India has witnessed a tremendous growth in its media and entertainment business. In the past decade, we have seen the growth of billion dollar home grown media conglomerates like Network 18, Zee, UTV, Reliance ADA, Yash Raj, NDTV, Bennet & Colmen, and Hindustan Times to name a few. At the same time the foreign players too have done extremely well either directly like Star TV or via investments and partnerships with local players. Today Disney, Viacom, Turner, Sony, you name it and they have a large presence in the Media and entertainment business. When it comes to Television, Newspapers, Magazine, Sports, Movies, Theaters, DTH and entertaining over 700 million people in India, these companies rock.
However, one area where none of these companies have been able to make a dent is the Internet and New Media space. Leaving a few exceptions in most cases, Internet and New Media ventures of these companies have been a complete disaster. And it’s not that these companies have been not spending enough money or time on the space. I think in aggregate, all the Indian media companies put together over the last 5 years would have invested between $300-$500 million in the space but the result is, we have an online advertising market dominated by Google (over 60% market share), the mobile operators are taking away majority of the moola when it comes to VAS revenue, ecommerce is dominated by players like Ebay, jobs is Naukri, matrimonial is Shaadi, gaming is Indiagames :-), VAS is Onmobile to name a few. There are tons of examples like Makemytrip, Cleartrip, Hungama, Sulekha, Justdial, Rajshri, Rediff , Smsgupshup, who have dominated their respective sectors even though they had to compete head-on with competition with large media companies who had companies in the same space, with high capital, technology and ‘quality people’.
I wonder if these big media companies will ever understand the real reason for this situation and continue to fund their internet ventures by replacing the CEO with an even more expensive CEO who will rubbish all the past strategies and invest another $20m in marketing and brand repositioning :-)
Having interacted with a number of such companies here is my take:
Large Media Companies STRONGLY believe:
1. That they have the ability to create ICONIC brands with the help of their media power and it’s the BRAND which is everything.
2. By hiring somebody from Google, Microsoft, Rediff, Yahoo, Facebook, ebay, or Amazon, to head their business they can build a business equally successful as these companies.
3. By poaching an entire sales and creative team of a startup competitor by offering them triple the salary, they can overnight wipe out competition.
4. By investing millions of dollars on server farms, high end technology from Microsoft, Complex CMS and video solutions, Oracle, SAP they can have a super competitive edge over a startup competitor who is mostly using (cheap) open source software.
5. By offering something FREE over what a startup competitor is charging for they can kill competition.
6. By Exclusive content, movie stars, prizes, tickets and every possible incentive they can make customers switch to their brand.
7. Using their Television, News and other media vehicles they can create enough PR to create viral effect.
8. They have piles of cash and unlimited resources over a startup who is constantly scavenging for funds and resources. That startup will DIE someday on its own.
9. The value of these startups is very high because of the stupid VC investors in the company. Actually, these startups are worth a lot less and one day they will buy it for peanuts or hire the founders as their employees.
10. They can always sell Internet and Online inventories as a bundle with their Television and Print inventories.
11. ESOPS in their media companies are worth a lot more than STOCK in some arbit startup with no revenues and cash.
While the reality for Startup Internet and New Media ventures is quiet the reverse:
1. Most startups were able to build brands with very little marketing spend but more on innovation and word of mouth on the strength of their product.
2. Founders and core teams of startups are driven by ‘PASSION’ and not just ‘MONEY’. Hiring a CEO with a $200k package and saying he is passionate is quiet a joke. Most founders take huge salary cuts over their last jobs.
3. Being low on resources actually drives startup teams to deliver a lot more as they now have to go the same distance with lesser cash. In fact, having too much cash is not good for an early stage business :-)
4. Open source solutions perform better, faster and have proven to be more stable than the expensive ones... a startup with no cash understands this and is forced to find the most cost effective solutions.
5. Having VC’s investors who look at investments very objectively is a boon to startups. As they are able to spend a lot of time mentoring the startups and at the same time if the startup is going nowhere they are unemotional about this and can ‘pull the plug’ anytime. This is a big motivation/scare for a startup team, which once again drives them to perform. Over a media company startup where irrespective of the ‘division’ making or not making business plan the media company can never really pull the plug...since there is a lot more at stake, including stock market expectations, face etc.
6. One of the worst things any startup can do is to hire some heavy hitter from a successful company like Google or Microsoft (unless he is willing to join at a huge discount to his salary with stock in the startup). The concept is simple when you are with Google, Facebook, Rediff and Microsoft you are not doing any selling at all. The product demand is created by the product itself, it is designed developed and managed by the masters in America and your role largely is to create fancy presentations, graphs, business plans, paperwork, strategy and keep the firang bosses happy. That is why these managers do very well at media companies since they can always create a great strategy document and why the last strategy they made did not work.
7. Startups are fast in responding to situations, changing course, modifying business models, modifying product and respond to customer situations. The corporate structures of most media companies make any major change an exercise for which they would require a board approval.
8. The hunger to win, the fire in the belly, aggressive, passion, dedication and terms you would normally associate with a startup how many times can you use these terms for a Media Company startup?
9. Finally, for a startup team there is a lot more at stake. It’s not a job they are doing... which a media company CEO and team can change 4 jobs in one year and no one will blink an eyelid.
So, if these are the facts, why do we still see more and more media companies pumping money in their Internet ventures verses investing in startups or acquire startup companies?
A lot of this I think can be attributed to the early stage our new media industry is in and slow development of the startup ecosystem in India. The good news is that media companies are owned and run by some very intelligent entrepreneurs themselves. I believe that in the next 18-24 months, many of these companies will have no option but to get into an active startup investment/acquisition mode as their counterparts in the west had to do. There had been many examples in the west where establish media companies made the same mistakes in the early 2000 and now we are seeing ventures like Hulu and their participation in early stage startup funds where they don’t want 51% stake in the company but operate like a strategic VC fund and at the right time happy to acquire the company. Sony, Cisco, Google, Microsoft, News Corp, Disney, Electronic Arts, Facebook, Time Warner and many others have largely got into new media ventures by aligning with successful startups.
Will this happen in India?
PS:- I think I have opened a can of worms but have to make an important disclosure that before writing this post I had 20 shots of vodka and was watching some crappy saas bahu show on TV and lost a game of T20 Fever to some guy called ‘BIG Daddy’.
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Comments (117)
Why the Great Indian Media Companies will Fail on the Internet, http://indianstartupgyaan.wordpress.com/2009/11/01/why-the-great-indian-media-companies-will-fail-on-the-internet/
Thanks for your sharing. I hope you have an enjoyable day with.
Thanks for the extra info (the link you given), this clarify it.
I was very encouraged to find this site. I wanted to thank you for this special read. I definitely savored every little bit of it and I have you bookmarked to check out new stuff you post.
It’s an interesting approach. I commonly see unexceptional views on the subject but yours it’s written in a pretty unusual fashion. Surely, I will revisit your website for additional info.
The media companies are stuck in ’mera-sabse-bada-hai-mera-virya- utpadan-sabse-zyada-hai’ syndrome. Apologies for the sexist vitriol, but hammering a point here. With this make-belief attitude they try to build it instead of buying/acquiring a better piece of tech stack.
Giving some videshi perspective, if you take Comcast (a US-based $100 billion media house) as a case, last year they bought Plaxo for $150m. Why? The know that they have become big and they had to go social! So, instead of building the technology and trying to act as if they already have social underpinnings, they up-ped the ante by acquiring Plaxo. This was not the first, Comcast has done several acquisitions from enterprise content platform to content networks to hardware startups.
India media companies have to start looking outside as it’s matter of time and change in government regulations that the likes of WSJ, Bloomberg, NYT, WashPo may become the household brands.
great post, i agree with your comment
I was very pleased to see you read on this site.I wanted to thank you for this great! I enjoy each case something like this and I have you bookmarked to check out new stuff you post.
i’m not sure but indians in short a scammers, this is the only reason they are not famous over internet
great post, i agree with your comment
Hi Vishal, such an interesting and factful post. I am sure this could not have been so true and upto the mark without having 20 shots of Vodka - liked it very much :)
As you rightly said, it would not be too far a scenario to see Media companies looking at new ventures and helping them to grow as well instead of thinking of creating more competition just by hiring highly paid CEO’s and team.
Not sure but a wild question - Why Indian Media company executive team think that an employee of their own company cannot create a decent startup of tomorrow? Why is this trust factor not their in Indian business environment?
It’s an interesting approach. I commonly see unexceptional views on the subject but yours it’s written in a pretty unusual fashion. Surely, I will revisit your website for additional info.
Having worked for close to a decade in the digital side of the Indian media companies I can say there is a lot of merit to what you have written, but not all of it is true.
Other than a few exceptions here and there, both the big companies and the start ups mostly get it wrong in a lot of ways. If big companies spend big, a lot of start ups I have seen lack even a basic plan that go beyond quoting the latest IAMAI number on the active user base.
While those problems are pretty valid, there is a larger problem in the overestimation of the addressable opportunity. Even if you assume that we have 70 million ’active’ users in India as the gospel, a lot of the consumer-facing generalist products don’t add up in terms of numbers. If the market is not really there, even the best products will bomb. Having products out there that not up to the mark only brings about that disaster a bit before its time.
Of course, on a smaller scale, it does work, for instance, with Instablogs. My guesswork is that the site does ~40k page views per day, which, with lower running costs of being based out of Shimla and a lean operation. Mind you, you can run at that scale for as long as you want to, but you will always then remain a small player. If you want to grow larger - somewhere in the region of a Wordpress.com for India - what would you do? Short of burning cash, there is no other option on the table at the moment.
For consumer-facing products to take off here one thing needs to happen: We start developing products that go beyond what either you or I will use. Step outside your house and ask 15 people on the street about how many of them use a Twitter or a Wordpress. Till you can come up with a product that a majority of them will say ’yes’ to, we can keep ranting about how startups suck or how big companies suck till the cows come home.
p.s: The comment posting form marks only Name and mail as required fields, but it won’t allow me to post the comment without the other details too filled in.
Vishal - this one came straight from your heart. What I really liked about this post :
1) Terrific detailing - which only you could have done, as you have lived this industry through and through!
2) The amount of new information that I have come across (though I read a lot) is surprising. Good for me!
3) Your style is what defines you. Keep it up. It’s very useful. (I will be taking this up in my class as an assignment for all students).
Now two points :
1) I am reminded of the legendary Rupert Murdoch who said to his Board during a heated discussion that there is nothing we cannot do .. and that applies to the social media space (globally).. and MySpace’s new adventure was born. We all know where it is now.
2) The TIME AOL merger is such a grand case study by now that there is no point delving on it any more!
I totally understand your emotions when you write about STARTUPS AND CEOs. I have faced the whole cycle, and have written quite a lot about it on my own blog http://smblog.proton.in
My comment may please be seen as emanating from an academician, and hence the formal tone and words may please be excused :-)
The probability of funding by the established media companies in the startups (though it’ll take some time) is not too low either keeping in view that the paraphernalia of Angel Investors and Venture Capitalists was a ‘new’ thing in India few years back in fact, it was a phenomena only of the west, at that time talking about these things seemed a farfetched dream, yet we experienced it coz of the entrepreneurial spirit in few pioneers and the Angel Investors. Not to miss, India is still in its infancy in terms of investing in startups, quite similar to Silicon Valley in the early 1980s.
Great indian blogger...
I know this is deviating from the point slightly but two observations:
1. Shyam (above) as absolutely right. The market really doesn’t exist. Internet ventures that are focused on the Indian consumer market don’t do well because there are no users. One can cite naukri but I think it actually managed to tap the one addressable market out there (and LinkedIn is actively trying to address the same one with some success). Naukri however, isn’t a model that’s driven by consumer spending or advertising. It makes its money from the businesses that list jobs. The 70 million number is probably technically true (defined as ’have used the internet at least once in the last 30 days’ or something) but the actual active user base is probably no more than 20% of that number. Add to that the complete distaste for using credit cards etc. online and you have a fairly low chance at a hit.
2. The venture capital space in India is hugely underdeveloped. Most venture capital here focuses on growth stage businesses and early stage venture investing is very limited. Seed stage is even less developed with only a few angel groups in the fray. Venture Capital requires a proper ecosystem that supports entrepreneurs in many ways (lawyers to start businesses, accountants, mentors, partners etc.). In addition, the one major contributor to the Silicon Valley phenomenon has been the involvement of Stanford. The intersection of business and academia and the effect it creates is phenomenal. I am a Stanford Alum and its impossible to be there and not be tempted to start something (which I have done!).
Just my 2 cents
I was very pleased to find this site.I wanted to thank you for this great read!! I definitely enjoying every little bit of it and I have you bookmarked to check out new stuff you post.
Vishal,
The malaise you speak about has been covered in few other blogs before. Kartik, Rajesh Jain and to a small extent, yours truly, have spoken or written about this before. But its nice to read a well rounded summary once again.
The problem is not just with media companies though. I figure, any company which has deep pockets, a sense or arrogance, and has corporatish managers (as against entrepreneurial SBU heads) running their business, falls into the same pitfalls.
Rediff is a classic example. From being at a vantage point, where it could have become an integral part of all Internet users from India, it has reduced itself slowly, to becoming a non-entity. I mean, no one would miss Rediff if it disappeared tomorrow. They have established leadership in none of the verticals that they had a shot at. And they continue the merry-go-round of MBAs at the top...
Where have the Indian versions of Yahoo and Microsoft Internet biz gone, likewise? They have also tried many avatars, but somewhere, the disconnect between what the users really want, and what they want to offer, has remained. Not having an entrepreneur drive the businesses, has cost them dear.
For that matter, of course, the ”next” ventures from Naukri or Shaadi or BharatMatrimony (JeevanSaathi, Brijj, Makaan, Fropper, IndiaProperties etc. etc.) have also struggled to make a mark?!
- Sanjay
Thanks for this article, Vishal. Inspiring for startups!
It seems to assume that startups will do the right things to succeed in the market just because the passion, eco-system and investors’ push. I am sure there are more things to succeed in the new media.
I shall look forward to reading about all of that from you. Do share with us some of those pearls. :-)
Great article Vishal. Enjoyed it completely.
thanks.. i enjoy your blog..
I quite agree with Vishal, Pooja and others here... frankly speaking, compared to US and London, Angel/VC scene here in India is a bit hopeless.. Environment and support over there for an entrepreneur is quite conducive to the growth of a startup and new ideas to flourish..
This blog says the same thing - http://indiansinuk.net/blogs/Funding-for-Real-Innovation-in-India-UNAVAILABLE.html
We are also in the market for some angel-funding for new-age media NRI portals but the crux of the problem we are facing is best explained by this post from Vishal.
Cheers
Aditi
Friends, neither I am a VC nor an entrepreneur. I am tempted to comment here as I have jumped on the bandwagon of the New Media four years ago after serving an English daily for about three decades. Therefore my comments would be restricted to the new medium of the media i.e. Online Journalism.
”The internet may kill newspapers, but it is not clear if that matters. For society, what matters is that people should have access to news, not that it should be delivered through any particular medium; and for the consumer, the faster it travels, the better,” says The Economist in the last issue of 2009. Unfortunately, there are a few persons in this country, in particular the newspapers’ owners and editors to accept the emerging reality. The owners may enjoy smug optimism about the growth of the print media and buttress their tall claims by manipulating balance sheets but the writing on the walls is discernible. Little wonder, M.J. Akbar, the only Internationally known Indian journalist described ”Internet is a deceptive development. Beware of it” in April 2009.
Indian media persons stubbornly refuses to admit what Harold Evans, perhaps the best journalist during the later half of the last century says in his autobiography ”My Paper Chase”, ”In fact the necessary worrying about what is happening with newspapers and their staff tends to obscure the fantastic utilities of the Web. Internet journalism sites have immense potential, not just for their speed but also for increasing our comprehension and enjoyment. Hyperlinks open a panorama of global sources. We, the skeptical or curious readers, can explore primary documents quoted. We can replay a political rally caught on video by a spectator and posted to YouTube. We can keep track of a hurricane from a weather center or watch the performance of a new theatrical star the critics are acclaiming. And we can be sure that misstatement and tendentious entries will be stung to death by a thousand blogging bees.”
There has never been such access to knowledge in all its forms but the ”Denialism”, a term coined by The New Yorker staffer Michael Specter to describe the mindset which refuses to accept any thing but the perceived notions and beliefs, grips Indian Media men and women to the extent that remain engaged in denying that the media, in particular the print and electronic both, is sliding and may gate a pace in the near future.
forgot to mention this awesome blog about startup scene in India.. although the blog’s title is India Or China but it actually talks more about startups and issues they face.. http://windia.blogspot.com/2009/11/india-or-china.html
Cheers!
Brilliantly written and bang on! Your forgot to add two other reasons:
1. Most electronic media CEOs don’t understand new media/internet and hence the desire to hire the most expensive resource - hoping the guy they hire gets it. If the passion does not come from the top, it will never happen - the primary reasons why startups do so well.
2. Most TV companies view the internet as an on line brochure for their channel/network.
While agreeing to your analogy and views the way I look at the new medium as an opportunity to bring the passive consumers of content into active content creators by increasing quality and veracity. This dynamism is being consistently negated by the existing media houses.
AnilJi,While agreeing to your analogy and views on Vishal’s article the way I look at the new medium as an opportunity to bring the passive consumers of content into active content creators by increasing quality and veracity. This dynamism is being consistently negated by the existing media houses.
Your blog seem to arise more from jealousy of loosing some good resources to big media company rather than nailing any specific factual issue.
I am really surprised that such a crappy blog has been praised soo much.
If passion alone can make any start-up successful than most of them should have been successful.
need more struggle for India company, yes they can
I am no marketing guru. My opinion is that like any other thing the idea of Internet marketing need to be tweaked for making it work in India. India’s diversity makes it a better market for localised advertising rather than a whole country campaign.
Very few internet campaign (text and banner) are catchy enough to get clicks or appeal to the customer.
Cheers all.
P.S : Reading your post is a pleasure. Nicely put.
The market leader in shaping the “future of tax”, Deloitte influences Canadian tax policy with the goal of creating a business climate which propels corporate growth and furthers Canada’s international competitiveness.
thanks again for great post here
well this is the posts like im looking for and you have a great blogs dudw
Brilliantly written and bang on! Your forgot to add two other reasons:
1. Most electronic media CEOs don’t understand new media/internet and hence the desire to hire the most expensive resource - hoping the guy they hire gets it. If the passion does not come from the top, it will never happen - the primary reasons why startups do so well.
2. Most TV companies view the internet as an on line brochure for their channel/network.
Your blog seem to arise more from jealousy of loosing some good resources to big media company rather than nailing any specific factual issue.
I am really surprised that such a crappy blog has been praised soo much.
If passion alone can make any start-up successful than most of them should have been successful.
Nice share...
Internet media is really important factor in Journalistic today...
I absolutely loved the post. Being involved in a startup myself I could relate to every point.
We need more vodka posts.
thanks man .....
nice infi broooo
Yeach, I like your articel this veri inspiration thanks
nice info
Indonesian also love blogging
Internet is become familiar
Internet is related with computer and my blog is about computer
This info reminds me to the book entitled Think India. India is tremendously a country with so much development in information and Technology
Yeah it is inspiring article. Thanks for sharing this useful article.
This is a post that is presented and depicted as if in a canvas; thanks for sharing.
Yeah its very useful article. Thanks for sharing this useful information.
Interesting information. Thanks for sharing it.
Great news!
same case with my country.. :)
that’s great.. nice to see your blog
nice info gan..
I just stumbled upon your blog and wanted to say that I have really enjoyed reading your blog posts.Any way Ill be subscribing to your feed and I hope you post again soon
Best regards to the author as your informative post
Informative post. Thanks to the author.Great info.I like all your post.I will keep visiting this blog very often.It is good to see you verbalise from the heart and your clarity on this important subject can be easily observed.
This is an inspiring article. I have a few Indian friends and I could say they are very competent in what they do. I guess India as a whole just needs to be in step with the current market trends to be more competitive. It is not only India that is having problems in offering innovative ideas to really make a breakthrough in online marketing. But give it time India and other countries will soon catch up and find their respective niches.
i am not sure but indians in short a scammers, this is the only reason they are not famous over internet
My opinion is that like any other thing the idea of Internet marketing need to be tweaked for making it work in India. India’s diversity makes it a better market for localised advertising rather than a whole country campaign.
I will encourage my friends to visit your wonderful blog.
i agree with your opinion.
I think India is the largest country using the Internet. I am very impressed with the companies.
thanks for sharing and bestregards
I really appreciate sharing this great post. Keep up your work.
Looking by here and learn and see so many beautiful things. Keep Up!
Interesting post. I have been wondering about this issue,so thanks for posting. I’ll likely be coming back to your blog. Keep up great writing.
Nice information, valuable and excellent, as share good stuff with good ideas and concepts, lots of great information and inspiration, both of which we all need, thanks for all the enthusiasm to offer such helpful information here.
nice post...goo idea your blog
As you said, it would not be too far to see a scenario of media companies looking for new companies and help them grow and instead of thinking about just creating more competition by hiring highly paid CEO and equipment.
Thanks for it. We must be winner
Thanks for it. We must be winner
thanks for it
I really enjoy your work on your website. Thanks for sharing.
i just know this, thank you very much :D
I don’t think so, some of these companies are quite successful.
yeach I think India is the largest country using the Internet. I am very impressed with the companies.
hey handphone terbaru .... actually I agree with you
I just stumbled upon your blog and wanted to say that I have really enjoyed reading your blog posts.Any way Ill be subscribing to your feed and I hope you post again soon
i am not sure but indians in short a scammers, this is the only reason they are not famous over internet
The beauty of these blogging engines and CMS platforms is the lack of limitations and ease of manipulation that allows developers to implement rich content and ’skin’ the site in such a way that with very little effort one would never notice what it is making the site tick all without limiting content and effectiveness
well thats a nice page i think ....good ;)
great website i love it
i agree with you ,,,its nice
Thanks for you
Thanks for it.
hmmmm good argument.... thanks for share it... and ini many thing i agree with u
great article... i like that u start sharing not selling regards...
I enjoy whatever you have done here. I love the portion in which you express you do this to provide back still I would presume due to all the feed-back this is functioning for you too.
This is a really good read for me, Must admit that you are one of the best bloggers I ever saw.Thanks for posting this informative article.
information space is very interesting. I loved going here. thanks
Interesting information, and thanks to admin
Perhaps this is one of the most interesting blogs that I have ever seen. Interesting article, Funny comment. Keep it up!
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I admire what you have done here, as well as share good stuff with good ideas and concepts
This is such a great resource that you are providing and you give it away for free. I love seeing blog that understand the value of providing a quality resource for free. It is the old what goes around comes around routine.I found so many interesting stuff in your blog, especially its discussion. From the tons of comments on your articles, I guess I am not the only one having all the enjoyment here! Keep up the excellent work.
Nice information, many thanks to the author. It is incomprehensible to me now, but in general, the usefulness and significance is overwhelming. Thanks again and good luck!
Nice thought and i am agree with you.
That was a great piece of information., I enjoyed reading it..,
Why do Indian Media Companies Suck at Internet ?
Its really a great post, the content is impressive I’m feeling grateful to read this post and get good points for a successful business
i love to read thsi post
good,thank you admin
good,thank you
Just goes to show....Just have to keep track of things changing around you. Obvoiusly they have not done this
nice post friends, i will add it to my favourite list, bookmarked
some times internet or cyber its isue bad opinoim and creat ppl belive it
thx for respont
nice and cool
Thank u Vishal :)
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No Porn ..
It would be good if the larger companies would fund managers to go overseas and do some training....
nice, thank you
When it comes to Television, Newspapers, Magazine, Sports, Movies, Theaters, DTH and entertaining over 700 million people in India, these companies rock.
First of all thanks a lot for the informative and useful information. I have just been searching for some information about the media in the internet and accidentally I have noticed this your entry. Well, this website is really great and full of various and attractive information about everything. Thanks a lot one more time for the great and informative article.