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Sunday, March 09, 2014

Disruptive Innovation leading to Convergence of Services

Couple of days back, read about a bunch of students from Bangalore offering free calling services. The catch is that users will have to listen to advertisements during the conversation. At onset my reaction was like 'what the heck',  I don't want any silly advertisement to disrupt my conversation. But the response to this service has been phenomenal, more than 4 lakh calls within 5 days of beta testing. On similar lines, in January, Micromax launched a app on its smart phones to reward users for watching ads and similar scheme was launched by Tata DoCoMo where free airtime was offered. There are many such variations being launched where users get freebies for simply watching advertisements.

This got my grey cells ticking. Who could be the users of such services, who would not mind small disruptions for the sake of talking free. Of course not those people who are always pressed for time and won't mind shelling extra pennies to save the time. Had it been 5 years back, these innovations could have targeted college going crowd. But with calling rates already at the floor and with numerous free options available like voice chats, whatsapp, viber etc., it makes no sense. To me, it looks like these strategies are searching fortune at the bottom of pyramid.

So is there a pattern or trend which is emerging? Though some sort of targeting was seen earlier when companies provided free billboards to shop owners, but it never benefited actual customer which we are seeing now. People are getting those services free which they have always assumed to be paid. No one would have imagined that they would get to make free calls or would get paid to watch advertisement. On the other extreme we see emergence of paid services which were always assumed to be free. Gone are the days of free broadcast by Doordarshan when advertisers used to fund the content. People are now paying to watch TV and even going to the extent of paying more for On-Demand channels or ad free channels.

So what should we call it. To me it seems more like convergence of services to target specific segments. One section getting paid for watching advertisement while the other paying extra to get rid of commercials. Both the target segment is different. And the type of commercials will be different. So you can expect those free services targeting poorest socio-economic group or a shade higher. Ads will be more like for products like Nirma, Wheel, soaps, Re 1 shampoos etc. I am expecting, we will soon see this disruptive innovation in number of other areas like transport where one can travel free or cinema halls screening movies free while generating revenues through advertisements. On the whole, it makes a win-win situation as everyone, from advertisers to customers, will be benefiting from this convergence!!!

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