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Embrace disruption to stay competitive: Sudhanshu Vats at CII Big Picture Summit

The Chairman of CII’s National Committee on M&E & Group CEO, Viacom18, kicked off the two-day event with his theme address that highlights the role of disruption to achieve newer heights and the role of M&E in the economy

BestMediaInfo Bureau | Delhi | October 26, 2016

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The 5th edition of CII Big Picture Summit started yesterday in New Delhi with an inaugural address by Sudhanshu Vats, Chairman - National Committee on Media & Entertainment, CII & Group CEO, Viacom18. Introducing the theme for this year – ‘Embracing Disruption to Stay Competitive’, Vats set the tone for the two-day event attended by the think tank of the Media and Entertainment industry to deliberate on its growth.

Elaborating on the theme, Vats said, “It’s a theme that explains how the sport of cricket reinvented itself right years ago to create a completely new avatar called the IPL that is arguably it’s most lucrative and successful one till date. It’s a theme that explains how a new Hindi GEC called Colors launched in 2008 and became number 1 in just nine months of its launch. It’s a theme that probably explains how a government-owned distribution platform known as DD Freedish revolutionized the world of Indian television so much so that it is a topic of conversation in the boardroom of every M&E organization. It’s a theme that explains how a show idea rejected by MTV led to the creation of one of India’s most iconic YouTube channels – The Viral Fever.”

Vats added, “It’s also a theme that explains why a telco called AT&T is expected to close a deal to acquire a media conglomerate called Time Warner in what is amongst this year’s biggest acquisitions. Of course, I’d like to see this as ‘convergence in action’ but more on that later.”

Vats recalled a recent conversation with a young colleague to explain the role of destroyers in disruption. “At Viacom18, we’d all like to believe we’re good listeners. We take feedback very seriously. So, when I attended this brainstorming session with our programming teams – we call them ’Content pe Charcha’, named after our PM’s ‘Chai pe Charcha' sessions – I thought of taking some feedback on my speech,” he said.

“I had barely finished explaining Schumpeter’s theory, when suddenly one of our creative trainees – she had been working on this new show that we’re launching on Colors on Shanidev titled ‘Shani’ – said, ‘Why are we referring to these western archetypes when we have our own belief system to explain this?’ She went on, ‘The Hindu Trinity explains this much better. Brahma creates the universe, Vishnu preserves it and Shiv is the destroyer. All three have to work in tandem for the world to change, and change it must if it is to prosper’.”

Vats told the audience, “I’m not sure if my young colleague understands the profound impact that she had on my thinking, or that I would share her view before all of you, but think about it, it makes sense. In our organisations, we need to ensure a well-balanced mix of all three: creators, preservers and destroyers. In my professional experience I have seen that even the best of organisations, that have the best creators and preservers, don't have enough destroyers or, even if they do, they don’t allow destroyers to play their role.”

“I would like you to pause and think about what I’ve just said. When was the last time, any of you, any of us, decided to end a consequential practice, department, revenue stream, or a business? The likely answer is never. Ending something, destroying it or disrupting it is generally seen as unpleasant. Even worse, one worries about the repercussions: ‘Will I be blamed for this?’, ‘What if people dislike me for this?’, ‘|Will I lose my job?’ etc.”

Vats made his point that our systems discourage destruction. “In our minds we have this notion that the word destruction itself is wrong. But if you look back, our belief system has always emphasised on the need to destroy. If we don’t destroy, then we will be disrupted,” said Vats.

“Over today and tomorrow, as you attend the sessions and interact with our attendees, think and ask, if you had to destroy one particular aspect about your business today, what would it be? It’s not an easy conversation. But trust me, it’ll make the future easier,” Vats said.

Vats further said, “Our knowledge partners, BCG, have worked hard to create yet another differentiated report. They’ve pegged our industry size at approximately Rs 130,000 crore. This puts us at almost 1% of the GDP with a direct employment base of half a million. If we look at indirect employment, the number will multiply several times over. If we look at employment in sectors in which we have a multiplier effect, say telecom, tourism, sports and so on, we are looking at a much larger base. If we have to, say, double in size - and this is not impossible - GDP is growing at a breakneck speed, inflation is looking subdued, we’ve had a decent monsoon, GST is around the corner, successful spectrum auctions have ensured that 4G will truly bring in a revolution, ease of doing business is improving, political stability is a given, then there are three fundamental truths that we need to prepare for. Bear in mind that none of these can be leveraged if we fear ‘destruction’. Each of these truths has significant implications for us.”

Speaking on ‘disintermediation is a business reality’, Vats said, "We have often spoken about B2C business models. We need to prepare ourselves for a direct to consumer offering and one with direct access to talent if we are to succeed.”

“Today we often end up squabbling amongst ourselves. LCOs are fighting with MSOs, MSOs are fighting with broadcasters and so on. In all these squabbles, we need to ask ourselves what the consumer really wants and needs. The consumer is already finding value in OTT services,” he said.

On the talent side, Vats said, “I truly believe that there is a bottleneck when it comes to discoverability, nurturing and honing of quality talent. A large part of this is due to incumbents. There is this entire democratization story that is unfolding in this space and my own sense is that incumbents refuse to accept it.”

According to Vats, technology and data are our friends, not foes. “We generally view technology/data and creativity as two sides of a coin. Instead, we need to see them as a potent currency that can revolutionise our success rates and monetization,” he said.

Explaining the point, Vats said, “Let’s rethink the role of a Chief Digital Officer in our organisations. There’s always this constant ideological tug-of-war between those who claim that our business is only about human creativity and those who find themselves at the other end of the spectrum. This is not an either-or debate. It is an ‘and’ debate. Both insights are critical. At Viacom18, we call this a ‘guts+insight’ approach. Data is important, data doesn’t lie and data is objective. However, data can’t play the role of your intuition. Data also doesn’t have a job to loose!”

“The other place where data and tech play important roles is that of monetization. In the new world we can only charge more for advertising if it is more targeted. A simple glance at the segmentation data available on TV viewership measurement and online, especially with the tech giants, tells you clearly about the risk traditional entities face. On the other hand, VPNs can render geo-fencing of rights obsolete. Technology is the new frontier and we must conquer it,” emphasised Vats.

Vats ended his address saying media powers several economic ecosystems, way beyond its own. He said, “Our sector is amongst the biggest stars of the Make in India programme. Let me explain. I recently read that in the last two years, India has seen 35 new smartphone factories, with a production capacity of 18 million devices per month and employment to 37,000 Indians. While the focus here – at least in the popular context – is on telecom handset manufacturing, think about it – what is the use of the smartphone with a 5-inch screen if you don’t have video content? I have no qualms in stating that our industry will play the biggest role in the 4G revolution that this country is about to witness.”

“We spoke about telecom. Let’s look at tourism. Travel and tourism in India, is a $150 billion dollar industry, contributes to 9% of India’s employment, around 38 million jobs. Even back in the day, Shammi Kapoor’s ‘Kashmir ki Kali’ led to an increase in tourists to Kashmir. ‘Dil Chahta Hai’ drove tourists to Goa. We have recently partnered with the Global Citizen Foundation for their first show outside the US, we expect tourism in Mumbai to increase as a result of this,” added Vats.

“Take sports. Without the value of media rights, how can we sustainably build the sports ecosystem? Take FMCG, leading companies spend more than 10% of the total sales on advertising. Take away media and you’re taking away their growth. The point I’m making is that we are far bigger than the sum total of our sub-sectors. Today we provide direct employment to 0.5 million Indians. The indirect number is at least five times this. The multiplier number is possibly 10 times this,” pointed Vats.

“It’s impossible for me to leave the dais without making a reference to our regulatory framework. I say this because without this piece, we’ll never crack our growth puzzle.   We have just seen a very robust step towards the overhaul of the tariff regime for television. My singular, humble request to policymakers is as follows: we need to look at our industry from the perspective of ‘convergence’. This alone will recognize our role as a force multiplier. I made this reference earlier in my address as well. Sooner or later we will see the kind of consolidation we are witnessing in the West. Some signs are already visible. Therefore, the regulatory framework must pre-empt this and prepare for it. This means ensuring parity across different forms of media so that there is no regulatory arbitrage. Several distortions have been corrected in the recently released draft regulation. However, it must now move beyond simply ‘TV’ towards ensuring parity across platforms. This is particularly important given that our sector knows no borders. We are competing on a global stage and it’s a tough market. Complete freedom to price will unleash our creativity even further and equip us to compete with the best in the world. An even lighter approach towards regulation, where market forces play and even greater role will also help all players in the value chain compete on the basis of efficiency. While it is important to level the playing field, we must be careful not to carve out too many rules that prevent incumbents from truly competing because the framework prevents innovation. I must also add, the industry is extremely pleased with the pro-active, consultative approach of the government. It has set the ball rolling on regulations that have been around frozen for way to long,” concluded Vats.

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