2010

We have to look at what is India in ’20

We have to look at what is India in ’20
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First Published: Mon, Oct 06 2008. 06 19 PM IST

A new beginning: B.K. Modi’s new venture targets youth. He said the company is looking at the age group of 13-25 as they are the ones using these new tools of mobile and the Internet. Harikrishna Katr
A new beginning: B.K. Modi’s new venture targets youth. He said the company is looking at the age group of 13-25 as they are the ones using these new tools of mobile and the Internet. Harikrishna Katr
Updated: Mon, Oct 06 2008. 06 19 PM IST
New Delhi: Billionaire Bhupendra Kumar Modi, who recently exited Spice Telecom, is planning big-ticket investments in the media and entertainment, or M&E, sector. With a business strategy weaving in race, geography and technology, Modi plans to invest $1 billion in M&E over the next five years through a newly formed company, Spice Enfotainment.
He is shifting base from California to Singapore in a move symbolic of his focus on what he describes as the I-to-I market—Israel to Indonesia. He is venturing into film production, television production and broadcasting, music, gaming and Internet. Modi wants to own content and distribute it over multiple platforms. “Digital and wireless is the mantra,” he says. Modi outlined his M&E business plans in an interview with Mint. Edited excerpts:
Can you run us through your broad plans for the media and entertainment sector?
We are looking at various areas where we will ourselves be developing content. One way is to buy content from outside and integrate it and the other way is to create your own. We are now starting to create our own content. We are now starting a film production company, we will enter television production and broadcasting—we will buy channels. There are three-four proposals we are looking at. We are looking at music companies and we are looking at gaming companies. In all these areas, first we are looking at existing companies. We find that companies are talking to us either for a strategic investment or for a complete buyout.
A new beginning: B.K. Modi’s new venture targets youth. He said the company is looking at the age group of 13-25 as they are the ones using these new tools of mobile and the Internet. Harikrishna Katragadda / Mint
The share prices of most of these companies have come down substantially and they have a financial crunch. The reason they have a financial crunch is that they have a single model. Our model is a technology model. If you make content, first it should be digital. Once it is digital, it can the be converted for various platforms like mobile, Internet, etc. The two new concepts that are changing the game is mobile and Internet. This is why a lot of these companies are failing. They are unable to adapt.
Spice’s overall strategy is a youth strategy. We are looking at the age group of 13 to 25. They are the guys using these new tools. The two big tools are mobile and Internet, but they are also undergoing change. Internet is virtually free and mobile is also going that way. The cost of hardware as well as connectivity is coming down. So how people consume entertainment is going through a change.
So what we are looking at is not just content, but also the technology to deliver it on all these emerging platforms.
The other interesting change is the language. If you produce content in English, you can deliver it to a global audience. For data, English is already the accepted language. For music, the language doesn’t matter. Music is global.
So when you look at a video, the dialogue and the music can be converted into any language, but the actors, the physical human being, cannot be translated. That’s where the race comes in. So there’s the yellow race, the black race, the brown race and the white race. The white race dominates the movies, and of late the black race has also got some prominence. The yellow race, while they have not been a global player, there has been big Chinese players. The talent of the brown race has not yet been exploited. That is our intention. The brown race as heroes and heroines and they can speak any language, with the modern dubbing technology.
The brown race is popular between Israel and Indonesia—it is their home race. Outside this space, you have to make them popular. So we are looking at movies with Asian themes and actors, global language, and high technology. You’ll see such movies coming out of India.
If we can now go into specifics, how many films do you plan to make in the next few years?
We plan to make at least five films in the next three years. These are global films. One films we have already launched and filming will soon start. It is on the life of Buddha and it has a budget of $100 million.
We will invest $200 million in all the films put together in the next three years.
The first film is the most expensive one—it’s a big epic, but the others are relatively small. We are only looking at global scripts. I have commissioned one more script.
All the content will be made in digital. When you enter a new segment, you need to have an angle, and our angle is technology. When these films are made, the fact that they will eventually also be viewed on PCs and mobiles will be kept in mind. They will be made accordingly.
Your first film has spiritual links. Is this going to be a theme across your films?
Buddha films is historical, not spiritual. This is why I resigned as the president of the Mahabodhi society. People thought I was spiritual. Spirituality puts off a lot of people.
The theme across all the films is brown people. The way I see it—the respect they command in the world is comparatively less. Brown people are not seen as entertaining people. They are not seen as people with knowledge. They are seen as working people. You need to project brown people through media. Only then will this perception change.
Have you personally faced this kind of discrimination abroad?
I haven’t, but my children do. They refuse to stay out of India. My daughter lived in America, my son in London, and they refuse to live there for long. The only place they like to live in is Singapore, because there is no discrimination there.
So here again, if you take Israel to Indonesia, there is no discrimination. Outside is all discrimination. Everyone faces it.
Look at how black people became prominent entertainers and how that helped reduce discrimination. Unless you have heroes and heroines who are popular globally, you will always face discrimination. Because they don’t relate to you, they don’t relate to your colour, to your style.
So you need a brown Denzel Washington?
You need more than that. You need a brown James Bond. Our people needn’t play second fiddle to anyone. They will be the heroes.
So the film production unit is a separate company or a unit within Spice Enfotainment?
It’s a separate company. It’s called M Films. But all the names will now change. We have engaged a new communications agency, The Brand Union, to come up with brand identities and strategy for all our new ventures.
It’s Enfotainment because people like entertainment even with information. The underlying philosophy is that we have moved from a primitive roti, kapda makaan society into an automated environment—hence the success of IBMs and Xeroxes of the world. Now we are moving into a mobile society. Mobility is the key word. Spice wants to be a big player in this mobile society and also help India move into such a society.
This is why we are working on technologies that will make information, communication and entertainment, all on mobile devices. Everything on the move.
On the television front, what’s happening with the Sony deal? (Modi has been in talks to acquire the 32% stake held by a clutch of Indian investors in Multi Screen Media Pvt Ltd, the firm that broadcasts channels such as Sony Entertainment Television and Set Max)
Once the news of our interest in Sony came out, lot of other people also latched on to it. Sony is more interested in making films. TV is not their main business. So we are talking to them on the films side.
So your interest in the broadcasting company is off?
We might still come in as an investor. But not as an active partner. They are already managing the business. One of our funds may come in as part of a group of investors to take this 32% stake. Purely as a financial investors.
But there are other channels who want to sell. People in the general entertainment business. There are at least six companies that are talking to us. This segment is going through a big financial crunch. The share prices have dropped by more than half. And those who used to put in money into this business are no longer there.
So this is a good time for you to enter?
Yes, it is a good time. But we are only interested in taking control, not in just putting in some money. Because we want to put in the Spice brand there.
That means you would enter a company only if you get majority control?
Not necessarily majority control, but we need influence over the management. Because we need to run it more efficiently. These are being run by people who are very emotional and artistic. We want to take the business approach there. We will need board control. You don’t need majority control for that. You just need to be the single largest shareholder.
Are you already acquiring some shares from the market?
No, we will negotiate and do a private placement or get new shares floated. Right now the market is bad, so we won’t rush into anything. We have a full team evaluating the options and by December-January, we’ll reach a decision.
You have been interested in establishing a studio chain and you were interested in the Culver Studios in California. Are talks still on? (Culver Studios CEO James Cella told Mint in June that his firm was not in talks with Modi.)
Well, it was owned by Lehman Brothers and now all their assets will go into liquidation and we will buy it from the liquidator. A lot of these properties will now come on sale and we will pick and choose judiciously. We were talking to Lehman Brothers for this and they were asking for a high price. Now it is on sale. We have people in New York and Hong Kong who are experts in doing this sort of thing. So we are working on it.
Can you elaborate on the plan for a studio chain?
Our idea is to change it all to digital. Be it Culver Studio or anything—in America, a lot of these things are still analog. Digital is a disruptive technology and it will bring changes all around. It is changing the business in TV, movies, music, everywhere. So the existing infrastructure needs to be modified and most of these people have gone out of cash.
Same thing happened in telecom. A lot of companies that were into telephony went bust. Same kind of shift is now happening in entertainment. We want to be able to grab this opportunity.
At this point, what is attracting you to the M&E business?
Media is coming on mobile and Internet. It is the convergence of this technology and content that is attracting me. We see ourselves ready for entertainment because it is becoming an essential part of mobiles and of the Internet ecosystem. We are both in mobile and Internet, so we need to be in Enfotainment.
I put up so many factories—separate ones for PCs, typewriters, printers, copiers, fax machines. And look at what happened—all of them became one!
So we have to look at what is India in 2020. I have a great faith in India and the brown race from Israel to Indonesia. Because this race has now got wealth. Now oil is in this area, software is in this area, people are in this area. Three billion people, that’s half of humanity. The Americans, Europeans, Japanese and Chinese don’t even look at this area as a market for entertainment. When American movies are made, they think of this market as a 3% market. India is just 1%. They are willing to sell territorial rights for this area for just 3% of the total revenues.
You said you are now planning for 2020, but typically you don’t stay in a business for longer than may be five-six years?
But this will take time to grow. We entered telecom in 1985, the first call was made on our systems. We exited only in 2008. So by then new technologies will come. All this takes lot of entrepreneurship, courage and belief in your people. We are also talking about education as part of this business. Everything will be electronic.
In the gaming business, you’ll take the acquisition route? If so, when will you complete the first acquisition?
Yes, we will first acquire a big gaming company. We are working on it. We have hired Michelle Crames, who is a Harvard MBA from Los Angeles, to spearhead this business. This is also a company from the I to I region.
What is the total investment you will be making into the M&E business?
We are talking about a billion dollars in the next three years. There are a lot of people who want to invest with us—people who have made money with us in Xerox and other ventures.
So despite the current credit crunch, you don’t have issues in raising funds?
No, because we are putting in our own money as well. It is not fully leveraged investments. This environment is a good one for mergers and acquisitions.
What is your strategy for your existing businesses?
At Cellebrum, we are looking at putting everything that is on Internet, on mobile. Jobs.com, etrade.com, all of this we are putting on mobile. We have a large team working on applying Internet technology on mobile. For the Cellebrum IPO, we have refiled the application with Sebi as there were some objections.
In the BPO business we have just acquired a company and we are merging it with our own unit. We are now specializing in telecom clients. We have the Reliance contract, the Idea contract.
In retail, we are opening about 100 Hot Spot stores in a month. We will use Hot Spots to sell not only telecom products, but also entertainment products and PC data products. We are looking at 5000 stores in the next three years.
There is a buzz that you are in talks to exit Cellebrum and Spice Mobile?
We are not exiting. Yes, we talk and that’s because we are constantly evaluating our businesses.
Is there a possibility that you may offload some stake in these companies?
Well, who knows? Not in Cellebrum. May be in Spice Mobile. Either we have to grow or I’ll exit. That’s my tactic to keep my management team on their toes. So I tell them either you grow or I’ll exit.
sruthijith.k@livemint.com
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First Published: Mon, Oct 06 2008. 06 19 PM IST
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