Arre, the digital media company floated by serial entrepreneur Ronnie Screwvala and former media executives B Saikumar and Ajay Chacko, has acquired Apalya Technologies a Hyderabad-based video delivery company, in an all-cash deal.
According to sources close to the deal, Screwvala and partners have paid between Rs 20 crore and Rs 25 crore for the technology company.
With the acquisition, all of Apalya's existing investors, including IDG ventures, Cisco, Kalaari Capital and a whole bunch of angel investors have exited. Also, as part of the deal, the cofounders of Apalya, Vamshi Reddy and Shiva, will get a 2 per cent sweat equity in UDigital, the parent company of Arre.
The new media venture, Arre, is positioned as an 'original' digital content destination that will offer cutting edge content in various formats: video series, podcasts and documentaries.
"We are very clearly focused on original content that's tailor made for digital. Unlike many traditional media houses, we don't have legacy businesses to protect. Our DNA is digital and our USP will be creativity," said Screwvala, co-founder of Arre.
Apalya's acquisition allows Arre to add platform capability to its digital content play. "With this acquisition, we not only get one of the best over-the-top (OTT) platforms in business but also inherit long standing relationships with telcos in India and also some global geographies," said B Saikumar, co-founder and MD of Arre. Apalya works with 10 mobile operators across four countries. On the revenue front, the model will be built around branded content and solutions, advertising, transactions/subscription, and post this acquisition, also platform-related activities.
The digital company plans to target the 16-30 age group with video heavy content across genres and formats and in the last few months has focused on creating an ecosystem of production houses, writers and stringers to create differentiated content. "We will not curate or aggregate or syndicate content like traditional media companies do. That's not our game. We will be original, live and very contextual on a daily basis," said Saikumar.
In its launch phase most probably in February 2016 Arre plans to air seven video programmes, including India's first digital reality show based on international show Re-Gender, podcasts, and some investigative documentaries in collaboration with a media company. Though Apalya garnered revenues of Rs 40 crore and was EBIDTA positive, the technology company was sold at a valuation of nearly 50 per cent of its top line because of profitability and scaling up challenges in a hyper-competitive segment, according to sources.