Reliance Industries - Walt Disney JV

Just recently, Reliance Industries and Walt Disney Co, joined hands to create a JV worth INR 70,000 crores, which is expected to wield a significant market influence in the broadcasting industry.

Well, media reports are quite ecstatic about this JV , which could give broadcasters like Sony, Zee, and OTT platforms "run for their money", as Reliance's Jio cinema content strategy with it's deep pockets, coupled with Disney-Hotstar's content treasure, could have this JV's ad-slot sellers literally ruling the ad-revenues segment, where broadcasters are concerned.

Undoubtedly, such kind of prognosis is a "no brainer". But the key aspect which has been overlooked is that, all such broadcasters are on a "content push" model. That is, their contents are streamed across channels, with the hope that their respective audience will remain glued to their TV sets etc, irrespective of their preferences or state of mind at that that particular point of time.

It is here that a platform like YouTube scores over and above all possible broadcasters. Simply because, this platform is based on a "content pull" model, where the audience can pick and choose the desirable content depending upon their respective moods or preferences at that particular point of time. Above all, across geographies and devices, subject to availability of a Wifi connectivity at least.

Now, is it possible for the Reliance-Disney Hotstar JV to match such a value proposition?

The real "lord of the broadcasting universe" will need such a vision.

Mark Zuckerberg should be smiling at this thought, as Reliance may knock at his doors anytime soon, to engineer such ultimate disruption. 😊

Birla Opus

Great to hear about Aditya Birla's flagship business - 'Grasim Industries' adding 'further colors' to the Rs. 80,000 crores Indian decorative paints industry via it's brand - 'Birla Opus'.

As per media reports, no paint company globally has ever launched in one shot - factories, operations, products, and services, at the kind of scale they are about to undertake.

Yes, their competition would certainly be getting their act together to defend their respective market positions.

To make a real impact in the highly competitive paints industry dominated by established players like Asian Paints, Berger etc, 'Grasim' would need a clear disruptive idea.

Positioning 'Birla Opus' as India's "first 100% environment friendly paint", through the use of environment friendly chemicals, could be a good bet. Furthermore, use of emerging technologies such as - AI, VR and AR embedded in an app, to let their target audience experiment with as many color combinations and textures online backed by AI based recommendations, before taking a final call to give their residences or offices a distinctive look without having to go overboard in expenses could also be considered.

Diversification into environment friendly chemicals, or acquisition of any such existing entity, could be a part of their strategy in line with suggested positioning.

And above all, by taking ideas from other industries which are pioneers in customer loyalty strategies, and implementing the feasible options, 'Grasim Industries' could further disrupt the paints industry. 😊

Interim Budget for FY '25

While this interim budget for FY ’25, has been appropriately labelled as “budget of confidence” by media channels, the key criticism of some eminent personalities, that nowhere has “unemployment” been mentioned even once merits attention.

But, the key thrust on infrastructure via an increase in the outlay by 11.1% as compared to the current allocation, is certainly welcome, and reflects the right priorities of the government, as spending on infrastructure yields the maximum multiplier effects in the economy, which certainly boosts employment generation. Higher capex is largely proposed for sectors like roads, shipping, and railways, which would boost connectivity and improve logistics efficiency thereby reducing cost of doing business. Of course, key assumption being that the implementation of the plan is as per expectations.

The benefits can begin manifesting from day one, by way of “crowding in” of private investments which in turn can boost the ‘propensity to consume’ by individuals due to increased job opportunities and incomes, which in turn leads to better capacity utilization of manufacturing units which further enhances the investment demand, which in turn leads to further investments from private and foreign sectors. This in theory creates a “vicious cycle of investments and employment creation”. Of course, with no shocks of any kind internally and the external sector remaining benign

Other key factor which merits attention is that, the very fact that the markets have already discounted the return of the Modi government after the forthcoming elections, would be a catalyst in itself for job creation, as both the private sector and foreign investors would be maintaining their focus on Indian markets, without having to bother about policy uncertainties and political instability.

And yes, the expectations from a full-fledged budget likely to be presented by the Modi government in July, would only be heightened at this point of time.

Putting "Threads" together

By releasing a Twitter clone, under the brand name 'Threads', Meta has started with a big disadvantage, notwithstanding this app garnering more than 10 million signups in the first seven hours of its release.

Simple fact : who prefers a a look-alike when the original is live and kicking ?

While competition is always welcome, the killer strategy is not to be perceived as a clone, but as a much better version which is several notches above the original, in terms of its functionality and usage.

Meta should have ideally worked on reviving the dwindling fortunes of Facebook, which is facing "law of diminishing returns", after the rising popularity of its two other properties - Whatsapp and Instagram, and post the same, should have identified the right gaps to be filled up via 'Threads'.

Yes, users of Instagram can port their followers on Threads, besides creating their own communities on the said platform. But is that a sustainable killer idea to take on Twitter?

Now, for avid users, Twitter will remain the first preference, unless Elon Musk doesn't really push them hard to boycott the platform. But, by appointing Linda Yaccarino as the CEO to focus on improving relationships with patron brands, Musk seems to be all set to spearhead fortunes of Twitter, which has seen significant decline in its ad revenues.

Meta's top brass needs to fight very hard to get over the perception of 'Threads' being a clone of Twitter, and keep a constant vigil via AI related technologies, on the pulse of it's users and patron brands, to sense their changing moods.

Armed with such insights, they need to come up with new features which bear no resemblance to Twitter, before anyone can even say WOW 😊

Reimagining F&B outlets in leading hotel chains

Imagine you are sitting at home, getting bored. Desperately wanting to go out for a meal, and try something different.
 
But there’s a catch. You are too health conscious, and are on self-imposed dietary restrictions, like avoiding too much fats, spices, carbohydrates. Besides, pampering your taste buds, you need to pamper your health as well.
 
You have downloaded an app of a leading hotel chain, having presence all over India as well as in several other countries. You open this app, and press/type or speak-out the option - “health friendly cuisines”. Pat comes few culinary options with their key ingredients, pictures, prices, and the feedbacks from those guests, who have sampled the same. Possibly, reviews as well by some nutritionists regarding the positive impact of those culinary items on one’s health. Some of such culinary options suggested could be those, which have been developed by the Chefs of such a hotel chain in some other city or other country. And of course, the production techniques have been disseminated perfectly, to Chefs in all other locations.    
 
You choose one or some items, make some advance payment on the app itself, and proceed to a particular outlet in that hotel for a meal especially prepared for you as per your preferences.
 
Next time, as and when you open that app, it showcases latest options from other outlets as well in that hotel chain, which have been successfully developed subsequently, and are highly recommended by nutritionists, besides other guests who have sampled the same.
 
Or, you are just sick and tired of having the same types of desserts, and wish to try out something different, which is a real “mood-enhancer” for you, but at the same time caters to your calorie conscious nature. Well, either type out or speak out “mood enhancing desserts within X calories”, in that app. Pat comes some options on similar lines as above. Again, you choose some item/s make some advance payment on the app itself. Then proceed to a particular outlet in that hotel for indulging in such “mood enhancers”, without going overboard in your calorie intake.      
  
And so on….
 
With generative AI tools like ChatGPT gaining wide acceptance, such apps can also have bots which can engage in conversations with their guests, gauge their preferences based on their past orders, thoughts as revealed in the chats, recommend customized cuisines, with their key ingredients, opinions of some nutritionists regarding their beneficial effects on health, and the respective prices.

And above all, with such kind of a disruption, the kind of WOW factor being created, for the patrons of such progressive hotel chains can be well-imagined.   
 
Of course, strong backward integration with the right data sets, and right algorithms to pull the right data from their data lake, and then process them accordingly to deliver the right output to each guest, hold the key to success to such an idea.

Negotiations on US Debt Ceiling:

In all probability, the US will avoid a default, as neither the Democrats nor the Republicans can afford it, especially because of the Presidential elections due next year.

But, as current public debt is already 129% % of its GDP ( as of March 2022), one wonders if a further hike in the same, due to a another hike in it's debt ceiling (79th hike in 63 years) will be negating all efforts of US Fed in combating inflation? Simple textbook economics suggests, that a higher fiscal deficit leads to higher inflation, followed by depreciation of the local currency, in this case the US Dollar.

Now, if the Republicans want a compromise formula, to keep the public debt under control, one can only hope such a compromise will not have it's cascading effects on the US economy in general, and the world economy as a whole.

But, a billion dollar question, that begs an answer is that, "What is the highest level to which US's debt to GDP ratio reach, without significantly damaging it's economy, as well as the confidence in the stability of US Dollar to serve as the world's reserve currency?"

A corollary to the above question is that , "How can the lawmakers focus on substantially increasing the denominator, that is the GDP, thereby keeping the overall percentage of Public Debt to GDP well under control?"

Answer to these questions, could be the "real deal-makers" between President Biden and the Republicans, and also set the tone for next year's Presidential elections.

Great Expectations

It was November 2008. A headline in an issue of Economic Times read, "Don't buy a burger, buy a blue-chip instead." This summed up the state of our stock markets those days, following the collapse of Lehman Brothers.

Most of the market analysts were literally competing with each other, in predicting the next bottom for our stock markets. None of such prophecies came true, and I don't recall reading any suggestion to dive in the stock markets with eyes closed.

Somehow, I summed up the courage to dive in, and after a year, was complimenting myself for my bravado. 😀

Stock markets today, are not at the same levels of that time, though there is certainly lack of enough confidence to dive in. Another Lehman moment is highly unlikely though not impossible. All eyes are on Credit Suisse right now.

Yes, amazing turnarounds are highly likely, which can change the direction of the world economy in no time. China has brokered diplomatic relations between Iran and Saudi Arabia. This should keep oil prices in check, assuming higher supply of oil.

Another diplomatic coup could be in terms of détente between Iran and the US, which is quite likely as US might like to use this to corner Russia, by allowing free flow of oil and natural gas from Iran in return for a quid-pro-quo from Iran in terms of a strategic alliance. This would translate into a rally in the stock markets following further drop in oil and natural gas prices.

And finally, coming to the "elephant in the room" which is hardening of interest rates by Fed etc. If some news reports are to be believed, the genesis of SVB crisis lies in the hardening of interest rates, which led to "funding winter' for some start-ups, which in turn triggered a run on its deposits as such start-ups badly needed funds to survive. That the SVB parked most of its deposits in long-term bonds is another story.

It is now reasonable to expect that the US Fed has taken the alarm signals from SVB crisis seriously, and would signal an end to sustained increase in the interest rates. Why administer a cure for inflation, which is worse than the disease?

Net net, odds are highly in favor of a rally in stock markets, and a sustained global recovery by Q3 of FY 24.

So, it's the right time to take long-term positions in the stock markets, by focusing on fundamentally sound companies with visible earnings in the next few years. Yes, one needs to be like "Rip Van Winkle" till March 2024 at least, after taking such positions. 😊