Happy to announce our investment in chakpak.com – the largest online community for Indian entertainment. 
We are excited to partner with Accel in financing the company, largely because:
- Entertainment is a high usage and engagement category – As per Comscore, 18 million visitors in India already access entertainment content. Add to that the NRI base, and that number should be in 25-30M range.
- Entertainment is also a high spend category, with over $36B spends on media and entertainment as per PwC FICCI Frames report. Some sections of this are addressable by chakpak over time – for example, movie marketing alone is a $500M market.
- Efficient execution – over 5 million users access chakpak services every month, and chakpak team has done a great job of generating such levels of usage without spending a dime on marketing. They “get” the internet.
And to top it all, we are already getting our share of brickbats on making the investment, which means we might have just done something right 🙂
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niice 🙂 how long did the investment process take in this case?
the community aspect of going where the users are and engaging them sounds interesting and a subscriber base of 5 million sounds hot. what’s the acceptable active user percentage and evidence for investing into such business models? Will chakpak also be reaching out to audiences like these mobile bioscope enamored kids? these are also users unlikely to spend much.. http://in.youtube.com/watch?v=rHWCNhyVJEA
unclear how important this may be – but the video content in chakpak seem to be mostly embedded from youtube. 3 of the first 5 videos I sampled have already been removed by youtube due to terms of use violation. chandni chowk to china was the first one i picked 🙂
2 cents,
Rahul
I actually think its a fabolous investment. I think of it similar to a Flixster (which in my opinion is an IMDB 2.0)
I think all the revenue generating opportunities that can be executed on. I think the big difference between a US style play and a US style play is some sort of offline component. E.g. Match.com will not have an offline presence but Shaadi.com has a wedding center office.
An idea that I didnt see mention in the press release- Build something to take on bookmyshow.com (India’s fandango/ticketmaster). I use Bookmyshow to book tickets every week. Its got a pretty good user experience and it just works. I am sure Chakpak with its reach can do something along these lines to go after a proven revenue stream.
Nik
Although Sanjay has voiced most of the concern that one might have, I would like to repeat few things …
1. Where is the revenue? Apart from Adsense (or any other adserver) money, what are the evident revenue streams?
2. Merchandising for movies could be difficult to crack, IMHO, requires an entirely different skill set as compared to managing a portal. And secondly as Sanjay points out, Bollywood merchandising hasn’t worked at all in the otherwise Bollywood crazy country.
3. Movie marketing on the Internet receives very little share of marketing spends as compared to spends on billboards and TV. The question is, are they substantial enough? And again, marketing on Internet is not just about owning a portal and publishing reviews and interviewing stars. And moment chakpak gets into this business, they suddenly compete with specialized movie marketing agencies like Marching Ants for example.
4. Alexa and Compete give out contradictory results when searched for chakpak and bollywoodhungama. Interesting is comparison with SantaBanta.com. Santabanta gets more traffic than either and IMHO better brand compared to chakpak or bollywoodhungama. (Off-topic but SantaBanta had also applied for a radio license; I am not sure what happened to it though). And there are few PHP based forums that receive more traffic than Chakpak. BTW, Google Insight says Bollyhungama is better than chakpak (if we trust the big G). Chakpak is second at best in terms of reach and traffic. What’s commendable is the fact that they haven’t spent money on advertising so far. With investment from Canaan, they might start advertising and might reach that inflection point we always talk about for businesses.
And am sure Canaan would have done their bit of business understanding before the investment. Cant doubt Canaan’s acumen but I sincerely dont see how is chakpak making money.
Part of the solution might be in strong execution capabilities (as indicated by Alok). If they can pull off the marketing vertical, they might reach somewhere.
@Alok, I know this sounds absurd but is it possible that curious minds like me get to interact with Chakpak team and understand their perspective of business?
Thanks,
Regards,
SG
Sanjay – very interesting points. The key differentiators for chakpak, IMHO, is the community element – none of the other movie sites rely heavily on that. Community models should engage more and scale faster. On the distribution side, while other sites want users to come to them, chakpak believes in going to wherever users are. So the first bet we are making is that chakpak will expand its lead in terms of reach and engagement.
Movie marketing is bursty on a per-movie basis, but if you look at clients/agencies, it could be a steady revenue stream. Official movie sites and fan clubs are clear areas where we need to go. Ditto on other revenue streams like pay-per-view, ticketing etc.
Users get the base content for free.
Very interesting! Some thoughts, mostly for discussion purposes:
1. A fundamentally crowded space. No winners yet. Bollywood Hungama has traction, at least from a brand perspective. How does Chakpak break out and differentiate?
2. What kind of ideas can generate possible differentiation? Content, images, videos, user participation – not a serious differentiation.
3. Official movie sites? Like IndiaTimes has been doing. Perhaps also Mauj, Zapak and others have done, I believe.
4. Celebrity endorsements? SRK tie up? That can draw big time growth.
5. Transactions? Booking tickets, DVD rentals, DVD sales…?
6. The movie marketing budgets, I suspect, are spent, in the short period of time, just 3-4 weeks (at most) prior to release. Burst marketing. Need to get a share of that burst each time.
7. Merchandise sales? This could be a winner. In offline marketing, merchandising has not worked so well, for Bollywood. But the challenges of offline merchandise sales could actually be addressed well, in an online model. Copyright violations, distribution network, global reach.. all of these can be addressed in the online model.
8. To compare with few other successful B2C models in Indian online space, we have the following scenario:
a. Recruitment – one side (employer) paying good money, other side (employee) getting free,
b. Matrimonial – both sides (bride and groom) paying nominal money,
c. Real Estate – one side (builder / landlord) paying decent money, other side (buyer / renter) getting free,
etc.
So where does entertainment fall here?
– User unlikely to spend much, perhaps nil,
– Other than burst marketing prior to release, is there sustained ad spend happening from entertainment companies? Don’t see it much.
So where is the sustained revenue model, from traffic alone?
Just throwing up a bunch of thoughts, for discussion.
But certainly a good development in terms of an investment of this nature, and during these times!