Guess The Future

How will you know that a company is on the path of growth. Well, try to guess the next logical step, if the company is doing better than what you thought it might do, then surely it is on the right track. Many companies try to diversify into areas which are not their forte, may be because the grass always seem greener on the other side of fence. That risk should be taken only when a company reaches its saturation point and no vertical diversification is possible. Focus is very important and plays a vital role in the growth of a company (Lesson from the book Focus by Al Ries). For example, two companies come to my mind Zee Telefilms and Adlabs, only thing common to them is that both cater to Entertainment Industry. Zee seems to have lost focus and marketshare while it was very nicely positioned to do all that Adlabs is doing.

For instance, Adlabs is trying to become Entertainment behemoth and is doing right things to become one. Adlabs is looking at straddling the entire value chain of the entertainment content carriageway, the Anil Ambani group is ensuring its footprints across every possible facet of entertainment. Ranging from television to radio to films to exhibition to home video, the ADAE group seems to have a blueprint for every division in place, and the kick-off into the media and entertainment segment does not seem too far off. FM radio seems to be the first initiative that will roll out. As of now, Adlabs has bagged 26 licenses in all, making it the largest player in terms of number of licenses owned including stations of existing players. While work is still in progress on ADAE’s direct-to-home (DTH) venture which is being called Reliance Bluemagic, the group is optimistic about beginning its DTH service by Diwali this year. It is expecting allotment of six transponders on INSAT 4B by July this year.

On the film production front, Adlabs Films is looking at investing Rs 50 - 60 crore every year and has already tied up with Ram Gopal Varma, Prakash Jha, Ramesh Sippy and Vipul Shah. Adlabs is targetting 10 films every year. Experts point out that once Adlabs has a large network of theatres, it will be possible for the group to digitally transmit a movie from one centralised location to all the theatres through Reliance Infocomm’s existing fibre optic network. Adlabs is also venturing into the overseas distribution of movies and have already pocketted Kkrish, Babul, Janeman and Salaam-e-Ishq. for distribution. Shetty pointed out that the effort was to extend the current international network by releasing more prints into an additional 20-30 mainstream cinemas.

Now also checking out the home video segment, Adlabs is looking at taking the acqusition route as a part of the company’s plan to emerge as a big player in the rapidly growing segment. Adlabs had sounded out all the established players in the industry for possible buy-outs. The list includes Shemaroo, Excel Home Videos and Ultra Group.

After aquiring a content rich company, Adlabs can use Fibre Optic backbone of Relaince Communication to distribute the same through Video On Demand services or IPTV. There are many possibilities, let's see whether Adlabs can deliver.