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

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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

19 Responses to “Big Adda To Break Even In 3 Years Says Rajesh Sawhney, President Reliance Entertainment”

  1. pooran

    Do you think, Bigadda will be running on any CDN (Content Delivery Network) paltform. If yes, then which CDN is Bigadda taking services from.

  2. They all may be "BIG" portals… i wonder why is Zapak no BIGZapak or BIGgames… everything is BIG, but i keep wondering why so many employees are quitting Zapak when they are supposed to be having Fun @ Work… is it the work or the management ??

  3. RYK: Thanks.

    Pranav: Thanks…we ran out of time. About spends on UI and design…couldn't get specifics on product development. Just a generic breakup which *may or many not be* for BigAdda. remember, Rs. 5 crore is for the current burst that covers TV, OOH (saw a hoarding in Delhi a coupla days ago), Radio and Internet. Not sure if print's involved, though.

    Prashant: Facebook had great usability, though i think it's declined over the past few months. Individual choices matter :)

    Swamy: the people you mention are power users. I think – and this is true for MIH as well – that they're trying to convert non-users. Another thing we shouldn't forget is that people have multiple accounts. True, people are switching to facebook…but many of them still log on to Orkut.

  4. Prashant, facebook is very similar to orkut, expect it has more features and functionalities. They are not tools for self expression/bloggin , video upload etc but tools to stay connected with friends and discover people with similar interest. That is NOT the case with bigadda judging by its first looks. I can only compare bigadda to MySpace. MySpace is all about the coolness, though to you and me it may seem like a dirty messed up site, to hoards of young 15-24 range it is a mecca for self expression. Tell me, how many of us here have loads of funny videos of us and our friends lying around, or even if we have it are we willing to upload them? And bloggin? The people who blog already have and account in sites like blogspot, wordpress and livejournal. How many of them are willing to move it from either of these sites to bigadda? How many of us really want to share photographs with complete strangers? Indian youths are still, in my opinion, not ready for a indian MySpace yet.

  5. Prashant

    I believe that on the contrary, the UI and Design has been extremely refreshing. No matter what we say, UI & designs are very subjective, and hold good based upon the users. I feel its very jazzy and colourful, keeping in mind the concerned TG. Also, i dont have an ounce of a doubt that Indian youth are not self-expressive. Check out profiles & UGC on Facebook by Indians, and i hink you might have a change of opinion. I personally don't have any choices, and i don't think individual choices matter, but the way Indian youth segment has been moving from orkut to facebook makes me stand up & take notice of the varied choices the Indian youth are embracing. Rising popularity of Facebook, dominance of orkut – well, nobody can always expect to have the first movers advantage…and if you dont have it, that doesnt mean you dont believe in the buisness, and if u do, i dont think existing strong players should be a hindrance in taking these decisions…..Having said that, i think BigAdda has a lot to do before it even catches up with these sites..thats a long, very long way ahead…..

  6. Whatever said and done, Reliance and Rajesh have infused a new life in India Internet. Thanks to their deep pockets and their super solid promotion budgets, Internet in India is growing to the pockets and metros that it never went earlier into. I feel, in some time, the other internet companies will start looking boring to younger crowds (especally).

  7. I completely agree with pranav, why dont they concentrate more on design and UI. Even crores of money poured into marketing can't save a site with such a bad design. I signed up for the beta close to 2 months ago, but i have not gone back again. It looks a lot like hi5, and i personally think user generated video content for Indians is a little too untimely. Perhaps in the next 3-5 years, may be. But the real question is are Indian youths that self expressive, like their counterparts in US or UK? Self expression of young people is something that drives these sites as far as i know, I'd be happy with orkut if I just wanted to stay connected with my friends.

  8. Nikhil,

    awesome interview…The one thing I was wondering – they're spending 5 crores for marketing..How much do you think they spent for the site development ?

    Going by the site UI / design, I'd say — not even a fraction of the marketing cost..


  9. Nikhil Pahwa

    Money: I asked him about Zapak…wanted a complete picture regarding the other properties like bigflicks and more details on leveraging mobile, but alas there wasn't enough time. Maybe some other time.