Ten interesting things that we read this week

At Ambit, we spend a lot of time reading articles that cover a wide gamut of topics, including investment analysis, psychology, science, technology, philosophy, etc. We have been sharing our favourite reads with clients under our weekly ‘Ten Interesting Things’ product. Some of the most interesting topics covered in this week’s iteration are related to ‘difference in Chinese & American tech’, ‘Netflix’s no-nonsense work culture’, and ‘4 dimensions of digital trust’.

 Here are the ten most interesting pieces that we read this week, ended February 23, 2018.  

1)    How does Chinese tech stack up against American tech? [Source: The Economist]
Uncle Sam may have ceded the top spot to China in exports in 2007, and manufacturing in 2011, and be on track to lose its lead in absolute GDP by about 2030. But Silicon Valley, the argument goes, is still where the best ideas, smartest money and hungriest entrepreneurs combine with a bang nowhere else can match. Not quite. American attitudes towards Chinese tech have passed through several stages of denial in the past 20 years. First, it was an irrelevance, then Chinese firms were sometimes seen as copycats or as industrial spies, and more recently China has been viewed as a tech Galapagos, where unique species grow that would never make it beyond its shores. Now a fourth stage has begun, marked by fear that China is reaching parity. By market value, the Middle Kingdom’s giants, Alibaba and Tencent, are in the same league as Alphabet and Facebook. New stars may float their shares in 2018-19, including Didi Chuxing (taxi rides), Ant Financial (payments) and Lufax (wealth management). China’s e-commerce sales are double America’s and the Chinese send 11 times more money by mobile phones than Americans, who still scribble cheques.

Being a global tech hegemon has been lucrative for America. Tech firms support 7mn jobs in America that pay twice the average wage. Other industries benefit by using technology more actively and becoming more productive: American non-tech firms are 50% more “digitised” than the European ones. And the $180bn of foreign profits that American tech firms mint annually is a boon several times greater than the benefit of having the world’s reserve currency. A loss of these spoils would be costly and demoralising. A study by Economist reveals that China is still behind the US in tech as an industry. Using the median of the yardsticks, its tech industry is 42% as powerful as America’s. But it is catching up fast. In 2012, the figure was just 15%.

Chinese tech’s total market value is only 32% of the figure for America’s industry. While there are two huge companies and lots of small ones, there are relatively few firms worth between $50bn and $200bn. China is puny in semiconductors and business-facing software. Tech products do not yet permeate the industrial economy: Chinese non-tech firms are relatively primitive and only 26% as digitised as American ones. As for investment, Chinese tech’s absolute budget is only 30% as big as that of American tech. And it is still small abroad, with foreign sales of 18% of the total that American firms make. Apple rakes in more abroad in three days than Tencent does in a year. The gap gets much smaller, however, when you look at the most dynamic parts of the tech industry. In the area of e-commerce and the internet, Chinese firms are collectively 53% as big as America’s, measured by market value. China’s unicorns, a proxy for the next generation of giants, are in total worth 69% of America’s, and its level of VC activity is 85% as big as America’s based on money spent since 2016.

China, importantly, is improving at “breakthrough” innovations. Take AI. China’s population of AI experts is only 6% of the size of America’s and the best minds still work in the United States, for example at Alphabet. But now the number of cited AI papers by Chinese scientists is already at 89% of the American level. China has piles of data and notable companies in AI specialisms, for example Face++ in facial recognition and iFlytek in speech.

At the present pace China’s tech industry will be at parity with America’s in 10-15 years. This will boost the country’s productivity and create tech jobs. But the real prize is making far more profits overseas and setting global standards. Here the state’s active role may make some countries nervous about relying on Chinese tech firms. National-security worries may mean China’s and America’s tech markets end up being largely closed to each other, leaving everywhere else as a fiercely contested space.

2)    The no-nonsense approach to company culture   [Financial Times]
Patty McCord, the former chief talent officer at Netflix, was recently contacted by a human resources executive with news of an epiphany. Reading Ms. McCord’s book Powerful: Building a Culture of Freedom and Responsibility prompted the woman to cancel her company’s annual staff performance review. If it were up to Ms. McCord, who joined Netflix in 1998 when it was a start-up, more companies would ditch their performance reviews, and other shibboleths such as signing bonuses, anonymous employee surveys and pay secrecy. She wants to shake up human resources, which has a reputation for being out of touch. “You need to choose the practices rather than just do them because it has been done before,” she says. “The top-down hierarchical model doesn’t work anymore,” she adds. In the book she eschews the language of HR: “A business leader’s job is to create great teams that do amazing work on time. That’s it.”

Netflix, is renowned for its organisational culture. Company perks include unlimited time off and an expense policy that is simply to “act in Netflix’s best interests”. That is the upside of the culture: treating workers like grown-ups. The flipside is intolerance of anything below high performance. Managers are expected to run the “keeper test” — that is, would a manager try hard to keep an employee from leaving? If not, they should ask them to leave with a pay-off.

Ms. McCord wrote Powerful as a “how-to for HR professionals”. After she left Netflix in 2012, she went hunting for human resources innovations. “I couldn’t find much,” she says. Instead, all anyone wanted to discuss was how to do the “Netflix deck”. “It took 10 years to write!” Ms. McCord, who now advises blue-chip companies and entrepreneurs on culture and leadership, insists that Netflix’s culture cannot, and should not, be replicated wholesale by every company. She also promotes higher say of HR in companies. According to her, part of the reason for turmoil at Uber, the ride-hailing app, which was criticised last year for ignoring sexual harassment allegations, was because “HR couldn’t speak to Travis [Kalanick, the co-founder and then CEO].” Yet they need to up their game, she argues, by understanding the core operations of a business and its profit and loss statement.

That said, the book’s relentless focus on brilliant performance can be exhausting for the reader. Does every employee have to be a star, all the time? “Work is work,” she says. “It’s not always a brilliant life-changing event every day.” But she dismisses the idea that some jobs suit mediocre employees, recounting a conversation with a chief executive, who dared to make such a case. “I asked, ‘OK, who in your company doesn’t need to be brilliant? Like, which job?’” When he tentatively suggested payroll, she replied: “Not every position needs to be filled with Albert Einstein, but they need to be very good at what they do.”

On Glassdoor, the job review site, one Netflix employee writes it is “open knowledge that the company isn’t responsible for your career progression”. It is a view championed in Powerful: “We should not make false promises of job security,” writes Ms. McCourt. If a good employee no longer fitted their role, Ms. McCord says, she has helped them find a new one elsewhere. And so the end came for Ms. McCord. In 2012, she got her own severance package. “It was time,” she reflects. “I left as Netflix transitioned to an international streaming model. It was a different phase that I wasn’t suited to. . . they were going into film. It wasn’t a surprise.”

3)    The 4 dimensions of digital trust, charted across 42 countries [Source: HBR]
Is it possible to measure digital trust and compare it across countries? Are there countries where guaranteeing trust is a more urgent priority and will draw a larger share of trust-building resources and regulations? The Fletcher School at Tufts University and Mastercard have launched a research initiative to address these questions by studying the state of digital trust across 42 countries. In framing a definition of digital trust, they considered the factors that determine the quality of interactions between two parties using a digital medium: users (givers), who are on the “giving” side of trust, and the companies (guarantors) that build the platforms. In addition, on the side of the guarantors are those providing broad trust-building measures (like cybersecurity companies), laws and regulations or the technology companies that make the online experience seamless and convenient. The trust in the exercise was measured on four key dimensions: Behaviour, Attitudes, Environment, and Experience. The first two are associated with the givers and the last two are a result of actions taken by guarantors.

Behaviour: How do users actually respond to frictions in their digital experiences and environment? Since every digital interaction involves some friction (for example, you have to enter a security code or wait for a page to load on your mobile device), one can make the case that users display a modicum of digital trust by simply completing a transaction. The higher the proportion of users that complete a comparable transaction across countries for a given unit of friction is interpreted as behaviour that is more trusting. The countries were scored from most to least tolerant behaviour.

Attitudes: How do users feel about the digital trust environment? A typical way to gauge trust is to survey users with questions such as: How do you feel about the digital environment? Do you trust and find value in your interactions? Do you trust tech company leaders? Do you trust governments to respect data privacy or tech companies to use your data responsibly? Do you trust businesses and institutions will protect your data and provide value?

Digital Environment: What are the “guarantor” mechanisms for building trust in the digital economy, and how robust are they? The authors considered three essential trust-building factors: privacy, security, and accountability. Privacy is one of the foremost areas of concern for users, from massive hacks of sensitive information to increasing government and corporate tracking of digital activities, identities, and locations of users. Online security is the second challenge for guarantors of trust. With more resources available to malicious actors, and a range of tools easily obtainable, cyber-attacks and repeated use of ransomware have continued to escalate. Data on attack incidents are a useful proxy for the risks to users. Accountability is the third key factor because, as the risk of incidents increases, users need recourse options, such as legal frameworks that hold businesses and institutions accountable or identity management systems.

Digital User Experience: How do users experience the digital trust environment? Enhancing digital privacy, security, and accountability involves some tradeoffs: the measures might add friction, which affects the overall user experience. Left unmanaged, even these “positive” frictions (e.g. multiple passwords, identity authentication) can have a perverse effect of making the user less willing to engage online. In addition, negative frictions make users less trusting. The ultimate goal ought to be “intelligent friction”: balancing a seamless experience with proper protections. In analysing this tradeoff, the authors compared the speed and ease of use when transacting online, drawing upon data on multiple sources of friction — regulatory, infrastructural, and identity and interface-related.

The authors concluded that countries evolving fast on digital front (from low base) display higher tolerance for friction and less than favourable experience and environments. Countries that are digitally mature and have slower evolution have the opposite pattern – lower tolerance for friction and superior experience and environments. The authors believe users in the former countries are more likely to put up with frustrations than those in more digitally evolved countries. Online users in these countries are, more typically, early adopters, often younger and enthusiastic about new technologies. These users expect that there will be problems with the technology and are willing to work with them and view the analog alternatives to be worse. By contrast, developed country users, who have come to expect high speeds, ease and reliability, have much lower demonstrated tolerance for friction. The irony is that, relatively speaking, these countries have less friction because of superior environments and experiences.

4)    Bittersweet campaign to liberate Japan’s office workers  [Source: Financial Times]
Godiva – the Belgian Chocolatier has chosen Valentine’s Day for a broadside on trying to change workplace attitudes. Specifically, the time-honoured workplace phenomenon of the giri choco — literally “obligation chocolate” in Japan. Each February 14, women feel obliged to buy chocolates and distribute them evenly to their male co-workers (usually with gritted teeth). The men must then return the “favour” a month later — the convention is that the value of their chocolate offerings be around twice that of those they received. The social pulleys engineering this bit of stagecraft are as impressive as they are unsettling. There are two distinct obligations that compel the purchase of the giri choco and ratchet up its scale: a fear of non-alignment with the unwritten rules of the office and the need to appear even-handed by buying something for everyone. Giri choco buying is banal, burdensome and sustained by a dread of non-conformity — the very same recipe that has locked Japanese office work in decades of productivity torpor.

In a neat stroke of marketing, Godiva’s Japan head, Jerome Chouchan, took out a full-page advert in the Nikkei newspaper (chosen for its audience of business executives) recently, calling for an end to the mental imprisonment of the giri choco. The advertisement notes the sense of relief that descends across corporate Japan in those blessed years where Valentine’s Day falls on a weekend. Absolutely you should give chocolates (hint: Godiva) to someone special, argues Mr. Chouchan in the lengthy letter, but giri choco no longer has a place in this day and age. Valentine’s is not a day, he writes, on which you should feel forced to do “something extra for the sake of smooth relations at work”. The letter concludes by exhorting male readers, “especially if you are the top person in your company”, to formally absolve female staff of giri choco obligations.

Godiva does not quite spell it out, but the shadow cast by giri choco is part of a much larger darkness in Japan’s office culture for which few good solutions have been devised. Japanese white-collar workplaces are hardly unique in allowing peer pressure and convention to reign, but the annual giri choco misery offers an uncomfortable reminder of just how potent it is as a force of resistance to change. Giri choco is on a spectrum of unspoken obligations which, at their most destructive, create the impulses that make the workplace bullying of pregnant women or new mothers — “maternity harassment” — a real thing, and leave the phenomenon of karoshi — “death by overwork” — seemingly impossible to dislodge. Even good ideas to reduce, for example, the culture of overwork — often end up wrecked by workplace norms genetically programmed to resist evolution.

A year ago, Japan’s Ministry of Economy, Trade and Industry tried to establish “premium Friday” where, once a month, the week would finish at 3pm. Almost as the scheme was announced, companies and entire sectors of the economy formed a queue to explain why they would have to be exempted. But they needn’t have bothered: the same suite of obligations and fears that lies behind giri choco, prevented a buy-in to premium Friday. The trade ministry, when asked, claims the scheme will dutifully trudge on in 2018, but the very people it was intended to uplift have already declared it dead.

5)    In the future we won’t edit genomes – we’ll just print new ones [Source: MIT]
This article discusses how one day we’ll be able to routinely design genomes on computer screens. Through fermentation, humans were able to harness microscopic species for our own ends. These days yeast cells produce ethanol and insulin and are the workhorse of science labs. That doesn’t mean S. cerevisiae, the unicellular fungus better known as brewer’s yeast, can’t be further improved—at least not if Jef Boeke has his way. The director of the Institute for Systems Genetics at New York University’s Langone Health, Boeke is leading an international team of hundreds dedicated to synthesizing the 12.5 million genetic letters that make up yeast’s cells genome. In practice, that means gradually replacing each yeast chromosome—there are 16 of them—with DNA fabricated on stove-size chemical synthesizers. As they go, Boeke and collaborators at nearly a dozen institutions are streamlining the yeast genome and putting in back doors to let researchers shuffle its genes at will. In the end, the synthetic yeast—called Sc2.0—will be fully customizable. “Over the next 10 years synthetic biology is going to be producing all kinds of compounds and materials with microorganisms,” says Boeke.

Think of the project as something like Henry Ford’s first automobile—hand built and, for now, one of a kind. One day, though, we may routinely design genomes on computer screens. Instead of engineering or even editing the DNA of an organism, it could become easier to just print out a fresh copy. Imagine designer algae that make fuel; disease-proof organs; even extinct species resurrected. According to George Church, a genome scientist at Harvard Medical School, this could be bigger than the space revolution or the computer revolution. Along with Church, among others, Boeke is a leader of GP-write, an organization advocating for international research to reduce the cost of designing, engineering, and testing genomes by a factor of a thousand over the next decade. “We have all kinds of challenges facing ourselves as a species on this planet, and biology could have a huge impact on them,” he says. “But only if we can drive down costs.”

A scientist named Ronald Davis at Stanford first suggested the possibility of synthesizing the yeast genome at a conference in 2004—though initially, Boeke didn’t see the point. “Why would anyone want to do this?” he recalls thinking. But Boeke came around to the idea that manufacturing a yeast genome might be the best way to comprehend the organism. “It’s a different take on trying to understand how living things work,” says Leslie Mitchell, a postdoctoral fellow in the NYU lab and one of the main designers of the synthetic yeast. “We learn what gaps in our knowledge exist in a bottom-up genetic approach.” Joel Bader, a computer scientist at Johns Hopkins, signed on to develop software that let scientists see the yeast chromosomes on a screen and keep track of versions as they changed, like a Google Docs for biology. And in 2008, to make the DNA, Boeke launched an undergraduate course at Hopkins called “Build a Genome.” Students would learn basic molecular biology as each one assembled a continuous stretch of 10,000 DNA letters that would go toward the synthetic-yeast project. Later, several institutions in China joined to share the workload, along with collaborators in Britain, Australia, and Japan.

It took Boeke and his team eight years before they were able to publish their first fully artificial yeast chromosome. Last March, the next five synthetic yeast chromosomes were described in a suite of papers in Science, and Boeke says that all 16 chromosomes are now at least 80 percent done. These efforts represent the largest amount of genetic material ever synthesized and then joined together. Boeke and his colleagues aren’t simply replacing the natural yeast genome with a synthetic one. Throughout the organism’s DNA they have also placed molecular openings, like the invisible breaks in a magician’s steel rings. These let them reshuffle the yeast chromosomes like a deck of cards. The system is known as SCRaMbLE, for “synthetic chromosome recombination and modification by LoxP-mediated evolution.” “This is a revolution we don’t want to fall behind on,” says Church. “If the federal government and all 50 states don’t want to do this, we will reap what we sow. We will be left behind.”

6)    Climate change threatens the UK’s favourite sporting events [Financial Times]
Extreme weather conditions caused by climate change are threatening the future of the UK’s favourite sports, with cricket matches increasingly lost to rain, football pitches too waterlogged for play and famous golf courses falling into the sea. That is the conclusion of a new report by The Climate Coalition, a campaign group. It urges sporting bodies to adapt to the changing environment and calls on governments around the world to take further action to reduce carbon emissions. In the UK, climate change is resulting in more rain, which is having an impact on the country’s sporting pastimes. Cricket is among the worst affected sports, with 27% of England’s one-day international matches reduced by rain disruption since 2000. According to the Met Office, the country has endured six out of the seven wettest years on record since 2000. The recent winters of 2013-14 and 2015-16 had record-breaking rainfall that was 50% higher than average, leading to the flooding of sports facilities across the country.

The England and Wales Cricket Board, the country’s governing body, has given £2.6mn in emergency grants to cricket grounds in the past two years to help cover the cost of lost revenue from rain-affected matches. The board has set aside a further £2.5mn a year to help local clubs mitigate the effect of increased rainfall, such as flood repairs and keeping grounds fit to play through the summer season. The issue is leading to fears that public interest in cricket could falter.

Grassroots football is also being hit, with local clubs losing five weeks each season on average due to bad weather and waterlogged pitches. More than a third have lost two to three months of games. Partly in response to these issues, the Football Association is investing £48mn in installing artificial “all-weather” pitches across the country. Golf has not left unscathed either. In Scotland, the ancient home of golf, more than one in six of the nation’s 600 golf courses are located on the coast. But coastal erosion, rising sea levels and storm surges are threatening famous venues, such the Old Course at St Andrews and Royal Troon. Even a small increase in sea levels could wash away all of the nation’s famous links courses — which are built on dunes, sandy soil and grassland — by the end of the century.

7)    DeepMind develops AI to diagnose eye diseases [Source: Financial Times]
Google’s DeepMind has developed artificial intelligence to diagnose diseases by analysing medical images, in what could be the first significant application of AI in healthcare. London-based DeepMind has crunched data from thousands of retinal scans to train an AI algorithm to detect signs of eye disease more quickly and efficiently than human specialists. Findings have been submitted to a medical journal by the company and the technology could enter clinical trials in a few years if results pass a peer review by academics.

DeepMind’s algorithm has been trained using anonymised 3D retinal scans provided by Moorfields Eye Hospital in London and painstakingly labelled for signs of disease by doctors. The company has now begun discussing clinical trials with hospitals including Moorfields. Because the images provide rich data with millions of pixels of information, the algorithm can learn to analyse them for signs of the three biggest serious eye diseases: glaucoma, diabetic retinopathy and age-related macular degeneration. However, the artificial intelligence is “generalised,” meaning it can be applied to other kinds of images. DeepMind said the next stage would involve training the algorithm to analyse radiotherapy scans, through a partnership with University College London Hospitals and mammograms, in partnership with Imperial College London.

As health systems creak with the strain of growing and ageing populations, hospitals around the world have begun to discuss whether artificial intelligence can reduce the burden of repetitive work. DeepMind employs 100 people in its health team, compared with just 10 three years ago. However, the relationship between big technology companies and hospitals is sensitive. Last year, the UK’s data protection watchdog ruled that an NHS trust broke the law by giving DeepMind access to the medical records of 1.6mn patients. The ruling was related to a trial of DeepMind’s Streams medical diagnosis app, which does not use AI but analyses data and sends nurses and doctors alerts when a patient’s readings look abnormal. The company has since set up a research unit focused on the ethical and social implications of the AI it is creating.

8)    This is the future, says world’s first cyborg-Neil Harbisson  [Livemint]
Neil Harbisson, the world’s first legally recognized cyborg, has an antenna implanted in his skull to help resolve his colour blindness. “It’s a new body part,” he says, pointing at it. “When I was studying music in England, I decided to create a new organ for the sense of colour, because I didn’t want to wear technology. I wanted to have an ‘organ’ that would allow me to ‘sense’ colours. I thought an antenna would be the best way, because it is independent from sight and hearing.” Born with achromatopsia, Harbisson can only see his surroundings in black and white. At the age of 21, however, he co-devised and implanted the antenna, which converts colour frequencies to sound, in his head. The device allows him to ‘hear’ and recognize colour, depending on the frequencies. Harbisson calls the antenna an additional ‘organ’.

“This is the future,” says Harbisson. “The future is that we need to start designing ourselves, and this will be the biggest change in our generation. We need to change the way we’ve been functioning as species. For thousands of years, we’ve been changing the planet and designing it in order to make ourselves more comfortable, whereas if we start designing ourselves, things will change. The more we design ourselves, the less we will have to design the planet. For example, if we had night vision, when cities would be dark, we would not have to spend so much money and energy to create lighting systems. It would also be better for the environment. Also, if we could control our own temperature, we would not have to use air-conditioning or heaters. We wouldn’t have to heat up the planet when it’s cold or vice versa. ”

In 2010, Harbisson, along with Moon Ribas, co-founded Cyborg Foundation, an international platform which gives ordinary humans the opportunity to develop their own artificial senses. In the realm of cybernetics, Harbisson is hopeful that an interest will soon develop “Designing organs and senses is a career that doesn’t exist. You can’t go to a university and learn how to design an organ. So, in order to create these organs, we need to have artists, designers, computer scientists, doctors—we need to have a perfect team.” he says.

9)   What WhatsApp’s payments push means for Paytm [Source: Livemint]
What happens when one of the most-used internet platforms in India plans to foray into digital payments? Obviously, the leader is bound to feel the heat. Paytm, the runaway leader in payments with nearly 300 million registered users, stands to lose most if Facebook Inc-owned WhatsApp can push its payments service to the 230 million people who use its app frequently to send messages, pictures and other content. While Paytm claims roughly 300 million registered users, the number of people using WhatsApp on a regular basis is far higher. Based on the UPI (Unified Payments Interface) platform, WhatsApp launched payments on trial for some of its users this month. It is expected to introduce the service to its entire user base soon.

Paytm founder Vijay Shekhar Sharma alleged that WhatsApp was flouting rules and putting consumers at risk because it was skipping steps in the payments process. Sharma also alleged that WhatsApp was restricting access to other UPI-based platforms. In response, the National Payments Corp. of India (NPCI), which owns UPI, said all UPI apps have to allow interoperability. Beyond the issue of interoperability, what is at stake is Paytm’s dominance of the digital payments business that has helped catapult the company into India’s second-most valuable internet start-up after Flipkart. Driven by a massive spending spree and Sharma’s ambitious vision, Paytm beat rivals including FreeCharge and MobiKwik to emerge as the country’s largest digital payments brand.

Paytm has been the country’s most stunning start-up story in recent years. The company has enriched many of its investors and employees and become a household name. It raised more than $2 billion and counts China’s Alibaba Group and Japan’s SoftBank Group as two of its key investors. From a valuation of less than $200 million at the end of 2014, its valuation soared to $10.2 billion this month. But now, WhatsApp with its easy-to-use interface and spending power, will offer the biggest challenge to Paytm yet. While Google and Flipkart are large internet platforms by themselves, their payments platforms aren’t nearly as well known. WhatsApp will offer payments on its existing app—a key difference in terms of useability and reach. Digital payments is a nascent business and while Paytm has a massive lead, what makes it vulnerable is that digital payments have far fewer entry barriers than operations-heavy businesses, such as e-commerce or cab transportation.

“You have to see what happened in China—Alipay was the biggest payments company for years but the market moved towards mobile payments suddenly when WePay (owned by Tencent) came in and became really big, because it was a higher-frequency app,” said Kunal Shah, founder and former CEO of FreeCharge. “Similarly, WhatsApp has the most number of daily active users, exponentially more than anyone in payments. How will Paytm or Tez or anyone compete with that? WhatsApp will lead to a digital payments revolution in India. Not just wallets, even services like NEFT could potentially become irrelevant or less used,” he added. Whoever wins, one thing is clear—the digital payments market is set for a big leap. Consequently, payments will become one of the most intensely competitive and expensively fought markets in India’s internet world.

10)    Why 2018 may see a revival of Indian horror movies [Source: Livemint]
The Holi weekend next Friday will see Bollywood actress Anushka Sharma dabble with a genre Bollywood doesn’t take to very often—horror, in her home production Pari. Along with a horror comedy called Stree, starring Rajkummar Rao and Shraddha Kapoor, there are a bunch of regional horror films scheduled for later this year. While the Indian horror movie scene has been heating up with the success of Vikram Bhatt’s 1921 and Tamil-Telugu horror thriller Bhagaamathie last month, Hollywood has supernatural horror films like The Nun and A Quiet Place ready too. Meanwhile, over-the-top (OTT) video streaming platforms like Amazon Prime Video and Viu have already gotten into the horror game with shows like Shaitan Haveli and Gehraiyan.

For a country still relying on the Ramsays, a group of seven brothers who produced more than 30 horror films with sparse crews and shoestring budgets during the 1980s, for its primary horror inspiration, there is suddenly a lot to look forward to in the genre. “There was a change that came in the 1990s with films like Ram Gopal Varma’s Raat, where we started exploring the idea of taking horror beyond the stereotypes of the putlas (idols) and the chudails (witches) as we started getting exposed to Hollywood cinema,” said Varun Thakur, writer of Amazon’s Shaitan Haveli. “When you saw this paradigm shift, you realized the Ramsay horror was really campy, though it was really interesting for the time it came in, but there were other stories that you could explore, and the setting of those older films seemed ridiculous.” Still, even towards the 2000s, in the name of horror, most Indian films were simply remakes of Hollywood flicks.

But the genre faces other challenges too. “Indian audiences are basically divided into two. While the mass audience likes the more in-your-face and easy to understand horror stories, those in the multiplexes like to be engaged with their minds,” Vikram Bhatt said. “So while we respect the intelligence of the audience, the question is how to make holistically for the entire country. One way would be to get a major star to do it, so that people come to see the star and then the story. A second way would probably be to have a simplistic story without too many other emotional angles.” Plus, the fact that most horror movies are adult films restricts a lot of the viewing audience and limits potential on satellite television. At the same time, horror is a genre, Bhatt added, that has a very loyal audience both ways. There are some people who will always watch horror and some who never will. “There’s a huge percentage of people, especially women, who are extremely scared of scary films and don’t want to pay for the nightmare. So it is always going to have slightly less revenue than a comedy or a love story that is all encompassing,” Bhatt said.

However, that hasn’t deterred him, or the numerous emerging OTT platforms from attempting horror stories. “The opportunity to tell various stories through (services like) Prime Video is bringing a lot of creators forward with ideas and concepts that are in the face of supernatural thrillers, horror and such adjacent genres,” said Vijay Subramanium, director (content), Amazon Prime Video, “Web series lend themselves very well to this genre, you can keep customers engaged for a longer period of time and build multiple story arcs which is very liberating for a lot of creators.” While Subramanium said the great deal of VFX and technical skill involved in putting horror together has proven to be a challenge, Thakur pointed to the focus on spectacle rather than story, hoping that credible names like Anushka Sharma will change that this year. “While horror done well is very popular, if it’s half-baked, you’re not going to get anybody to consume it. Unlike drama where you can get engaged with any character track you fell in love with, in horror you have to love the whole story otherwise you don’t have the customer’s attention,” Subramanium said.

- Saurabh Mukherjea is CEO, and Prashant Mittal is Strategist, at Ambit Capital. Views expressed are personal.