Flipkart is at again! After raising a heavy round of financing not so long ago and staking its claim as India’s first billion dollar internet company, Flipkart seems to be making good use of the cash. As reported by Medianama, Flipkart has acquired Mime360 and will now get into the digital distribution space including music, movies and games
The deal value has not been disclosed but it is a 100% acquisition with part-stock and part-cash transaction. Flipkart’s CEO told Medianama that the acquisition was done to acquire both the technology as well as the people, which sounds logical since the digital media distribution domain can be tricky and having people who understand the domain can definitely help Flipkart.
Come to think of it, Flipkart’s entry into the digital media space was inevitable. It is noteworthy that Flipkart has been ramping up its inventory by introducing new categories rather aggressively, even as competition in the Indian e-commerce space starts heating up. The folks at Flipkart would have felt the need to differentiate themselves further from the competition by adding a brand new digital media category. Additionally, Amazon’s entry into India is on the cards which could have prompted Flipkart to expand its offerings.
Inorganic route to enter the digital media distribution space makes sense for Flipkart. Mime360 is a strong player in the digital media distribution enablement space and works with labels like Saregama, Universal Music etc.
It has the technology and domain wherewithal which Flipkart can use for building a inventory of digital products and then leverage its strong distribution channel to offer consumers a wide range of products with both physical as well as digital options to buy from. Building a technology platform from ground-up and then forging partnerships with content creators could have taken significantly longer.
In my opinion, Mime360’s technology and content partnerships notwithstanding Flipkart will face an uphill task in selling digital media products in the Indian market. Even as the likes of Spotify, Pandora have managed to develop sustainable businesses around e-music distribution, the presence of illegal alternatives like Raaga.com in India to download music is expected to prove a hindrance. The same applies for games et all where torrents provide a free alternative.
Having said that, there is a growing base of customers who prefer taking the legal route and don’t mind paying the due price for digital media. Couple that with Flipkart’s heavy discount policy (if it will apply to digital media products also) and there is a possibility that Flipkart might have played it cards right by acquiring Mime360. A lot will depend on the inventory of digital media products that Flipkart can create through partnerships.
What are your thoughts on Flipkart’s acquisition of Mime360 and its entry into the digital media distribution space? Do you think there will be enough buyers of digital media in the Indian marketplace.