Media company New Delhi Television Ltd (NDTV) first ventured into the e-commerce space in 2013 with the launch of IndianRoots, an online marketplace for ethnic wear. In September this year, it turned its gadgets news and reviews website to a gadget e-commerce marketplace called Gadgets360, which received funding from several investors. NDTV’s auto portal called Fifth Gear Auto and yet unnamed food portal are also set to ride the e-commerce wave. This month’s announcement of a big-ticket deal between NDTV Convergence, the digital arm of NDTV, and content discovery platform Taboola, indicates that NDTV is keen to realise the opportunities in e-commerce. Edited excerpts from an interview with Vikram Chandra, executive editor and CEO of NDTV Group:
NDTV has been associated with Taboola for a year now. So what is new now?
It’s essentially a re-negotiation of the deal. Taboola is essentially monetizing a particular space on the NDTV pages. It was monetizing it at Rs 10 crore so far. Now the market looks much better, the traffic and page views on our website are continuing to grow, there is a lot more confidence in the way our partnership is working and therefore, it is worth a lot more money. Three years ago we were selling this space for Rs 35 lakh, over the next three years it will be worth Rs 90-100 crore. This goes to show how much traction we are getting and how our business is growing.
Does this mean the NDTV group is inclined more towards its digital products than its TV division?
NDTV has historically been a television company. However, for the last 10-15 years, we have seen digital as our new strength. Television will remain our core product, but digital is a very big thrust area, both in news and e-commerce. Our content, brand and credibility is giving us a position of strength online. So now we are one of the largest digital news portal, largest in gadgets, largest in food, and one of the top players in auto.
Will the revenue from digital surpass that from TV?
It is premature to determine that. Digital is still 20 per cent of NDTV’s revenues, so it’s not the mainstay. However, our digital revenue is growing 50 per cent year-on-year. And with deals like these (Taboola), it will only get accelerated. So, it’s a meaningful part of our portfolio. I think we are leading the industry in conveying that even if a brand comes from a print or TV background, it should embrace digital without giving up the core. It’s not like digital supplanting television, but complementing it.
Even in digital, is the focus more on e-commerce offerings such as IndianRoots and Gadgets360?
The NDTV Group stands on three legs – one is our television business, second is our digital content business, and the third is e-commerce. It started with IndianRoots, and now we are moving to gadgets, auto and a couple of other verticals. In e-commerce, you make losses and valuations are very high. IndianRoots is valued at $85 million, Gadgets360 is valued at $50 million and auto is valued at $30 million. That’s $165 million from these three businesses only. These three businesses are valued at one and a half times the market cap of the whole NDTV Group, so it doesn’t make sense somewhere. But e-commerce has its own dynamics. You can’t look at NDTV as a consolidated loss number, you need to understand whether it is the television or the e-commerce business, or the dotcom business that’s key.
What is NDTV’s strategy for the next few years?
All three legs are going to be important. Television remains our mainstay and brings the bulk of the revenue. In e-commerce, we have been able to demonstrate a lot of strength and generate a lot of investor interest. A lot of big names have invested in us, so they are obviously encouraged by what they see. In Gadgets360, where we get 25 million unique visitors, we have now started transactions. In internet, you either make money from advertising or from transactions. Historically, we have only been making money from advertising and sponsorship, but now we have monetised the same asset by bringing in transactions.
What is the kind of money that is being invested in these new launches?
NDTV has been successful in incubating and launching new businesses with a very low capital. The NDTV.com business was set up with just Rs 15 crore. Gadgets was set up with a couple of crores. And there was almost zero external marketing. That’s our key strength. So we are confident that we can roll out new businesses successfully very fast.
Will you be looking at the television shopping space?
It’s not on the agenda right now, but we shall see in the future. We have our hands full with these new businesses.
NDTV has not reported any net profit in the last eight years. Your comments?
Amazon, Flipkart, Snapdeal – all make losses, but their valuations are high. Gadgets360 and IndianRoots will also make losses. Paradoxically, our digital content business makes profits. It’s only when you get into the nitty-gritty of it that you realise that the losses are coming from the new businesses that have very high valuations; so, for a shareholder, it is a good proposition in the long term. In the TV business, we are working very hard to cut our losses.
Our strategy is that TV should break even soon, digital business should remain profitable as it is, and e-commerce may continue to make losses for a few years. Here, the idea is to capture the market rather than make profits. In auto we have 3.5 million unique visitors, and in food we have 3 million unique visitors. So we already control the audience here. Hence, it is not that difficult to figure out business models to facilitate transactions here.