Flywheel Effect

Times Internet has grown by transforming into a company with multiple digital products, all drawing power from a dynamic centre

Vishal Koul

When Thanos destroyed half of the universe, an armoured Hulk did not stride into the villain’s swampy pit alone to exact revenge. He went as one of the Avengers. When you have a big task at hand, you need a group of highly skilled friends, maybe one who knows how to swing a hammer like a Norse god or a raccoon who is a weapons specialist. So you can understand why the Gurugram-headquartered Times Internet (TIL) has bought over several start-ups, taking the total count of their businesses to 40. The person at the helm, Gautam Sinha, says that it is a group of small machines working towards a common end — to expand user base and, of course, monetise it.

The company CEO says, “I am not running them, it is the individual (start-up founder) who is running it.” All of them are CEOs of their businesses, which include the digital properties of The Times of India, The Economic Times and Navbharat Times; music streaming leader Gaana; video platform MX Player; cricket news generator Cricbuzz and classifieds portal Magicbricks. The combined base adds up to a massive 450 million monthly users, which puts it ahead of Facebook (350 million) and Google (300 million) in India (See: Head-to-head).

So why race for regular users? With cheap data, nearly everyone and their 90-year-old grandparents are on internet using digital products such as booking apps, streaming apps, dating apps and you-name-it-and-we-have-it app. The faster you get consumers familiar with your service, the higher the chances of you keeping them. The best way to do it, TIL has figured out, is gather a strong group of apps and digital services, and nudge users from one to the other. The company has come a long way from 54 million monthly users in 2012 (when the transformation began) to nearly 9x times that now.

Like TIL’s, there have been successful attempts in other countries, such as by internet conglomerates Tencent in China and Naspers in South Africa. Naspers, which started as a publishing and media company, transformed into a mega tech investor, running hundreds of internet businesses such as classifieds, home delivery, fintech, e-commerce and so on, across 130 countries. In 2007, Naspers’ online businesses accounted for barely 11% of its revenue; today it makes up 100% of its revenue of $19 billion. 

Reading the signs

TIL had been steered to grow as a media business for 10 years since its founding in 1999. In 2010, the management realised they had got the online model wrong. The advantage they had in print, television or radio, where they did not have to contend with foreign media houses for audience attention, did not apply to the borderless cyberspace. Here, they needed to beat the Facebooks and Googles, and local niche players. Sinha recalls, “We asked ourselves why a Silicon Valley company becomes successful. They become successful because they are product-driven. They are not marketing or media-driven, they are tech-driven.” That was the fundamental shift in thinking from FY11.

Once TIL decided to become a digital product company, the first thing was to get the right leaders. “Three things we looked for in the hires were that they needed to be a product person (who has created or worked on a digital product), they had to have a business angle on everything and they needed to be entrepreneurs at heart,” says Sinha. They also decided that these new heads had to be “digital natives.” “They had to live and breathe digital,” he says. The average age of the leaders fell to 29 years, drastically different from a regular media company. “You won’t see many companies in media run by people who are 27 to 35 years old; typically they are 45 or above,” he says.

After bringing in younger chiefs for TIL’s businesses, the company also decided to invest in 50-60 start-ups, to be in constant touch with emerging businesses and ideas in India. “The business heads too had to have a tech-product background, have built something themselves and follow ‘extreme delegation’”, says Sinha. Early investments included Byju’s, Shuttl and Delhivery. Before this intentional cultural shift, everything was centralised. All decisions would come to Sinha or TIL vice chairman Satyan Gajwani.

Prashan Agarwal CEO, GaanaThis decentralisation forms the core of the bigger company’s relationship with their acquisitions. “We delegate the entity to the nth level of detail,” he says. Sinha and Gajwani discuss the broad vision for the business with the ‘startupreneur’ and figure out the financial resources needed for that, but otherwise the individual business head has the authority to take almost all decisions. For example, Prashan Agarwal, CEO of Gaana, doesn’t go back to the board to add a new feature to the app, onboard new singers, open up a new revenue stream or launch a new subscription plan. But, if Gaana has to seek an external investment, that decision will go to Sinha and Gajwani.

Moving parts

In acquiring various independent ‘parts’ for the larger company, Sinha says they check the reach each of them has, their audience data and monetisation potential. They analyse if the younger company can grow its user base from the audience TIL already has through their various businesses. What they are looking to replicate is the flywheel effect — where the parts draw power from the central wheel.

“Only thing we ask a business head is that they need to connect to the SDKs (software development kits) we have, which enables a user to switch between any of the 40 digital properties. A Gaana user can move to Cricbuzz and vice versa, so they are part of the larger system. Every interaction on any digital property is analysed and other (partner) sites are suggested to the viewer based on his/her interests,” he says.

Jehil thakkar Partner, DeloitteJehil Thakkar, partner at Deloitte, feels presence across various genres or niches in the digital space has an added advantage for a traditional media group. “On a digital platform, every activity of an individual can be measured in terms of who is accessing what, where and at what time. If you can aggregate similar audiences across genres, you can give a wider reach for advertisers.” That helps when you have to compete with Facebook and Google, who hog a large chunk of the total digital ad spend in the country.

TIL may be discarding its ‘media company’ straitjacket but it is still hungry for ad revenue. In a strategic move, the company launched Colombia Ads Network. This business makes its money by charging advertisers for getting their content published on the right platform, and shares that fee with the publisher. Colombia Ads has 80 publishers, and competes with players such as Taboola and Outbrain. 

One of TIL’s buys, towards the new product-driven future, made headlines in 2018 — the acquisition of MX Player, the world’s most downloaded video player app. The deal was closed for a staggering $144 million. It was TIL’s entry into the hugely promising OTT (over the top) market.

It is a crowded space with Netflix, Hotstar, Amazon Prime Video, ALTBalaji and Zee5. So why spend over Rs.10 billion to join that race? Sinha stands by it, saying MX Player is already downloaded on half of India’s smartphones, and over 600 million devices globally. “Two million users organically download MX Player every day. Many brands spend millions to achieve that,” says Sinha. “Our strength lies in being the best hybrid of media, technology, and distribution, and MX Player is a great example of that. In just six months since launch, we have become the second largest OTT in India,” says Gajwani. 

Sinha is unafraid of the biggies in the segment, although he does not reveal his strategy. 

Satish Meena of Forrester hazards a guess. “TIL is not looking to compete with a giant like Netflix. They probably feel they can target the mass audience and make a dent,” he says, adding that this target market could grow to 500 million in a few years.

The video-streaming monster does not have to prove its worth, but other acquisitions are given five years to become the leader or come second in their field. They usually meet that deadline. Cricbuzz is one such buy; others include Dineout and CouponDunia (See: Smart spend). The Bengaluru-based cricket-news platform was founded in 2004 and acquired by TIL in 2014, and now has 50 million monthly users, which is 5x that of its competitor ESPNcricinfo. Sinha says it benefitted massively from the flywheel, seeing 300% growth in traffic within six months of the acquisition. 

Mukesh Kalra Founder, ETMONEYMukesh Kalra, founder of Moneysights, which was bought out by TIL in 2014, has had a similar experience. “Times Internet gave us access to a huge consumer base to test and build our product quickly, for one. Secondly, the brand helps us get customers without much hassle,” says Kalra, adding, “Our customer-acquisition cost is only a third of what traditional players such as mutual fund companies and banks incur.” Together, they launched ETMONEY, a personal finance app, in 2016 and claim to have enabled transactions worth Rs.2.5 billion over the last two years. 

Ankit Mehrotra Founder, DineoutKalra operates out of TIL’s Gurugram office, while Ankit Mehrotra operates out of the Noida office. He, with three others, founded restaurant-table booking platform, Dineout in 2012 and his business was bought by TIL in 2014 for $10 million and dinings have grown 6x over the past two years. “We call it crosswalk,” says Mehrotra. “It’s the same user who is doing multiple activities, while surfing on Cricbuzz, you are listening to songs on Gaana and booking a table on Dineout. We are able to target them effectively”. Deloitte’s Thakkar adds that such ‘crosswalk’ would give a company far more information about the user habits. “The richness of the data will be far more than an individual website would have,” he says. Table booking is yet to catch up in India, so Dineout diversified into payments and restaurant management software (a SaaS product that helps restaurants register and analyse customer data). The B2B product has 8,000 restaurant customers in India and 500 internationally.

We now know that TIL is good at spotting companies that can draw millions of users, but the company also builds popular services. Their in-house innovations such as Gaana and Magicbricks are market-leading platforms. The first, with over 100 million monthly users, is driven by Agarwal from TIL’s Noida office. Agarwal says that they stood out from the rest of the players by gaining a deep understanding of the Indian psyche. “Unlike in the west, listeners here prefer a song-based layout. People don’t approach a player albumwise. We added ‘recently played’ songs, created an artist dashboard and gave recommendations based on that. We have witnessed 73% play rate for recommendations,” shares Agarwal. In all fairness, most music apps have these features, but Gaana was the first to come up with them. The app has also invested in tapping Tier-I and Tier-II cities in India, by curating regional content and making the interface available in 12 languages. Over the last three years, Bollywood music streaming as a proportion of total has gone down from 75% to 50% on the platform, and regional music is now at 35%. Gaana, which makes its revenue from advertising and subscribers, is yet to post a profit.

TIL’s other organic property Magicbricks was created as a digital extension of its property classifieds business in 2005. The real-estate portal, which has 45% of the market and generates Rs.2 billion in revenue, is one of the Big Two in the largely duopolistic market (in terms of revenue). 99acres is the other. Sudhir Pai, CEO of Magicbricks, says that six to seven years ago, it was about driving adoption. Today, however, they have supply leadership. “I think we have aggregated over 80% of the buyers on the platform and, in terms of supply, there would be very few listings in the market that are not available on our portal today.” While Magicbricks is older than TIL, Pai believes they too have benefitted from the flywheel. “We have used group resources, for example in promoting our ads. We also profile customers across the group and that information is used to personalise services,” he says.

Sudhir Pai CEO, MagicbricksMagicbricks is one of the few businesses that has broken even. “It may not be fashionable for online companies to make money, but this year on, we start generating profit,” says Pai, with a hint of well-earned smugness. They has developed monetised products such as ‘owner services’. “We help photograph their homes, have people who write specialised content which makes their homes more presentable and have a relationship-manager service for owners who are far too busy to attend calls,” says Pai. Builders and brokers account for 90% of Magicbricks’ topline.

While TIL struck gold with Magicbricks, it has not seen much success in the e-commerce space. Initially founded as a news and entertainment content portal, TIL tried to develop Indiatimes.com into an e-commerce platform, unsuccessfully. The company also ventured into video streaming with BoxTV in 2012, but due to unattractive content and relatively higher mobile data charges, it failed to attract users and shut down in 2016.


India is the last growth market for tech companies, but we all know that we hate to pay; though Magicbricks did pull off a neat trick. A large number of internet companies either do not make money in India or most of their revenue comes from ads. TIL is not an exception. The company registered top line of Rs.13.59 billion in FY19, a jump of over 40% over the previous year. But they also spent most of that money in acquiring MX Player. It is an expensive game but MX Player is not charging a fee, while other OTT players do.

Hotstar, Netflix, Jio Prime and Amazon Prime are offering paid content with monthly subscriptions ranging from Rs.129 to Rs.800. How does MX plan to make money? It is like squeezing blood out of stone, in the mass segment that MX Player is targeting, if you go by what Deloitte’s Thakkar says. “Paying users are very few on mass-usage sites, anywhere between 0-3% of the base. In some premium categories, you have upwardly mobile audience where per capital income is over $10,000, where you start seeing conversion. However, the mass audience base is so big and revenue can be generated even by converting 5-7% of the users,” he says.

Gaana, too, has only a low percentage (in single digit, according to Agarwal) of paying users — the rest are on it for free. Last year, they reduced their service fee from Rs.999 per year to Rs.399 and the number of subscribers went up 4x. Deloitte’s Thakkar says, “The irony is that every time a user streams a song for free, you lose money.”

The service has managed to save on cost by cutting a deal with music labels, who otherwise charge streamers a hefty fee. Agarwal does not reveal the details. In China, he says that they have been able to keep the till ringing from affiliated services such as karaoke, live streaming and gamification. Luckily, the largest streaming network owner Tencent also happens to be a major investor in Gaana ($115 million invested in 2018). Martin Lau, president of Tencent Holdings, says, “As more affordable mobile data plans are driving smartphone penetration in India, we believe growth in the music streaming market will accelerate.”

Roopak Saluja CEO, The 120 Media CollectiveLau is optimistic about the future of digital products in India, but TIL is yet to consistently report profits (See: Path to profit). Sinha says that it is because they are betting on companies that have just started their journey. “You can categorise our businesses as early, growing and mature. There will always be early-stage businesses, because that is the future. We want the mature business to become profitable,” he says. Gajwani adds, “We’ve invested very heavily into building a suite of transactional products to have a diversified revenue stream. While our advertising business is more mature, our transactional businesses are growing about 2.5-5x per year, with businesses like ETMONEY and Dineout.” Sinha wants TIL to be an anchor company such as Google and Alibaba. Roopak Saluja, CEO, The 120 Media Collective, says it will take a lot more to catch up with the tech giants. “There is a reason why Google and Facebook corner upto 80% of ad spend of any big market. They have created such an effective, easy-to-use product. Whether you’re a Unilever, who is going to spend millions of dollars on Facebook or you’re somebody selling cookies online, the experience is same,” he says. On the contrary, TIL is still approaching the new business the old way — getting maximum users onboard.