Big Adda To Break Even In 3 Years Says Rajesh Sawhney, President Reliance Entertainment

We had broken the story about Reliance launching a social networking site Big Adda. In the five months that have elapsed since, the site has switched to beta, and now has video content as well. They’ve recently launched an advertising campaign…but why is Reliance launching a social networking site? What’s the business model? When do they expect to break even? Are they innovating in any way? Is Reliance Entertainment considering an IPO? I spoke to Rajesh Sawhney, President of Reliance Entertainment for some answers…

What’s the reason behind Reliance Entertainment starting a social networking site?
The World is moving towards broadband, and Reliance has a big stake in the success of broadband. Our insight is that the growth of broadband is determined by the youth, and what the youth wants is entertainment. Web 2.0, media sharing and user generated content are all driven by the youth. The core of that is going to be communities and friends, which are going to power media sharing platforms that we are building. That’s why we’ve launched Big Adda.

Could you explain the structure…what is Reliance Entertainment’s relationship with other concerns like Big Adda, Zapak and Adlabs?
Reliance Entertainment is a part of the Reliance ADAG group. Then we’ve got companies that we’ve acquired, like Adlabs. And we’ve got operations like Zapak and Big Adda with their own specific teams. A part of our content strategy is the production of movies, TV and Broadcasting. As you know, there’s no global conglomerate today without an Internet strategy, and that’s because of the youth, which we are targeting.

Can you elaborate on the nature of holdings?
Not at this point in time.

You’d spoken once about how Reliance Entertainment’s properties serve RCom in a converged scenario. You seem to be taking the Internet way to the mobile, and not the mobile way to the Internet. Why is that?
That’s not true. We’re taking both routes. On the mobile, we have R-World, which is open only to Reliance users. Our Internet properties will cater to a larger ecosystem, since many may not be Reliance Communications customers. We will also be working with other operators. It’s like in Adlabs, we make movies and have multiplexes as well. That doesn’t mean we restrict ourself Adlabs multiplexes only. On BigFM, Airtel and Hutch are major advertisers.

But broadband growth is minimal. Is this the right time to launch a social networking site?
That’s a chicken and egg situation. What comes first – the infrastructure or the content? I think they’ll follow one another. My personal belief is that we’ll see an inflection point in broadband in the next year or the year after that. The last mile problem exists for the new players alone. So do I want to launch before the inflection point, or after? We have a long term plan in place.

What’s the business model for Big Adda?
Internet advertising. Right now, Internet advertising in India is around $100 million. In five years, it will at least be $500 million, if not more. India’s GDP is growing at 8-9 percent, and over 50 percent of the population is below 25. It’s all being driven by the youth.

More Q&A after the jump

What kind of advertising will you have? How many users do you currently have at Big Adda
We’ve got 100,000 users so far. We have a video sharing platform, search, banner. But we really want to beyond the usual…the next generation in advertising, because this is an interactive platform. Like we have advergaming at Zapak, we want to do something different here as well.

What’s your budget for Big Adda? How much of your advertising spends are online, and how much on search marketing?
For this (advertising) burst, the advertising budget is around Rs. 5 crores, of which Rs. 2 crores is online. Search is a fairly big component of the online budget.

So by when do you expect Big Adda to break even?
We expect that it will break-even in three years.

Your positioning in the TV commercial for Big Adda is different from Zapak. It’s not as quirky…
With Zapak, we wanted to build a brand in an MTV kind of way. Here, it’s about connecting people, discovering old relationships

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