Will Saregama Carvaan become a prized possession? Here is what company is banking on

By: | Published: October 12, 2018 2:16 AM

Saregama's portable digital music player Carvaan took to the market last year with a collection of 5,000 old Hindi songs, positioning itself as a gifting option aimed at consumption by the elderly.

Will Saregama Carvaan become a prized possession

Saregama’s portable digital music player Carvaan took to the market last year with a collection of 5,000 old Hindi songs, positioning itself as a gifting option aimed at consumption by the elderly. Since then, the company has rolled out other products including Carvaan Mini aimed at a relatively younger generation. Last month, Carvaan Premium was launched with a companion app that aids song selection, a new feature.

As of Q1 FY19, Carvaan has sold 1.64 lakh units, up from 1.47 lakh units in Q4 FY18. In the launch year (2017), the gross margin stood at 17% which has gradually grown to reach 23% in Q1 FY19. Carvaan has been able to capture the attention of the ‘proxy consumer’ as a valuable gifting option for the elderly. The brand’s advertising reflects this as it plays on the nostalgia of the old songs brought to life by the music player — a gift from a son or daughter to parents.

This peg is likely to evolve into one for personal consumption as well. As of now, 33% of traction comes from personal buying. Carvaan is expecting self consumption going up from 2019 onwards.

Come Diwali, Vikam Mehra, managing director, Saregama India informs that the company is looking at launching a high end version of Carvaan designed towards personal consumption, with an advertising campaign supporting it. “One of the objectives right now is that Carvaan becomes a prized possession. It will have internally built in high end speakers,” Mehra says.

Additionally, language differentiation will increasingly become important with more language launches on the horizon. Carvaan is currently in the US, UK and Canada with plans of launching in the West Asia this month.

The 40-45 and above age segment, in the case of many industry categories, remains largely underserved as a majority of the focus is on targeting millenials.

Ashish Pherwani, partner and head, advisory, M&E, EY India notes that identifying a need on sharp segmentation has worked for the brand.

If Carvaan is at one end of the digital music spectrum, at the other, there are numerous music streaming apps such as Gaana, Saavn etc. In the case of such apps, it is a question of getting volumes in first, convincing them of the value proposition and then converting them into subscribers.

“Most music consumed is always recent, so whoever has recent music will get more volume,” observes EY’s Pherwani. “However, there is a market for providing a catalogue with ease of access, an interesting user experience and multi-media options.”

Gaana, for example, has 79 million monthly active users (MAUs) with daily active users (DAUs) around 8 million. Almost 18% of consumption for Gaana is from tier 2 and 3 cities.

Between Hungama Music and Hungama Play, Hungama sees over 50 million users on a monthly basis. Active usage, Siddhartha Roy, COO, Hungama Digital Media, informs, is growing at 5% m-o-m. He notes, “From a music perspective, habit formation has more or less happened. All of the players put together would be serving over a 100 million users in the country of which 70-80 million is fairly active.”

Prashan Agarwal, CEO, Gaana, notes that the migration of people from tier 2 and 3 cities into the folds of legal music consumption has fared well for the industry. What about revenues though? “Revenues are split almost equally between advertising and subscription,” he says. “Subscription will continue to grow but that is on a very small base, a low single digit percentage currently.”

EY’s Imagining India’s M&E sector report finds that the number of subscribers in music streaming platforms is estimated to have grown to 31 million in 2017 with the approximate ARPU (Average Revenue Per User) for streaming at `70 and for downloads at `22.

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