Anil Ambani the Entertainment Czar

Couple of points I made in my earlier blog which I would like to repeat here –

1. Few years down the line 90% revenue of Reliance Communications would come from non voice business
2. The strategic advantage Reliance Communications has over its competitors is the fat optic fiber backbone (90000 Kms. In India + Flag’s multi-country infrastructure)
3. Anil Ambani might not do well in power sector but Capital and Entertainment (extension of communication) suits his aptitude and skills


Now read this article. http://inhome.rediff.com/money/2007/may/05spec.htm. Its one of the best business article I have read in recent times where the author has taken pains to collect maximum possible information, understand the business, analyze and then write the piece.

Unlike his elder brother, Anil is following a very different strategy but with the same ultimate goal of ruling the industry. Mukesh Ambani is more of a Greenfield person who builds from scratch to rule the sector. He has the whole blueprint ready in front of him before he inters the sector and he has everything chalked out on pen and paper – the ultimate goal, the road to take etc etc. He is Rahul Dravid of Indian Industry – Mr. Dependable. Anil Ambani on the other hand is Gilchrist – the Improviser. He knows where he wants to go and he is ready to take risks. He doesnot have route map chalked out but he is confident that as he move along the roads will appear or he will make one. The goal clarity is very much there.

Right now what Anil Ambani is doing might appear like a jig saw puzzle with pieces not falling in place. But once you are able to get hold of the common theme – which in this case is the fat optic fiber infrastructure – the picture will become very clear to you.

If Mukesh Ambani was bullish on ‘Information’ (or data services) as the ultimate leverage point in Communication industry (that’s why he named his company as Infocomm – Information + Communications), Anil is bullish on Entertainment.

Anil is very clear that content is what would help Reliance Communications differentiate itself from any communication player and he know that the optic fiber infrastructure his company has places him in the best position to leverage it.

Let’s read the Rediff article and try putting all the pieces of the puzzle together.

1. Movie Screens – Already ADAG has bought out Adlabs and adding screens at rapid pace to emerge as the leading cinema exhibitor in India.
Strategic Advantage – The optic fiber infrastructure can help him deliver movies without the prints. Each print cost Rs. 30000-40000 and is one of the biggest limitations to grand all India release. The optic fiber delivery mechanism can not only help cutting cost but also increase reach, cut piracy and help early recovery of money by simultaneous release in maximum number of theaters.

2. IPTV – As mentioned couple of times earlier on my blogs it’s the technology of the future. Unlike Cable Tv and Direct to Home (DTH) it’s a two way communication system for television and would put it other rivals to shame once it catches up.
Strategic Advantage – Again, the optic fiber infrastructure. The last mile infrastructure would help deliver voice, broadband & cable Tv etc. on the same cable.

3. Movie Making & Stakes in TV18 & TV Today– Know ultimately content would be the king and would not like to see these content providers call the short while his business is reduced the distribution. Again it’s Anil style to buy rather than build.
Strategic Advantage – Again, optic fiber infrastructure. With Indians spread across the globe there is huge unsatisfied demand for Indian content. These NRIs are willing to pay for Indian content but don’t have access to it due to uneconomic size of Indian population in these locations which make reaching out to this target audience uneconomical for the content providers. Reliance has Flag infrastructure through which it can beam these content directly to NRI houses at much less cost and without much competition. It’s a huge market whose potential nobody has studied till date. Movie on demand, IPTV, India Calling, Live telecast of personal events over net etc are potential revenue generators.

4. Gaming – Zapak was a great launch and its being properly backed by media blitz, high profile game, gaming cafes etc. It’s a big industry world wide with little competition in India.
Strategic Advantage – Again, optic fiber cable infrastructure. Online gaming is something which is still totally unexplored in India and relatively unexplored around the world. Rel Com has the potential to give competition to X-Box and Playstations as the infrastructure it has (Flag) is unmatched in the world.

What makes it interesting is nothing like this has even been tried before anywhere in the world. No telecommunication company had tried to marry entertainment to communications in such a big way. Apart from failed attempts like AOL buying out Time Warner there are few precedents of any such vision. But then Reliance / Ambani are known for this. Nobody in the world has done backward integration from Textile to Oil Exploration like they did. This Anil Ambani vision for Entertainment industry is trying to repeat the same in Communication & Entertainment industry. With optic fiber infrastructure like Flag’s 65000 Rkms undersea Optic Fiber Cable (OFC) and Point of Presence (PoP) in 28 countries across 5 continents and Reliance Communication’s 90000 Kms domestic OFC infrastructure my money is on Anil Ambani.

However, the challenge for him is to find few professionals who can help him execute his vision. He has finance expert or deal makers as team members who can recognize & buy out the right pieces required for his game plan but his team lacks the professionals who can put these pieces together and make the whole thing run as a single integrated unit.