Employee Speak : Neeraj Roy , Managing Director and CEO, Hungama Digital Media Entertainment Pvt. Ltd.: V3 Issue 1

www.hungama.org

1. Congratulations on Hungama’s new visual identity!  It is very interesting – do share your thoughts on what prompted this change in identity?

The new logo is more contemporary and is represented by a triangle, which is actually a depiction of the ‘PLAY’ button.  It is formed by the intersection of three triangles represented in blue, green and orange indicating forward and continuous motion. It is also synonymous with the entertainment world, which we are into, be it mobile or online entertainment. The three colours are derivatives of the primary colours from a digital perspective. They actually represent the three digital screens that make up the world today – PC, mobile and Internet TV. The brand name, Hungama, is written in lower case in blue. Blue is a universal, natural and sky colour indicating infinite possibilities. The letter 'G' in the logo is incomplete and will remain so in the quest for perfection, adding irreverence to our brand identity and indicating our urge to challenge convention and define our own benchmarks. It also highlights our desire to innovate and represents a work in a state of motion.

2. You were the only Indian to address the Mobile World Congress at Barcelona in February 2008? In hindsight, has the mobile entertainment industry progressed as envisaged?

Yes it’s been good but it could have been much better had we taken decisions on certain infrastructural related investments earlier.  It’s been now 3 years and we are still talking about introduction of 3G whereas the world is already moving into more advanced environments of 3.5 and 4. The government has aided certain parts of it but has created some kind of an over competitive environment right now. Scenarios where you have 11 telecom companies in 1 single market and another 5 coming up rarely exist.

3. Are you as a company ready with products centered on the 3G technology?

Oh yes! There is a suite of products and services that we have. Essentially, 3G or broadband will enable more people easy access to the internet through the phone. If you look at the internet today as the new form of education and not as a medium of information, then this will not only enhance people’s livelihood but also overall economic prosperity.  Research conducted all over the world shows that there is a direct correlation of enhanced and deeper broadband penetration with GDP growth of those countries.  So I think in that context what it leads to is a more digital lifestyle.  For e.g. young couples using an internet enabled 3G product can keep an eye on what is happening with their children. If a country like ours understands the platforms and technologies for this then as a company we will definitely be  at the forefront of enabling and leading to a digital and mobile lifestyle.

4. Considering that 3G phones are fairly expensive wouldn’t this technology cater to only a certain section of the urban population?

Not true!  In the mobile business niche is the new mass and everything is mass as it were if you see this thing more holistically. Globally the mobile data business will be 124 billion dollars next year, of which Mobile Entertainment will account for 42 billion dollars. In that, music, imagery video, gaming are principal constituents to it.  Now there are two things.  One is the device - the mobile phone, the laptop, the PC, or the television. It has an ability to store more now because memory is becoming a commodity. The second is that connectivity is becoming faster and therefore you can access a lot. And once you start thinking in that manner that’s really what this ecosystem is all about and in many ways convergence is becoming a reality.  You are on your PC or laptop and then you move forward into your blackberry, you are connected and you get into your Tata Sky.  The adoption of this is of course related to price point because it has to be viable for a large enough audience. But today a 3G enabled phone is available for Rs.5000/-.

5. As the new chairman of Mobile Entertainment Forum (MEF) what are the top two initiatives on your agenda?

MEF, a body that founded in the UK about 8 years back is made up of 250+ of the most prolific companies across a range of businesses that are all a part of the entire mobile and digital entertainment ecosystem - content owners, broadcasters, record companies, companies like ours, a whole host of technology companies etc. Among the numerous initiatives our thrust areas in 2009 are:-

6. How do you see the economic slowdown impacting the mobile entertainment industry globally and in India?

I think there is not an individual or business in this world which has not or will not continue to be impacted in some manner or the other and I mean it.  Whatever has happened, is happening and is likely to happen can only be best described as unprecedented and certainly somethingwhich there will be very few people who can turnaround and say that I have witnessed something of this nature before in my lifetime.  Even the economic depression in 1929-33 etc did not have this enormity and the world was not as flat or as connected as it is today. The scary part is of course that whatever is about to happen is likely to be even more dangerous in many ways than what we have witnessed till now.  So that’s a given.  So everything gets calibrated, adjusted and has a caveat attached to them in the current circumstances. 

But when you look at the mobile telephony data in India, the last 3 months have consistently been record breaking months.  The reason for that is that the mobile phone today has become such a utility that it not just makes you connect with people but has the power and potential of changing economic lifestyles.  For eg: If there are 350 million people currently accessing mobile services, even ITC and Unilever don’t reach more than 250 million customers.  Now to a customer in a small town, even basic information like electricity today will come at 3 pm empowers him to utilize the time before 2 pm to do other work rather than just wait by the pump.  Even something as elementary as that opens people’s mind. So even if one has to save 1000 Rupees to get a phone connection one will do so.  It is no longer a luxury.  So I think in that context the trend is positive and insulated from the rest of the world.  If the condition deteriorates then there is bound to be more pressure. Therefore ME growth is very closely linked to customer acquisition growth. If customer grows and gets on to a service there is no reason why he will not want his music, video etc.

7. What about the Digital Entertainment Industry? How do you see it getting impacted by the economic slowdown?

People may not want to change their music so often. Until now, that is the first few months of this blood bath; we have not witnessed that trend.   This is unlike a lot of industries which have literally cramped up like the realty industry.  Because construction is cramped up, steel goes through a crunch, cement goes through a crunch.  You cannot produce. And even if you do how do you stock that because there is lack of space.  Whereas our products and services being digital do not have a physical element to it and can exist somewhere in the ecosystem.

8. What are some of the measures that you have taken for managing the impact of the economic slowdown on Hungama?

All CAPEX is being very closely reviewed. We are preparing our people in a fair way, giving our employees a chance to enhance efficiency or pull up their socks if required.  The investments related negotiation process has seen a very hard nosed approach and as a result, we have seen a tremendous amount of positive fall out.  For example when we were looking for an office space in Delhi, we just stalled saying we are not buyers in the market right now.  And within a matter of four weeks we have seen as high as a 30% drop in prices.

9. Please share your thoughts on what you think business leaders should be doing differently to be prepared for or even prevent another economic meltdown like this in future?

I would like to talk about this more from an entrepreneurial perspective rather than how to avoid an economic crisis of this nature.  In my mind there is a very simple straightforward two word solution “Prevent Greed!”   I think that’s essentially what has resulted in this.

What can businesses do?  I think conserving cash is the first on the agenda for any business at this point in time.  It is going to be a commodity which will be fairly scarce.  It will certainly be available for businesses that have robust profitable pieces because it is not as if liquidity is not there but you have to be very tight fisted the way you approach it.  The second part is that you have to at times like this, talk more, both internally and externally. You have to communicate a lot more, both good and bad news.  You should not be shielding and protecting people from bad news or hiding things because I believe these are times which call for demonstration of even higher levels of transparency and trust to the internal and external stakeholders. This will ensure you come out holding hands, forming human chains and saying that we will not succumb to scenarios like this and we will overcome. That brings about a certain sense of motivation and drive. And the third part is that if you are fundamentally in businesses that you are confident about, then I would urge and encourage businesses to demonstrate pragmatic aggression. So you should certainly be on the look out for assets, whether it be human capital or in businesses. But do not necessarily jump to concluding deals right now because you are likely to get some very very good deals at this time so you can consolidate and strengthen your position even more.  In our own small way that is also the practice we are following.

1. • Mobile Internet initiative: This is related to what you can do with getting more access to internet through mobile. To give you a perspective - there are a little over a billion people who are accessing the internet mostly through their PC, where as there are 4 billion people who have access to mobile phones, there are only 4.2 billion people who have access to toothbrushes in this world.  So you know it is the highest adoption of any form of technology in the world.  It is our belief that the next 2 billion people will access the internet not necessarily through the PC but through a converged mobile device of sorts. 

   • Ad-funded mobile entertainment: Until now this 30 to 35 billion dollar industry has largely been very transactional in nature i.e., it’s a consumer buying a product from a telecom company. Now the telecom companies are themselves becoming media companies thus reaching 85 to 87 billion consumers.  When you become a company of that size, you are also in that zone where you are a media company and when you are a media company, brands naturally need to participate in that entire ecosystem. So we feel that this wholebusiness of ME which is currently a transaction between a consumer and the operator will soon get a big boost because the brand will then turn around and say… “You know what, you want this video?  This game? This music? This service? I will give it to you or subsidise it for you” and that is what is called Ad-Funded mobile entertainment.  That is another thing that we are looking at and within that mobile advertising will be another area.