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CHANGE IS IN THE AIR………

It’s not only the year that is about to change but the whole paradigm of Entertainment business where change is imminent! We and many others have spoken about this in the recent past but the pace it is happening is certainly a surprise. Entertainment and Media businesses were rather simple businesses largely relying on content and funded through either subscription or advertisement. The business model lasted many decades till the strides in technology caught up and changed it irreversibly. Technology made it possible to consume content in any form, anytime and anywhere. With new capable devices and mobile the modus operandi of consumption had changed forever. However what has lagged behind is the ways and means of monetising that content which is benchmark of economic performance of all such businesses. It is changing now though understanding this change and recreating business models is challenging to put it mildly!

It is not only the business model that has changed, the change also becoming apparent in rise of new kind of Entertainment giants who it looks will dominate the Entertainment and Media Industry for the future. The holy grail of entertainment companies is rapidly being replaced by a new breed which is flush with funds and is very capable in technology. Whether they are content giants like Disney or distribution giants like Comcast or AT&T, statuesquo has ceased to be an option as they plan for the next decade. Their imposing size, their domination of access, their libraries, are all under threat. They are all on a sharp learning curve and their actions demonstrate that they still do not understand the impact of all these changes. Some are vertically integrating for size while others for content and some consolidating across markets. Is this going to be enough??

As we try to answer that question, one needs to understand the change. One fact which is apparent is that our consumer has changed. He is mobile, a little lazy, more connected, wants everything free and is interested in experiences. The changes in technology has given him the taste of what is possible and he wants it. Also his regular haunts where he congregated ie a movie theatre or a TV screen for that matter have also changed. His regular haunts are now the social media sites or the search engines or the e-commerce platforms which now interest him. Therefore this new consumer definition has a new service provider in the form of Facebook, Amazon, Google and Netflix. These providers have cash, are not in a hurry to make money and provide the ideal congregating ground. This what the traditional companies are up against.

Very difficult to say as to what strategies each of the companies will take to meet this challenge though one thing stands out. There is going to be a continuing and substantial demand for CONTENT! That’s possibly where lies the salvation of the Entertainment companies – what do you think…..??

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CONTENT – Is it still King?

Content has been and will be at the heart of Entertainment or Media businesses. The business models for these businesses have always been about monetising the Content. Though Content is still the heart or the key product of these enterprises, it’s form has undergone a change largely because it’s distribution as well its modes have changed. Video now is the preferred form of content, largely because it’s distribution is possible worldwide through advances in technology manifesting itself in the Internet reach. With wireless technology and mobile devices content can now be consumed at anyplace and anytime. This in a way has increased reach but the industry still has to come up with a way to monetise this reach. Also some of the older methods of distribution are bordering on the extinct specially the Print industry while current models on satellite as well as fixed time viewing are also under threat. In other words, E&M businesses worldwide need to rapidly  change to safeguard revenues and adopt the new world order.

The other significant change in the E&M world is the rise of tech companies who initially started as the necessary adjunct for the distribution of content but have now become not only distributors but key buyers as well as producers of content. Also since some of these companies are social media giants or key device makers or large online retail enterprises,they have natural congregation of communities which in turn is fueling their quest for Content to attract customers. Not only are these companies making as well as acquiring content but are slowly becoming reservoirs of large advertisement revenues in the digital world which was once the preserve of the large entertainment and media conglomerates. Nothing demonstrates this better then when you look at the market caps in today’s time when a Google and Apple is valued at $1 trillion while the largest of the entertainment giants do not go beyond $200 million. However Content is still key for their survival.

In the changed word order, one can reason that for the Entertainment Companies even with the onslaught of tech giants,Content remains their key survival plan. Premium exclusive content is still and will always be a winner. It is the only arsenal to be close to the customer. While advertisement may take a hit, subscription is the way to go. Success of Netflix is the case in point. One can conclude that ‘Content like always will be King’.

FICCI FRAMES – a Partnership Extraordinaire

The nineteenth edition of ‘Frames’ concluded last week in Mumbai. While I could not attend it this time, with all that we read in the press , it seems like always to have been organised well, attended well with a generous presence of the industry, the government as well as the partner countries. ‘Frames’ and ‘FICCI’ have had a special relationship with Entertainment & Media industry in India, and have been significant in bringing to the fore to the world as well as India, the business potential of its greatest expert ‘Bollywood’. It enters its 20th year soon and to me who has been involved with it for some length of time , its good to discuss its importance to the ‘Entertainment & Media  Industry’ in the past , its relevance in the present and do a little dip stick for the future.

The Start

Early Nineties saw India opening its doors to the world for doing business. By initiating one of the most significant reform process, India opened the door for foreign investment to a large number of sectors barring a few, resulting in a large interest by the International community looking for growth as well as new markets. The more organised business sectors like Manufacturing as well as Services led by IT were the first to take advantage of this liberalization. Sectors like Entertainment & Media which at that time largely consisted of Print and Films and to some extent music could not take advantage due to restrictions on ownership as well as being an unstructured industry with very little   information. Advent of ‘Satellite TV’ in the mid-nineties, which now is around 50% of the industry prompted the change in regulation to garner new investment in uncharted but very promising new territory. FICCI as India’s premier trade body through its Director ‘Amit Mitra’ (now the Finance Minister of West Bengal) and the E&M committee having as its chairman Mr Yash Chopra, Mr Amit Khanna and other E&M Stalwarts realized that in order to attract investment India needed to showcase its market potential, talent as well as potential partners to the investment world as well as E&M world leaders. ‘FRAMES’ was born out of this thought process and need.

Journey Thereafter:

‘FRAMES’ eversince instituted and even today remains one of the best events for the Entertainment & Media Industry in India. It has consistently reinforced its founding objectives which primarily was to be a forum/ platform  for :

  • Showcasing the Indian E&M industry potential to the world.
  • Showcase Indian talent and services
  • Showcase new innovations in the industry.
  • Promoting partnership between Indian companies and companies in developed E&M markets.
  • Industry information of its different variants as well as their growth potential through FICCI FRAMES annual report.

   Each of the key E&M companies both Indian as well as International have been a part of ‘FRAMES’ and almost all of the service providers/consultants have helped develop the information that FICCI FRAMES helped create as a benchmark for the industry and its constituents. Each of its event editions (including regional) over the past 19 years have had top government involvement, excellent discussion formats with world experts and have helped discussions on many of the partnerships which developed over this period. It has also provided the industry constituents the platform to have a constant dialogue with the government on the changes which this industry faces everyday.  It was always a priviledge to have one’s name in their annual report and to be part of their inaugural session as well as their other sessions.

Despite all changes the difficulties it has persevered and one needs to congratulate the continuing FICCI team behind this endeavour.

The Future:

 The Entertainment & Media industry worldover is in the throes of a major change. All accepted business models are under threat and the very existence for some of them is under question. Therefore a concept like’ FRAMES’ still hugely important but its objectives need to change with the times. Closer linkage of technology with entertainment becomes paramount when your distribution is likely to be technology led and Artificial Intelligence (AI) is likely to be playing a significant role in the future. ‘FRAMES’ need to evolve to the following.

  • being a premier platform for showcasing new trends & technology in Entertainment & Media Industry.
  • being a key interlocutor between the Industry and the Government of the day.
  • focus to being a platform to represent change in business models in addition to have focus of saying where growth is going to come.

Evolution of ‘FRAMES’ in many ways is happening and is an ongoing process. However it does need to step up to claim the mantle of the ‘Interlocutor’  as that is something the present E&M industry setup is missing. As it matures, this role will acquire major significance.

Let the new ‘FRAMES’ unveil the new partnership as  the Entertainment & Media Industry walks into a ‘new’ chapter of its evolution.

Entertainment and Media – A Changing Paradigm

 

As we come to an end of another year its time to reminiscent about the year gone by. What changed, whether good or bad, whether surprising or not and what can we expect in the future. Future is always uncertain as well as unpredictable until you look back to start connecting the dots to see a pattern where the destiny is likely to lead us. Very risky contemplation, but what the hell – it’s the end of the year.

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Connecting the Dots:

Lets start with what changed in the Entertainment & Media industry in 2017. Some themes picked up are as follows:

  • Based on Research reports it seems to suggest that worldwide E&M growth is slowing as a whole.
  • Again based on reports, the maturer and higher paying markets seems to have reached a saturation level while newer markets continue to grow.
  • Two clear elements have shaped the E&M industry i.e, the Content Strategy & the Distribution. There is now a third element of ‘User Experience’ largely bought on by technological advances.
  • Content strategy moving from ‘One size fits all’ to consider content fitment for different markets due to cultural as well as demographic differences.
  • Distribution strategy also being changed to encompass digital access in addition to fixed viewing experience either through theatre or fixed cable networks.
  • While the higher paying audiences are saturating, the newer audiences, though while they are consuming content, the per Capita spend is down.

Clearly some of the things we had spoken about earlier as possible are now coming true. All the markets may not feel the same intensity specially market in India, since India remains far behind  on the digitalization infrastructure front. Therefore there is tendency to scoff at the inevitable due to the still prevalent growth in the subscription as well as advertisement revenues in TV  as well as print. Fact is that it is a matter of time, as is already evident, that growth in digital is imminent, ever since Reliance Jio introduced its benign data rates.

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Possible Future :

Having plotted the ‘Dots’ we do get an inkling where the E&M markets are headed. However, as we sit to look at possible insights into the Indian E&M market a few considerations need to be kept in mind.

  • India is still one of the rapidly growing E&M market in the world.
  • It is one of the most populous countries in the world though far behind in the per capita E&M spend
  • Its fixed as well as digital infrastructure is far below the large E&M markets. Its broadband usage is largely mobile led.
  • TV and print networks still garner a lion’s share of the subscription as well as the advertisement spend largely due to the lag in infrastructure for internet access.

Looking at the state of E&M market as a whole and particular exception for India the following could shape the E&M industry in India;

  1. Content Strategy:

‘Content is King’. It is true here as it is elsewhere in the world. India is a diverse country and Content Strategy has to be taken into account any contents acceptability to its vast populace or appropriate interpretations of the same. It will have to fit the multiscreen mould such that its monitizable value goes up. Since TV screens still control the bulk of the monetization the TV content needs essentially to travel to other screens to build a community such that there is an easy shift as digitization increases. Content partnership with players with large digital footprint and deep pockets would likely be value accretive.

  1. Distribution:

Technological advances have made distribution both a nightmare as well as a hugely  accretive for the audience reach. Large online players along with Social Media giants are likely to play huge role in the access game. The strategy has to be to reach all screens and adoption of ‘technology’ as well as ‘partnerships’ are the new game.

 

  1. User Experience:

As per PWC report, ‘User Experience’ is key for future strategies and that is being borne out more and more by the ground facts. That is why development of communities and use of social media is paramount even though our infrastructure still is behind time. Use of AI or Artificial Intelligence will play a huge role in the ‘User Experience’. Our ability to understand and then use the same will be paramount. The change can be rapid and disastrous if not prepared for.

I think the trend is obvious and will follow the world though a little delayed. However what is interesting is the recent news of the likely Disney/ 21st Century Fox mergers. It seems to be a move to consolidate Content and control the ‘Streaming’ market. It has the ability to reshape the Entertainment & Media market both across the world as well as in India.

Interesting times! We will have to wait and see how it unfolds, Won’t we!

Welcome to 2018!

 

 

 

Is Government support to M&E Industry a key ingredient for its success?

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Media & Entertainment Industry in India is one of the fastest growing and one of the few well recognized across the world. From the current estimate of Industry size of US$ 20 billion it is expected to touch US$ 35 billion in F.Y 21. With its burgeoning growth potential, world recognition, as well as world class skill base, it somehow just has not got the government attention it deserves. A free and fair press is a key pillar of democracy like ours and any government whether the present one or the ones’ in the past will reaffirm that they have done their bit to keep it that way. They will also say that the Ministry of Information & Broadcasting ranks high on the importance levels in the government and hence gets the industry the attention needed.

This then begs the question: ‘What is the attention we seek from the government?’ And secondly ‘Why do we collectively feel that the government is not giving that attention?’ To answer these questions, a better understanding of the Media & Entertainment industry is needed.

The business of Media and Entertainment currently is in throes of a change across the world and India is also experiencing the change. Most of the M&E businesses have two key pillars i.e, Content and the Distribution, Providing engaging, good, and clean Content is a prerequisite and so is regulation (whether self -regulation or government controlled regulation) to monitor such content. Legacy systems though existing are striving to keep pace with how the content is being distributed and regulated.

Distribution, has seen the biggest change in the past decade or so largely fueled by innovative advances in information technology and the changing consumer preferences. The consumers are rapidly moving towards consuming content anytime as well as anywhere and going away from fixed time viewing, made possible by innovative technology in wireless. Wireless in the form of smart mobiles are now capable of accessing worldwide content with very few barriers.

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Therefore, most of the M&E businesses are now complex businesses. Global availability of content on the worldwide web facilitated by ever expanding smart phone technology have rendered the traditional business models of these businesses very vulnerable. Many of the M&E businesses were models largely funded by advertisement and very little through subscription. Inability to control the content offering to defined audiences, going away from regular payment mechanisms as well as vulnerability to protect the brand or IPR’s promise are making the businesses very risky and in search for the new model of sustainance. Therefore the role of regulation as well as the government becomes important as well as meaningful in today’s context as always. The government through selective investment, regulation as well as oversight can help in the following:

  • creating appropriate regulation to oversee distribution content in today’s term of technological possibilities
  • bringing licensing regulation in such a manner that it supports revenue generation as well as restricts undesirable behaviour including conflict of interests.
  • help in creating infrastructure and adopting newer technologies.
  • help in regulation with respect to Intellectual Property Rights (IPR’s), the lifeblood of M&E enterprises.
  • Appointing independent regulators for important parts of the industry such that the constituents behave as per law laid down and their problems are addressed.
  • Rationalise the tax guidelines of the industry for the benefit of the constituents as well as the government.

Clearly, Government has a key role to play in helping shape the M&E businesses. Why then, collectively as an industry there is always a feeling that government does not always help?

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The reasons are many. Some of the reasons are of Governments own violation while the others can be attributed to the other industry constituents. Some areas where the government needs to take note are as follows:

  1. Just as the industry constituents it is difficult, for the government too to understand the rapid change in the business model of the industry. They need to understand the rapidly changing technology as well as its capability to deliver content not only in India but across the borders without any real hindrance. This learning is key to understanding what as well as how to regulate and thereafter how to protect as well as enhance government revenue through taxes.
  2. In India like in many other countries, the government performs a dual function. It is a regulator/Licensor as well as a Industry constituent with ownership of a large media organisation. It needs to find ways to delineate the two responsibilities such that it can lead to a healthy growth of the industry as well as the government owned media enterprises. Media tends to be the most regulated of the industries world over due to the tendency of controlling information landscape for nationalist endeavours. Some countries have managed the delineation well, of which UK/US are prime examples.
  3. Political masters and the government look at Media often from the prism of nationalist endeavours and therefore fail to recognise the impetus the industry can provide for the country. With its well – endowed skill base as well as a worldwide calling card of ‘Bollywood’, the government has faltered in not enabling the industry to world standards through forward looking laws , infrastructure as well as tax policies. Their positive action could enhance skill base, provide jobs and more importantly increase the tax base.

However it has not been fault of the government every time it has not acted. Its also the industry constituents who have not been able to provide the government enough material for them to act.  Very often the pitches to the government are biased, meant to benefit few rather than the industry as a whole. To be fair to the government, they did act when it understood that digital distribution of TV content was the way forward or what the issues were in Radio licensing.

In the free world, the accepted way of educating and propositioning the government is through the industry associations. They usually provide knowledge of best practices as well as provide collective lobbying service. In India, specially for the M&E industry, there is no single ‘Industry Association’ which represents the industry as a whole. There are many associations which represent the different areas of M&E industry and are pretty active too. However, they usually proposition the government separately, often with separate agenda’s and at cross purposes even when some issues are same industry wide. Trade institutions like FICCI as well as CII have tried to play a stellar role in bringing these associations together on a common platform but they still fall far short of what, for instance, ‘NASSCOM’ has been able to do for IT industry.

Therefore, there is a key role for the Government to play to help grow the M&E industry. However industry players too need to come together, pooling knowledge and lobbying to get greater attention of the Government largesse for identified common issues. The route for greater cooperation between the Government of the day and the Industry constituents is there. It just needs greater cohesion and trust in each other. We all hope that future will allow the Industry players as well as the Government to work together to realize the real potential of the Media & Entertainment  Industry not only in India but  for success across the world.

 

Is being digital profitable?

This question is probably the uppermost in the minds of the digital entertainment entrepreneurs both on the content as well as the platform side. It is also important to the legacy content and legacy platforms that are looking to change to digital. The fact which has stood out is the change in consumer choice as well as preferences, which are rapidly shifting towards digital platforms. The change has been quite sudden and swift, as was witnessed in Print as well as Music. The legacy business models, the brands, revenue streams like advertisement as well as subscriptions – are all under threat, though to varying degree based on the technological progress as well infrastructure of the country. Consumer preferences dictate the businesses to be ‘Digital’ but the businesses need ‘Profit’ to be sustainable as well as attractive to the investment community. While this paradigm shift takes place, how does the entertainment business change and also remain relevant?

As you peel down the layers, the core of the Entertainment business remains ‘CONTENT’ Engaging content is what draws in the customers and the revenue. This remains true today as it has been in the past and probably is not likely to change in the future. Therefore, engaging content is the first key to any profitable entertainment business, either digital or otherwise. Content is engaging if it caters to the right genre, has the right production values and in today’s time is capable of being appreciated cross border as well as presented across multiple screens. The writers today visualise cross border audiences as well as their sensibilities and the production technology is advanced enough to fit it across screens.

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While Good ‘CONTENT’ remains as the heart of every potential profitable Entertainment business, it’s ‘Distribution’ and ‘Monetization’ is equally key for the business to be profitable. ‘Distribution’ is the area which has seen and is likely to see the maximum change. The change has largely been due to technology which has functionally changed the way the content is distributed and consumed. Some examples:-

  • Physical print media to online media.
  • Physical video tapes / films to online transfer as data.
  • Content transfer through internet.
  • Access to content through mobile devices.
  • Change from fixed time viewing of content to ‘mytime’ viewing.
  • Change from fixed place viewing to anytime/anywhere viewing of content.

With the abovementioned changes in consumer preferences largely enabled by technology, ‘Distribution’ has become complex. It has also changed the profile of the distribution players from being businesses having access to exhibition and linear platforms to being technology driven enterprises having large investments in technology enablers. The revenue lines for each of the constituent’s i.e. the content owner, the distributor, the exhibition platform have also blurred due to rapid change in technology, consumer choice and possibility of different forms of delivery. Therefore understanding ‘Distribution’ in its current as well as changing state is the key to getting the maximum value for your ‘Content’.

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‘Monetization’ in the legacy business has rested on three pillars. The first one is ‘Advertisement’ which has been a key contributor to the revenue for Entertainment businesses. Advertisement follows engaging content and the good news is that on an overall basis, it is expected to grow 11 – 12% on a year on year basis for the foreseeable future in India. Digital advertising in recent times has seen a phenomenal growth even though legacy platforms continue to be major beneficiaries of the advertisement stream. Therefore the question remains as to what will be time frame of the switch of the advertisement revenue stream from legacy content and platform to digital. Though the advent of change is apparent, the velocity differs from market to market and is dependent on information, technology, rate of adoption, availability of digital content as well as the consumption devices. It is also apparent that in countries like India or even in some developed markets, advertisement revenue and growth is likely to be available for both legacy as well as the new digital platforms for the next few years.

The second pillar of ‘Monetization’ is ‘Subscription fee’ which also includes entry ticket fee for the films. This revenue stream remains pretty strong for legacy platform whether it is cable subscription for linear TV or ticket cost for film exhibition. The subscription model for E digital content is still not a settled system and will have to come of age if the entire entertainment business were to go digital. Presently while the consumer preference to consume content digitally is growing exponentially, the propensity to pay for the content is not there. Most people want this content for free. Digital ‘AD’ based models are still to convince the investment community of being able to give a good return over a reasonable period of time. Therefore a co-play between the legacy model and the emerging reach through digital could be an interim solution for a profitable Entertainment venture.

Third area of ‘Monetization’ for Entertainment contact is the ‘IPR’ (Intellectual Property Rights’). It is these rights which have provided a recurrent cash flow for the legacy Entertainment business. This model is under dire threat with the advent of technology. With all content being now available electronically, its ownership, its use, as well as collection of royalty are a huge issue to be tackled for the new businesses. Strengthening of the ‘IPR’ regime in India is the key as in some of the mediums like films, half of the revenue comes through exploitation of these rights.

Therefore while it is true that there is a rapid shift of consumer preference to the digital, the revenue line is far from settled. The content for the digital screens is still being repurposed, the measurement systems are still being evolved and most importantly much of the content is still available free. The systems and the attitudes will evolve but till the same happens, today’s digital entertainment business is likely to fail to generate profit in a sustained manner.

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As we experience more it becomes more apparent that in the interim one does need to maximize legacy revenues, as we build digital businesses. With legacy demand as well as revenues still being robust and growing, there needs to be equal attention to be paid to legacy platforms. In the interim, there is merit in having both, the business as well as the brands (digital and legacy) as a focus. There will be a time when the digital revenue of businesses will settle and maybe that will be a time we can forego legacy platforms. However in the foreseeable future, ‘Digital’ is good but only with equal attention to legacy platforms for a predictable profitable future.

 

DIGITAL – are we there…

There has been a significant buzz in the media recently about the ‘Digital India’ launch by Prime Minister Modi. It was launched at a very impressive ceremony reminiscent of the ‘Vibrant Gujarat’ summit amongst a galaxy of India Inc stalwarts promising a significant investment to make this dream come true. Yes this is a ‘dream’ which all of us in India have dreamed will come true someday. Even if 50% of amounts of investment committed actually happens we would be very close to achieving the same.

I have always followed the process of digitization from the blinkered view of an Entertainment and Media analyst watching with interest how increasing broadband connectivity has changed and continues to change the very basic paradigm of content delivery and now content production. It has disrupted the settled business models and the new business models are still being developed. Change has been rapid in some markets but relatively slow in India. Pace in India has lagged the world not because of the consumer mindset, but the lack of infrastructure or investment in infrastructure at par with the world. The advent of ‘Mobile’ and ’Wireless broadband’ is finally helping us leapfrog some of our legacy infrastructure issues.

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However a digitally empowered service capability has a far larger import for a country like India than just looking at Entertainment Sector. It can help make a substantive difference on how India provides information and services to its vast multitudes of population and turn this into a true demographic dividend. The potential in following sectors has been discussed extensively and come to the mind immediately i.e,

  • Healthcare – both information and services
  • Education – with ability to reach large distances in language of choice & without physical infrastructure
  • Entertainment / Media – content production, distribution and consumption
  • E Governance – key government information & services provided without human interface
  • Agriculture Services – Information & Services
  • Financial Services – payment platform
  • E commerce – ability to transact without physical infrastructure

Clearly, the benefits are many and a digitally empowered India is a necessity rather than good to have. Therefore then the ‘Digital India’ dream needs to be fulfilled and the government’s might behind this dream is welcome.

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In recognizing this need to be digital, one must also recognize the difficulties one may encounter to get to a reasonable level of service delivery capability. In our euphoria of announcements, we must not get ahead of our ability to deliver. India as a country is far behind other countries in fixed line broadband & PC penetration.  Therefore our big thrust for connectivity is most likely through wireless and primarily on mobile devices. Some key areas which will need address before we can contemplate a hassle free digital connectivity are the following:

  • Spectrum – Availability of Spectrum and management of its use is critical in providing wireless connectivity. The current availability of spectrum is woefully less, providing for speeds which are substantially lower than in digitally advanced countries. As data usage increases spectrum availability, cost and its management will play a crucial role in how digitally empowered we are. Without spectrum, large investments in services are not likely to fructify inspite of promises made.
  • Devices – Provision of digital services & information is likely to be received through mobile and mobile handheld devices. Therefore, cost of such smart devices is the key to accessing digital services. Indian consumers are cost conscious and it is crucial at what prices these devices are available to them. The telecommunication revolution in this country was made possible through cheap devices. Therefore the ability to keep these costs down will determine the success of our digital drive.
  • Infrastructure – If mobile is the device of choice, then the attendant infrastructure in terms of mobile towers needs to be in place. Provision of environmentally beneficial power for telecom towers as well as equipment is a critical component in our quest for being a digital power.
  • Net Neutrality – To achieve the breakthrough and creative impact of digital connectivity, the government needs to ensure net neutrality or open internet with free & equal access to all consumers. Restricted access would hamper full digital creativity.
  • Privacy Laws – As we get digital, privacy of personal information assumes significant importance. We need policy and implementation of policy at the highest level to protect against unauthorized use of such information. In a country like India, it is all the more important as sometimes you can buy almost anything including private information for a price. This would be a recipe for chaos and needs to be addressed as a critical piece in our journey on the digital ladder.

No journey is without its pitfalls, but that does not mean we do not embark on the same. A start has been made. We look with interest as to how the journey unfolds and how it integrates into the very fibre of our lives. Its time for the government not to let down its constituents who have already accepted this disruptive change in their lives.

2015 – Is ‘Digital‘ the new ‘Normal’

25 million video views on a digital platform for the Indo Pak match, 4 million downloads of the digital entertainment app ‘Hotstar’ from STAR within a fortnight, the burgeoning valuation of e-tailing online platforms, the growing acceptance of public service delivery though online intervention as well as digital being seen as viable tool to curb corruption are the news which have hogged our headlines since the start of 2015. Individually, these are no doubt significant events which demand attention but looking at them collectively it is a huge ‘Tsunami’ which is about to engulf us in many ways we imagined but never experienced. Our lives are about to change mostly for the better, but also in many ways  where we still do not have full understanding. Probably it is the tipping point or very near the tipping point that we all have been discussing about. All this change or ‘Tsunami’ as I call it has happened due to a revolutionary device called the ‘MOBILE PHONE’.

No change in Indian subcontinent has been as disruptive as ‘Mobile Telephony’. Ever since it was introduced in 1995, it has virtually changed the way we communicate, exchange information and do business. It has been an inalienable part of you for the past 20 years encouraged by its ability to bridge distances through low rates and devices. With its smart phone possibilities, internet service highways and large connected population it now promises to change your life again if the present news is any indication. In this new world order of which India is a part what can we expect?

As a consumer of content and services the following:

  • Ability to consume past and present content whether it is informative, entertainment oriented or specialist content at the place, time as well as on the device of your choice.
  • Ability to consume services whether public or otherwise with least intervention, least cost and at the time of your liking.
  • Ability to consume goods with widest choice, best bargains and delivered to the place of your choice with payment option to your liking.

As a businessman, provider of services and goods it opens the whole world as a market without any boundaries and without the present infrastructure costs with key supply partnerships in different parts of the world.

However ‘Utopia’ is still not at hand and many adjustments – legal , technology related as well as market related need to be made before we reach the full potential of the change which is at hand and that we will encounter to its full extent going forward. Some of those adjustments are technology as well as infrastructure related, which will require time to build and the roll up can be different in different markets. Other adjustments  – like a sudden overhaul of your business model, for example the change from fixed screen to multiple screens for entertainment content, change in subscription and adfunded models for content can be painful. Consumer preference usually predates the change in business models and that change will be painful and maybe a little drawn out. New avenues of revenue will need to fulfil this loss of revenue in present models either through enhanced coverage or better charging services. Another area which will evolve would be the IPR regime and the IPR protection of brands in an increasingly accessible world.

Welcome to the world of uncertainty!

Welcome to the Digital World!

2014 -will it bring us closer to the Digital tipping point?

As 2013 comes to a close, last few weeks as usual have seen a frenzy of images, reminding us of the important milestones we witnessed in the past 12 months. Besides the lukewarm fortunes on the economy, which were consistent alongwith a rather poor record of good governance , there were also images of the political churning against corruption as well as surprising voice of the ‘AamAadmi’ finally starting to come to the fore. One startling fact that everybody  recognised and noted was the advent of Social Media as the preferred choice as the carrier of the message. While the world may not have shifted away from other forms of  media, the digital interconnected highway of information is increasingly making its way as a very important medium of communication. In a country like India, where internet infrastructure and intelligent devices are not at par with the world , it was always considered that digital revolution was, a while away. The importance of the ‘Social Media’ has surprisingly also coincided with the increased use of the digital information highway for access to information and online purchases. The current valuation of some of the online properties bear out this fact. This therefore begs the questions – ‘Are we close to the digital tipping point? ‘  ‘What caused this change?’ and finally what are the likely implications for the E&M industry?

 

It is also customary at every start of the year to do a little crystal ball gazing as to what the future holds for us.  Before we do look at the crystal ball and imagine what is likely to happen in 2014 ,its important to understand what is causing us to reflect that we are at the cusp  of a major change . As per TRAI latest estimates, the internet users are likely to touch 200 million plus, making India the second largest  internet user after China. The user base has grown by 40 -60% in the urban/rural markets respectively over the last year. It is pertinent to note however that while the wireline access grew , the major growth as well as connectivity came through mobile. 60-70% usage is through mobile and growing at a faster clip than wirelineaccess . Facts now corroborate what one had predicted earlier that India’s digital growth will largely happen through a mobile platform.

 

Therefore, if the above is a fact then its good to crystal gaze and visualise how the business of Entertainment & Media will change. Also it may be the right time to estimate the pace of change and how far are we from the tipping point. People have an insatiable desire for  entertainment and one does not want to be caught on the wrong foot, if the medium of satisfaction of that desire changes  and changes rapidly.

 

Lets look at some of the pointers. The first is the growth in internet usage. The second is the demand for Smart Phones and Tablets which have outstripped the supply of fixed PC / laptops and are increasingly cannibalizing the TV screen. Prices of the   said smart devices are constantly  coming down making them affordable. Further with faster  4G speeds becoming a reality, we would be fooling ourselves if we do not fore see that the tipping point is closer than we think. Centre of this change is clearly the ‘Mobile’ device.

 

Therefore we need to reevaluate ourbusiness plans keeping distribution through wireless devices primarily the Smartphone in consideration. Content companies whether they are in news , current affairs, movies, documentaries, short films or TV serials need to resize their offerings based  on a new distribution medium. There is a need to rethink the economics and the value exchange.What could  be a loss of value can be made up by much faster growth. Its time to think of what ‘ Netflix’ ‘Redbox’ or ‘HuLu’ have on offer or for that matter what domestic companies like EROS, HUNGAMA and SHEMAROO have already started doing.Image

 

Market is in a transition mode. Its not that the traditional business of entertainment is going to finish. The companies need to defend these traditional offerings while trying to extend the new modes of delivery of content. There are still hurdles to delivery through Mobiles though.The payment gateway is still far from refined, the battery lives still not long enough, screen size is still small for total enjoyment of video and the prices of the devices remain high. Therefore, it’s a key question whether Mobile will be able to overcome all these issues to be relevant as we think it should be.  2014 could be a game changer should there be solutions to these hurdles. From all available facts the ‘Digital’ way of life does not seem very far away.

 

eye on media blog


Entertainment & Media industry with revenue of USD 17 billion has always been in the news, whether it is for the glamour quotient, myriad controversies, its growth in the past or the future potential of the same. Although, there are enough forums and tabloids that cover the glamour as well as the controversy part of this huge industry, not much has been written about the growth and the future aspects of the same.

Through this blog, my endeavour is to provide a two-way platform to discuss the future growth potential as well as the business model of an industry that is in the throes of a big change worldwide. The other reason for this blog is more personal as I want to remain connected with an industry sector where I have worked very closely with the constituents in the past seven years as head of the PwC Entertainment & Media…

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