thing. So much so that a famous confectionery brand had launched a campaign a couple of months ago to gift chocolates during the beginning of every month – as one get’s his or her monthly salary! It is also widely believed that gifting existed in our culture for very long. For example in our Kannadiga culture, guests who attend a wedding are actually given some money and food on the last day of the wedding – the idea being that once they return home, they don’t have to cook food and the money given to them is for their conveyance back. Strange, but is still practised. They are also gifted clothing or cash equivalent during the course of the wedding as a token of appreciation of their visit and guests would even wear the same new clothes during the wedding. Similarly, we have many other examples in each culture and community.

In modern times, gifting has taken a different route. It’s quite common to see women shopping for their men – father, brother, husband or friend. And similarly, men shopping for women in their lives – mother, sister, wife or friend. So much so that luxury diamond brand “Carbon” successfully created “guilt-shopping” where men buy diamonds for their women without even understanding the jewelry – it was fashion jewelry and hence, not to much of thinking or analysis (like how women would do while buying jewelry) was required. And the result – the concept is a great hit and their flagship outlet is now at the “Bengaluru International Airport” where over 80% of customers are men! Although Jewelry, watches and accessories are quite common to purchase as gifts, consumers tend to weigh back on apparel. This is mainly due to size inconsistency among people and the brands and their fits. And add to that, color preferences. So usually, apparel is refrained from gifting, except for t-shirts and other fashion wear.

This is where the concept of “Gift Vouchers” fit in. It’s quite common to see today people rushing to buy such vouchers from leading retail stores, especially Department Stores and Mono Brand Apparel/Accessories Stores. A few years ago, the Future Group introduced “Central Vouchers” which could be redeemed across the Central Malls in the country and sometime ago, launched vouchers that could be redeemed at their home improvement retail concept – Home Town. Even café chains like Café Coffee Day have vouchers that could be redeemed across the 800+ outlets in the country. If there is one segment where it is not yet present in full measure, it’s probably at the Supermarkets. However, these vouchers are usually sold through institutional sales – typically a B2B activity where the Retailer sells the vouchers at a discounted price to Corporates who in turn pass them on to their staff members on special occasions such as birthdays or anniversaries. And the common belief is that the user would buy more than the voucher value and the retailer would benefit from it. Well. If only it was so true! My friends in the business would agree that while the redemption is sure, the difference in the final purchase price and the cost of the voucher is not very high. It could also be because the consumer didn’t find anything as exciting or the validity of the voucher was shorter and he/she didn’t have anything to buy at that time.

While Shoppers Stop has created a big opportunity among its customers through branding and communication measures, many retailers haven’t done this yet. I would rather say, they haven’t “tapped” this yet. Imagine, Christmas and New Year is around the corner and you may want to be gifting something to your loved one – but may not know what to. So, that’s where the Voucher comes in. But do Indian consumers believe so? Probably not. And the reason is simple. When you buy a product and gift, it is generally perceived not to be valued monetarily. For example, if your give a flower bouquet and a vase, then there is no value that is attached. Instead, if you give a 500 Rupee voucher, then the receiver would “feel” the value of the gift – something that is not very much in our culture. Although, we contradict ourselves a bit in reality. In Indian marriages, its quite common to give some money as gifts. Probably for other occasions as well. This is usually instead of a product as gift. While this is commonly accepted, Retail gift Vouchers are not. Reason? They are probably not so well marketed. Starbucks recently had a scheme where when a person buys a gift voucher, the buyer gets rewarded… So, with a US $ 100 voucher, the buyer gets a US $ 20 voucher – that’s a 20% Discount. It still works to the benefit of the café chain as they make higher margins. This could be a bit of a challenge for traditional retailers but still, certainly worth a try.

And the key to this is marketing and communication. The concept must be communicated to potential consumers in such a way that it induces them to buy gift vouchers. I am already dreaming of a day when consumers would flock to their favorite Retail stores to buy vouchers during a particular day or week because of attractive offers like how they now buy during the End of Season Sale. I would imagine that consumers would stock up these vouchers at home and would use it as and when an occasion arises. Or they would find one where they could gift it. Whichever way, gifting is good – brings a smile to the giver, a bigger smile to the receiver and yes, helps us, the Retailers.

So, whom are you gifting this festive season? Make a list and remember to count me in…

Braving the Indian winter – Best of Luck…

Talk of global warming and every one around seems to have one common observation – winter this year is quite peculiar with unusual chillness during the nights and sharp sun rays during the day. I felt this myself when I was in Delhi last week. Thankfully, I was carrying a blazer at the insistence of my colleague, lest I would have certainly caught up with severe flu. Delhi winters are famous for their biting cold – in India, that’s 2-3 degree Celsius. (which is not the case in the US or in Europe!). During the months of Oct – Jan, sales of winter related merchandise see an increase substantially and premium brands such as Benetton and Tommy take advantage of this by bringing some of their iconic international collections that are otherwise non-saleable in Indian conditions. Sales of cold drinks, colas and even ice-cream take a dip during these months and the Brand owners try several promotions to entice consumers to buy their products. While it is usual for consumers in the western world to have ice-cream during winter months (temperature sub-zero), it is not the case in India. I remember the long discussions that we used to have while I was in Bengaluru International Airport – to have or not Ice-Cream as a concept as the sales in winter months was less than half the average in summer months. Though it made business sense (the summer’s steep sales offset the losses in winter), it was always a question on top of mind.

Branded Ice-Cream market in India, according to various estimates is in the range of INR 800 – 1,000 Crores and the super-premium bit is about 25% of the total. Haagen Dazs is the latest entrant in the market with its Indian franchise partner and is expected to open its first outlet in Delhi in Dec. 2009. Although the ice-cream varieties were present in India through gourmet stores and restaurants since quite sometime, it was out of reach even for the discerning middle-class due to its upwardly pricing, that’s 2-3 times than its Indian counterparts. This is mainly due to import restrictions, like in many other products that are brought into the country. The history of Haagen Dazs dates back to the 1920s when Mr. Reuben Mattus, the founder, worked in his mother's business in New York, selling ice-cream in horse-drawn carriages. Later, he spun off the business into a company and named it Haagen Dazs. The business grew rapidly and spread globally as distribution logistics and popularity of the brand increased. In 1983, Haagen Dazs was bought over by the Pillsbury Company of the US. Haagen Dazs has a range of traditional ice-creams, frozen yoghurt, gelatos, sorbets and frozen ice-cream bars in its product range and is the most favorite ice-cream for the Americans.

The prevailing popular international ice-cream brand “Baskin Robbins” story in India began in 1993, when it opened its first store in Mumbai. Today they are spread across the country with more than 300 outlets in over 60 cities and catering to other premium channels like star hotels, leading airlines, malls, multiplexes and top retail chains across the country. The Baskin Robbins story began with two brothers in law- Burton – “Burt” Baskin and Irvine – “IRV” Robbins. Burt and Irv strongly believed people should have choice, so they offered 31 flavours - one for every day of the month. And they believed people should be able to try any flavour without cost - a belief that led to the iconic pink spoons. Their ideals live on at Baskin-Robbins even today, where they now possess a flavour library that consists of more than 1,000 ice cream recipes. By the way, I used to be a scoping boy at Baskin-Robbins in Madras 14 years ago – my first job to say so! In my experience, 7 out of 10 customers who tried the ice-cream actually bought it. Those days, a scoop of 33 gms of ice-cream used to cost INR 45.00. And the sales were not bad at all. The franchisee used to make us try a scoop everyday (on the house) so we actually knew what it felt like and we could convince our customers to buy them. That parlour shut because a flyover construction began on the road opposite to it and the Location which was once considered lucrative turned into a dead spot.



Ice-Cream in India is available from as low as INR 5. Many local brands – some even city specific have been quite successful in this aggressive, yet challenging market. AMUL, part of the Gujarat Cooperative Milk Marketing Federation is the single largest popular Indian brand of ice-cream that’s available across the country while ARUN ice-cream is market leader in South India. McDonald’s single scoop is affordable available although only at a few places across the country. Walls, from Hindustan Unilever is the most popular packaged ice-cream brand, mainly drawn by the distribution strength of the core business. Nestle SA, which recently bought over the Movenpick Swiss Ice-Cream brand has not launched it officially in India although the previous India franchisee has several outlets across the major metros, many of which were shut due to poor patronage.

So, there are two main challenges in this business – Price and Climate. Even if one is favorable, there is no surety of success. And between the two, it’s almost impossible to say which one is riskier. Given the scenario, the big daddy of the business is venturing into India during the infamous Delhi winter with the highest price per ml. Bravo! I hope this venture takes off well, like how they have in many other countries. My sincere best wishes.