Watching Mukesh Ambani unveil the next version of his digital plan at the Reliance Industries Annual General Meeting a few days ago, was a moment that was both exciting as well as déjà vu. In 1999, when I was approached by the Ambanis to be a part of their planned digital foray, I remember Mukesh telling me what his overarching vision of a converged world was. To say it was ambitious and futuristic is an understatement. Having spent over three decades in media and entertainment, and having done some path-breaking stuff myself, I not only connected with him but also told him of how I foresaw the space in the new millennium. It was a matter of weeks—Mukesh Ambani has an uncanny ability to convince even the die-hard skeptic—before I decided to shut Plus Channel, India’s first integrated media and entertainment company which I had founded, and come aboard the Reliance juggernaut as chairman of Reliance Entertainment.
The vision then, as it is now, was to straddle all segments of the digital value chain and the route we selected was wired broadband.
Together with a small team, I spent many months trying to put together the most futuristic plan; of which, incidentally, a newer updated version was presented last week. Meanwhile, Reliance decided to pursue wireless technology, initially through wireless-in-local-loop and later through a unified license. I was asked to put my entertainment dreams on hold and was drafted into the leadership of Reliance Infocomm. However, Mukesh and I would continue to share thoughts on the grand ‘convergence plan’. To be fair, he and his close aide Manoj Modi were convinced that the future lay in data particularly in entertainment and media.
It Started In 2003....
What was done then was a rollout of wireless and Beta trials of smart home and business solutions on wired broadband. In 2003 we had, in our Navi Mumbai campus, working models of virtually all what was shared 15 years later, on July 5: a quad play of wireless and wired broadband, smart home, education, telemedicine, GPS, data warehousing (today’s cloud computing) enterprise solutions, and of course entertainment (films, music, gaming, video on demand) and media (television channels, news and infotainment).
Then the family split happened and in a strange quirk of circumstances media, entertainment, and communications landed in Anil Ambani’s half. In a final meeting, Mukesh told me to stay with his team and said that in a matter of years he would see that we would realise my dream of convergence. Fate had its way, and we parted ways. I joined Anil and began the journey to build Reliance Entertainment. What went wrong after Reliance Entertainment had become a dominant player is another story. Once the non-compete agreement between the brothers was over Mukesh was back with his digital plan and a much wider canvas.
Mukesh Ambani’s New Plan?
He is basically reinventing his vision of convergence of carriage, content and commerce, cloud computing and artificial intelligence. From smart homes and offices to e-commerce, virtual health, education, health and of course an array of entertainment and media options. His retail venture too has reached a tipping point and together with Jio, Reliance is creating the largest consumer business in India. Meanwhile, technology has developed exponentially and opened newer avenues of digital opportunities. All that was imagined in a lab in 2003 is now progressively being rolled out.
He has, in a short span of two years and considerable capex of $40 billion and counting, built the first large telecom company which has built an all-IP network from the ground up, while all his peers in India and the world have updated existing infrastructure.
Jio has acquired 200 million plus wireless customers, built the largest fiber optic grid, and is about to begin the rollout of its fiber-to-the-home (FTTH) broadband.
Reliance has bought, or controls, several media, and entertainment companies (Network 18, Viacom, Savan etc.) and holds substantial stakes in others like Balaji Telefilms, Eros Entertainment etc. Besides, in an Indian context, he has the deepest pocket, fuelled by his hydrocarbon and petrochemical business, and a track record of executing mega projects. Mukesh has disrupted the telecom applecart with his aggressive rollout and pricing.
All that Mukesh Ambani has declared is forward-looking and pretty futuristic.
It is the way India’s own baby boomer generation and millennials will live, work and amuse themselves.
It is a path global leaders are traversing too. There are a dozen companies across all these digital businesses who are world leaders with a strong presence in India. In devices and network manufacturing, China is far ahead. All these players have not only a richer experience but tons of cash to be major interlocutors in this space in India.
But, Will Ambani Succeed?
What are the variables which can and probably will impede his digital trip? The pace of technological change, hyper-competition, global peers, and most importantly Reliance’s inherent lack of consumer-friendliness.
A company which has a B2B DNA, Reliance’s approach is always driven by cost.
Not Quite Customer Friendly
In spite of tall claims of being customer-centric the top management is pretty heavy-handed, with a presumptuous approach towards the consumer. I hope the next-gen Ambanis change this attitude. In all of their customer-facing businesses, discerning consumers have stayed away. By playing the volume game margins are squeezed out. There is more buzz about Mukesh and Nita’s parties than their products. Even its retail stores or fuel retail outlets are neither very aesthetic, nor customer friendly and there is always a touch of arrogance in the approach to vendors, distributors even customers.
Advertising and marketing are at best average (large budgets, poor creative) and trail peers in design, look and feel. Customer service too is nothing to write home about. In time, much of consumer interaction will be automated yet the design and taxonomy will still need to be people-friendly.
Sure, you can grab market share through sheer financial muscle, pricing, bleeding your balance sheet and the competition. But, in the long run, it is all about consumer satisfaction.
Carriage And Content
It’s tough being Amazon, AT&T, and Disney rolled into one.
Unfortunately, there is no senior manager with global skills except for the core Reliance team. That too is far behind the curve than Mukesh himself.
The audacity of the vision can dazzle but after the initial hoopla competition hits you. So in wireless, there will always be Bharti—with SingTel’s deeper pockets—and in other segments, there will be other competitors. The fact is, in a global context, Reliance is far smaller than Apple, Amazon, Google, Microsoft, Facebook, Alibaba or the new ATT-Warner and Disney (Fox). These companies spend billions annually on technology and research. Over years they have refined their services and consumer orientation. They are far more advanced in AI, analytics, and domain knowledge. All of them have more financial muscle too. There’s no way Reliance will be able to compete with them in content. Similarly, it is easy to say one can take on an Amazon or Walmart or Google and Apple.
Last year alone, Apple, Amazon, Netflix, Facebook, and Google have pumped in over $15 billion on content.
Media is pretty fragmented in India and not many people make money in the business. Today, there are many players but where does Reliance stand in competition? Besides, there is an inherent clash between carriers and media conglomerates. Entertainment gets its revenue from distributing its content across platforms and geographies. It's tough creating exclusive software for a particular network. No wonder Netflix is being wooed by everyone.
Now let’s look at technology. It’s no longer about an IP network (everyone has it) or vanilla voice customers. It’s about powering everything through connectivity. Faster networks, next-generation software, and applications, more bandwidth, interoperable devices. Global connectivity and artificial intelligence have redefined the entire communication landscape. 5G technology—which should be introduced in some markets as early as the end of this year, and in 18 to 24 months in India—will have wireless speeds up to 1 GBPS. Coupled with the Internet of Things (IoT) and Industrial Internet of Things (IIoT) machine-to-machine will make mundane tasks redundant.
As big data spreads, and AI gets fully integrated with networks and devices, the way we use the internet is changing dramatically. Automation and robotics in everything from governance security, education, health, transport, energy, to civic supplies. Internet-based systems interconnected intelligently will be the new bedrock. Millions of jobs will have to move from manufacturing to newer services. Data analytics enable the personalisation of media and entertainment as never before. From a dis-intermediated world, we will move to a re-intermediated society.
In content, everything from music to news, films to information will be customised and curated for an audience of one. Already, conventional media like broadcast, print, filmed entertainment, music, and gaming are going online. Entertainment, media, and a host of other services in every sector from governance, education, health, security, banking, to shopping will be customised for one. I am sure the Reliance plan unveiled recently will and does include most of these services. There are global tech companies doing similar things.
I am confident they will get the hardware piece right but it’s the software which makes the difference. And the attitude.
Let’s see whether Reliance pulls it off this time.
Ambani May Be King, But Can He Rule All The Micro-Kingdoms?
There is no business which is future-proof now. In fact, the speed of obsolescence is frightening even as the Fourth Wave hits us. Automation is visible from simple home products to complex manufacturing. Millions of jobs will have to move from manufacturing to newer services. Voice-activated devices are cheap, common and competent. Wearables will be the next fad, and soon seamless connectivity will facilitate the transition from one screen to another. Ubiquitous search options will make applications redundant. Smart homes and appliances will be replaced by ‘predictive homes’ where sensors will anticipate our requirements. Big data will be all pervasive. Immersive content, powered by AI, will take creativity to another level. Technologies like Cinematic VR and Holography are not far away.
One of the hallmarks of a networked society is a ubiquitous always-on telephone and internet connectivity. We are also now in a stage where on-demand services will be the norm. We have seen the shift in the United States, the Scandinavian countries, South Korea, Singapore, and a few others. Sure Reliance has all this on their radar but I believe they are much behind global leaders in this. In any case, our regulatory response to change is much slower than in developed markets; so there always will be a time lag. So Reliance does have reach, bandwidth, and technology, but the arrogance in its attitude is not co-terminus with societal needs.
The core of its philosophy is to build world-class cutting-edge infrastructure and the use of financial, and in some cases political, muscle to push ahead.
In the coming years where personalisation is the key, commodification of voice and data is not enough. Services are all about the consumer.
That brings me to the final point. India may become a $5 trillion economy in a few years but let’s not forget that we are also 1.3 (and going towards 1.4) billion people. Our per capita incomes are still among the lowest in major economies.
In the U.S., per capita spend on media and entertainment is $2,000, and China’s is $500. No wonder, in spite of India producing about 200 films annually, our box office is a mere $2.5 billion. Similarly, though we have over 800 TV channels, the average cable and satellite subscription is only $36 per annum. The global average on leisure spending is over 2 percent of GDP while we are less than 1 percent. Even our telecom average revenue per user is among the lowest in emerging markets. What everyone is hoping is, that rising incomes will increase these amounts substantially; as people start spending more on these services. That is why global players are eyeing the next big market after China-India. Mukesh Ambani seems confident that he will do in the digital space what he did in petrochemicals and refining. It’s a tough ask.
The consumer, it has been said, is king. Well in the post-millennial generation, all of whom are digital natives, all the 7 billion-plus people on the planet will be kings. These kings with their own micro-kingdoms of ones will demand new types of service providers, court jesters, informers, entertainers even wise counsel. Whoever is able to fulfill this role effectively will survive either as an individual creator or a part of a collective or a giant corporation.
Amit Khanna is a writer, filmmaker, and media guru.
The views expressed here are those of the author’s and do not necessarily represent the views of BloombergQuint or its editorial team.