Backward Integration. These two words have formed the core of Reliance Industries Ltd’s (RIL) business strategy over the past four decades.

Since 1977, RIL, with a present turnover of ₹6.22 lakh crore, has progressively entered new businesses—from textiles to petrochemicals; from petrochemicals to crude refining; and from crude refining to oil and gas production.

Sure, there have been seemingly unrelated diversifications in between—into retail and telecom. While that has been more out of RIL chairman Mukesh Ambani’s vision of seeing his company’s future in consumer-facing businesses, the capital for growing these businesses has, no doubt, come from this successful yarn-to-oil backward integration.

Around four decades later, RIL—India’s largest company by revenue which is led by India’s richest billionaire—is attempting a backward integration of a different kind.

This time, RIL, valued at ₹7.58 lakh crore, is hoping to traverse the value chain in the technology, media, and telecom sector. With the successful roll-out of Reliance Jio Infocomm’s (Jio) broadband wireless network, which has already become India’s largest telecom player by notching up 340 million subscribers, and the aggressive commercialisation plans for JioFiber—the telco’s home broadband and digital services business— RIL has laid the groundwork and the ‘pipe’ for its ambitious triple play strategy.

What is triple play? The strategy involves offering mobility solutions for voice and data through smartphones and feature phones, highspeed home Internet and fixed-line connectivity through fibre to the home (FTTH), and a whole host of digital services and content. This would power usage of these ‘pipes’ that have been created at an investment of ₹3.5 lakh crore. On September 5, Jio launched its FTTH offering, JioFiber, that would offer network speeds between 100 mbps and 1 gbps, priced between ₹700 and ₹10,000 a month. JioFiber is initially targeting a customer base of 20 million households.

The new backward integration strategy is crucial for Ambani as he wants half of his company’s operating profits to eventually come from consumer-facing businesses (up from 32% at present) like retail and telecom to mitigate the overdependence on the volatile and environmentally sensitive hydrocarbon chain. Therefore, it is imperative to keep Jio’s subscribers hooked on to the network by feeding them with the best content out there so they keep consuming those gigabytes of data.

According to KPMG in India’s Media and Entertainment (M&E) Report 2019, the size of the Indian M&E sector stood at ₹1.63 lakh crore in FY19, with a compound annual growth rate of 11.5% since FY15. Digital media is the fastest-growing segment, showing year-on-year growth of 43.4% in size. Digital is expected to become the second-largest segment of India’s M&E landscape after TV and attract maximum advertising spends by FY22.

Ambani has always thought big, and has the money to pull this strategy off. He knows the playbook first-hand, having played a hands-on role in planning and commissioning the refining cum-petrochemicals complex at Jamnagar in Gujarat, the most complex of its kind in the world. All he needed was a lieutenant who could help give shape to his vision.

Enter Jyoti Deshpande.

As president-media and entertainment at RIL, the 48-year-old is part of the chairman’s office. Since joining RIL in April 2018, she is on the boards of the diverse media properties owned fully or partially by the conglomerate. Deshpande is responsible for exploring synergies between these businesses and aligning them with Jio’s digital distribution ecosystem. As such, she has clearly emerged as one of the most important executives in the Indian M&E space and is ranked No. 18 on the Fortune India Most Powerful Women in business list for 2019.

We will invest actively in building up a pipeline of content to power the distribution platform and expand its reach.
Jyoti Deshpande, president, media & entertainment, Reliance Industries  

“We have already created a large portfolio of media and digital properties, which are as widespread as they are valuable,” Ambani had said at RIL’s 2018 annual general meeting (AGM). “Our purpose is twofold: to provide wholesome entertainment and to enrich the power of ideas that can make India a great nation.”

To better understand RIL’s game plan, it is necessary to go back a little in time. RIL’s first investment in media came about in 2014 when it acquired control of the Network18 Group, till then run by media entrepreneur Raghav Bahl. The network owns and operates a wide bouquet of entertainment, news and infotainment channels across English, Hindi, and other Indian languages through TV18 Broadcast and Viacom18 (a 51:49 joint venture with U.S.-based media company Viacom Inc.). A measure of the significance of the network can be had from Ambani’s statement at RIL’s AGM in August where he pointed out that the Network18 Group now had 72 channels that reached 800 million Indians, representing 95% of the TVviewing universe.

Subsequent to the Network18 acquisition, RIL has made a slew of strategic investments including a 25% stake in TV production house Balaji Telefilms (which also owns streaming platform ALTBalaji), led by Ekta Kapoor; its investment in JioSaavn— the product of a merger between JioMusic and music-streaming platform Saavn; and a 5% stake in films and digital content production house, Eros International. Eros is also the company where Deshpande worked for over two decades, rising to the position of group chief executive officer and managing director. Apart from these investments, RIL also has Jio Studios, which produces original content, including films and web series across languages, and JioTV and JioCinema, which aggregate licensed content for linear TV and video on demand.

“Our mandate is to consolidate the media and entertainment business, grow the sector and use it as a fuel to grow the distribution business multifold,” Deshpande tells Fortune India in the course of a long discussion at the nerve centre of Jio’s content factory, located on the 19th floor of the imposing One BKC building in Mumbai’s Bandra-Kurla Complex. As is typical of Reliance, the potential scale of operations is immediately evident from the sprawling office complete with labyrinthine alleyways, and even a mini-theatre. That the M&E division is a work in progress is clear from the fact that the new office is sparsely populated now, but is progressively filling up.

“Initially, we will invest actively in building up a pipeline of content to power the distribution platform and expand its reach. As it grows bigger, content producers will find this platform attractive to publish their content on, and this will help us earn an attractive return on the back of investments that we put in the initial phase... What is sweet about the content business is that it has multiple licensing and monetisation models, so Jio Studios is a profit centre from the very beginning,” says Deshpande.

She cites the example of the film production business housed under Jio Studios, which has already produced hits like Stree and Luka Chuppi, and has a slate of 19 films that will release between now and 2020. At RIL’s 2019 AGM, Ambani caused a flutter when he announced that premium subscribers of JioFiber can avail of a service called First Day First Show (FDFS), where they can watch movies in their living rooms the same day they release in theatres.

Mukesh Ambani
Mukesh Ambani
Image : Gettyimages

Jio studios will invest in developing a robust pipeline of films—through production, co-production, and acquisition— that could potentially premiere via FDFS when the service commences in mid-2020. Apart from FDFS, these films can also be aired across the multitude of digital platforms and linear TV channels that RIL owns.

“The film industry is restricted by limited cinema screens with no major plans of building out more theatre screens in the country. So we plan to expand this distribution window by bringing the latest movies directly to households simultaneously with cinemas and not necessarily in lieu of it,” says Deshpande. And with the number of households RIL is targeting through Jio, “the digital box office collections can be enormous in this movie-crazy nation and will help content partners better monetise their work,” she says. She adds that while those who want the big-screen experience will continue to patronise cinemas, Jio will try to expand revenue streams across the value chain, but not by cannibalising other streams.

Content partnerships, therefore, will be a key element of the strategy. Shobha Sant, head-content alliances, media and entertainment at Jio Studios, says her company wants to bring the promise of “great storytelling” and drive content by becoming a super aggregator where it produces and acquires Jio-branded content. “While stitching content partnerships, we try and spot new-age storytellers that reach the varied audiences in India and the world; storytellers who can tell stories of our heritage, our values, and varied cultures. In short, strike a balance between cutting-edge and traditional stories.”

But some friction is imminent. In a statement issued after Ambani announced the details of FDFS at the AGM, multiplex chain operator INOX Leisure said: “This exclusive theatrical window is a model that is followed internationally, in order to ensure the robust financial viability of all the segments of the sector, and has been replicated in India. We strongly believe that Indian movie watchers’ love for cinema on giant screens is deep-rooted and unshakeable, and this has kept and will continue to keep the industry alive and thriving for the past several decades, and for several decades to come.”

INOX also said that the producer of the film was the owner of the creative content and was entitled to choose the platform for distribution and consumption of the content. “However, in view of this mutually agreed exclusive theatrical window, he would have to choose between theatrical exhibition or release on any other platform, since release on both simultaneously would breach the mutually agreed exclusive theatrical window,” the statement added.

At Jio’s media lab, there are also other innovations at work. JioSaavn, the group’s music streaming app, which already boasts over 100 million monthly active users, will in the future offer short-form video content along with songs, Deshpande reveals. “JioSaavn already produces artiste originals and with its massive reach can be a great platform to showcase new talent,” she says. “What is the user looking for? He is looking to fulfil all his needs for content with the least possible switches, easy discoverability, and a great and easy-to-use and intuitive user experience. And that is what we are going to strive towards in the next couple of years.”

Another example of how Jio can take content from linear TV and amplify it on a digital platform is its association with Kaun Banega Crorepati (KBC), a quiz-based reality show that airs on Sony Entertainment Television, hosted by Bollywood megastar Amitabh Bachchan. When Jio tied up with KBC to allow subscribers to play along and win prizes even as they tune into the show on TV, not only did the show’s ratings go through the roof, Jio’s subscriber engagement on its own platform also grew multifold. Jio has acquired an Israeli startup, Screenz, to amplify interactive entertainment on its platform. “We are looking to bring a new level of interactivity with unscripted content on broadcast television,” Deshpande says. “This allows us to offer a two-screen experience to users wherein they watch content on one screen and interact on another.”

That looks like the way to go, according to experts. “Telecom networks and data tariffs have become fully commoditised in India. The differentiator between one network and another would be the killer apps offering content, messaging, and payments,” says Jehil Thakkar, partner and leader–media and entertainment at consulting firm Deloitte Touche Tohmatsu. “It makes sense for a network provider to have inhouse M&E properties churning out content as they can then retain greater control over what content to offer to which category of subscribers and at what price.”

Then there is the super app that Jio will be offering to its consumers, which will house leading OTT (over-the-top) video streaming platforms within itself. “We are substantially simplifying the purchase and consumption of content,” Ambani had said at the AGM. “Today many of us pay for and keep track of multiple subscriptions to multiple applications just to watch our favourite movies and shows. This is both expensive and cumbersome.” It was with these words that Ambani announced the launch of JioFiber, which will come bundled with subscriptions to most leading OTT applications, as well as FDFS.

There is another unrelated purpose that Jio’s content factory serves. It also doubles up as an incubator to develop women leaders, something that RIL has lacked in the past. Taking forward Ambani’s vision to build a formidable women’s presence within RIL, his daughter Isha, who is a director on the board of Reliance Jio Infocomm, is actively driving the diversity and inclusion dialogue. Deshpande is working closely with Isha on this.

As a result, 65% of the employee strength at Jio Studios comprises women, as does 70% of its leadership, says Priyanka Chaudhary, Jio Studios’ chief financial officer. The ratio of women employees at RIL’s other media properties is also relatively higher than its other mature businesses.

“We have extensive and regular interactions with the senior group leadership from time to time and they are consciously pushing through the agenda of achieving a more balanced gender ratio,” says Chaudhary.

As she goes about putting the pieces of the jigsaw together, Ambani’s advice to Deshpande has been to “crawl, walk, and then run,” she says. But the objective is clear: to be the most formidable media and entertainment powerhouse in the country.

“We will definitely emerge as one of the leading players in the media and entertainment sector in the years to come with not just the power of compelling content but also our unparalleled digital distribution ecosystem,” Deshpande says.

But the ultimate winner will be the consumer “who we will spoil for choice with our combination of mobility, broadband, and content offerings at a value price point”, Deshpande adds, before heading out for a late-evening strategy meeting with her bosses at RIL’s headquarters at Maker Chambers in Nariman Point.

She knows the meeting will be long. There’s a lot to be done.

(This story was originally published in the October 2019 issue of the magazine.)

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