Cashing in on the couch potato

Updated: Jan 23 2007, 05:30am hrs
Its official: the home video market in India is worth Rs 1,500 crore, but it still doesn't contribute to more than 7% of a films theatrical revenue (only about Rs 300 crore is organised, while a significant portion of revenue is lost to piracy). According to the latest Ficci-PWC study, the home video market has grown 15-20% every year since 2004-05 and its share is an estimated 6% of the entire film-based entertainment industry, and is slated to grow to about 14% by 2010.

"Now that prices of VCD/DVD players are falling and there is a huge growth in income, the current penetration of 3% could even grow to about 25%. This would take the size of the industry to about Rs 2,100 crore by 2010," says Ravi Gupta, CEO, Mukta Arts.

The home video market is currently facing threat from video-on-demand and pay-per-view services provided by cable operators and DTH operators, especially as telecom companies also have started these services on the IPTV platform. "The Indian audience has become discerning and also wants bonus material like the directors' cut (making of the movie), deleted scenes and alternative endings, which is why DVDs have become popular even in India," feels filmmaker Suneel Darshan.

The Rs 300-crore organised home video market might become more competitive with global player Moser Baer slashing the cost of its writable DVDs to just Rs 28-30. Hoping to cash in on what is being touted as the fastest growing market in the entertainment industry and is likely to double by 2009, Moser Baer is planning to release Hindi films in both DVD and VCD formats using proprietary and patented technology, which enhances quality and significantly reduces cost.

The companys new division is in final negotiations to acquire copyright and exclusive licenses for more than 7,000 titles in all major Indian languages. Harish Dayani, CEO, Entertainment Business, says, "This initiative is poised to bring a paradigm change in the home video market. We believe it will lead to much higher sales of home videos, and encourage people to build libraries. We have planned distribution to reach virtually every town."

The year 2007, runs the consensus among industry experts and players, will be a good one for the home video market. Agrees Hiren Gada, vice-president, Shemaroo Video: "This year, the market will consolidate. The DVD format is going to emerge more popular than the VCD format. Besides Moser Baer, more players are likely to emerge this year. Add to that a growing overseas market, which will see a revenue growth of 25-30% in 2007." The Indian home video market has not grown as much as it should have feel most players, given that India is the world's largest producer of films, thanks to piracy and fragmentation in the business. On the other hand, the US home video market is almost the same as the theatrical market in revenues, unlike the Indian home video market, which accounts for only 7% of the total film revenues of Rs 7,900 crore.

Saregama India, which has a tie-up up with six major Hollywood studios such as MGM, Warner, Paramount and Universal, and has set aside large investments to boost its distribution network and marketing. "There was a time when no marketing spends were needed for a DVD release. But now, out of the total marketing budget of a movie, close to 10-20% is assigned to home video launches," says Siddharth Roy Kapur, Senior VP, UTV.

A major reason for the popularity of DVDs over VCDs among distributors is the security built into the players, making it tougher for pirates. Moreover, with capacities between 4.3 GB and 15.9 GB, a DVD can hold more than two hours of high quality MPEG-2 video with several audio tracks and subtitles. "In the international market where copying of Indian movies is rampant, DVD technologies may be of some help. But DVD/VCD prices will have to be cut to make it affordable and reduce the chances of piracy," feels Mahesh Ramanathan, CEO, Percept Picture Company. Yet, despite the villainous pirates, it looks like the home video market has the potential to be a blockbuster in the future.