Last year during October, Google had announced that it plans to sell premium online content to Indians via YouTube. I went gungho at the news and believed that Indians were ready to consume premium content. But I was so wrong! It started with Flipkart closing Flyte after a year but when Medianama broke the story that online video portal iStream has shut down, it was disappointing news to all those people including me who are striving to make a living out of online content.


The SAIF Partners backed business venture was in the news when it was looking for a Series B round of funding. And if rumours were to be believed then there were talks of acquisition but the Founder and CEO of iStream, Radhakrishnan Ramachandran had disclosed with Medianama that all the floating rumours were baseless.

The site now has a notice put up by the founder that tries to share the journey by making a point on why a fruitful business had to close down. Ramachandran shares in the note that it is unbelievable to him and his staff since iStream was the undisputed leader in the premium online video space in India.

“We were by far the undisputed leader in the premium online video space in India. Our numbers were soaring – in March we crossed 6 million unique users; and over 12 million video views. We had marquee brands advertising with us. And more!

All this, in just over a year.

And now we are forced to shut down – something we built with so much passion, emotion and honest sweat.

I don’t have all the answers as to why it had to end this way.”

One can read the entire note here.

But the moot question remains then – What led iStream’s closure?

Was it the lack of support from the Indian investor community or is it that the Indian consumer who considers Internet more or less free, is not yet ready to consume premium content?

iStream, which had raised $5M from SAIF partners in November 2011, has been struggling to raise another round and that was not hidden. So it had to be the business model that might have lost charm before the investors. In fact Ramachandran has discussed the same in the note.

“While one could debate the best business model for a digital media product like ours – whether India is an ad driven digital economy; or whether the market is ripe for experimenting with a subscription model, the fact remains that online video is a capital intensive business, requiring patience and cash flows. This is not unique to us or India that is how it has been everywhere.”

It is surprising that in the far west a similar business model Hulu which had been launched in 2008 for public access is deliberating on the bids that are being made for a value of $1 billion and here in India we let a business close down just because it is a capital intensive business.

Hulu today has more than 4 million subscribers and generates revenue of about $700 million through subscriptions and a free ad-supported service – a business model similar to iStream. But one may debate that Hulu has been around for six years, the US market is already paying for premium subscription and the revenues are speaking for itself but isn’t the market for online consumption developing in the country. Can’t the investors put faith in a business that boasts of having every marquee brand advertising with them?

With more than two years of experience in the content business, I know that survival can’t happen on ads alone and premium content is far fetched right now. Nevertheless, the founder has really not called it quits as he gives a hint while ending the note.

“Guys – are you ready for starting all over again?

One leg of our journey may be over before we reached the destination. Rest assured, the second leg of that journey begins, and this will be one that will home into its destination.

The dream continues….”

Once an entrepreneur, always an entrepreneur! Nevertheless, it seems that premium online content will take a back stage right now in India and it seems it is still too early. But the case might differ if you are Google’s YouTube. What are your thoughts?

P.S. I’ve tried to get in touch with Ramachandran to know more on the story. So will update as and when we hear from him.

Image courtesy: