Far from the fears that the slashing of DVD and VCD rates will endanger the survival of the DVD rental business, the segment is experimenting with new concepts and is on an expansion spree with deep-pocketed business houses like Reliance ADAG group and Nimbus venturing into the space.
Most of the online DVD rental houses are entering into talks with DVD manufacturing companies to provide them with a window for the latest Bollywood flicks, before the DVDs hit the market through the retailers. Pilot projects to that effect have been already tested by seventymm, the largest online DVD rental company by customer-base, which struck a deal with the DVD company, Excel Home Video last year. ?We tied up with Excel for three movies wherein they allowed us an exclusive time period of seven days for three movies, before they released the DVDs in the market. In return we promoted the movies and the DVD companies through our portal,? said Raghav Kher, CEO, seventymm.
The rental service is also in talks with other DVD companies to replicate the model. Kamal Gianchandani, COO, Bigflix.com, the rental service from ADAG group said, ?We are working on a rental release window, to release titles on our rental service a minimum of 10 days prior to their official release on the sell through format?. However, he added that it is premature to comment on the films and supplier details. Bigflix has already experimented with the idea in its video on demand business segment. Bigflix may have an additional advantage for movies produced or co-produced by Big Motion Picture.
Rahul Mansharamani, CEO, MovieMart believes that such tie-ups will happen more frequently in future. Traditionally, the home video value chain operates like this – the movie producers or the content owners sell the DVD rights of the movie or content to companies like Moser Baer, Shemaroo, Excel which in turn dole out licences to DVD rental services at a negotiable price for a basket of movies.
Although the players feel that it may take another 3 to 5 years for digital download of movies to catch up in the country, Bigflix has already launched its download to own (costing $1.49 to $19.99) and free streaming service, albeit targeted at the NRI audience and seventymm will launch its download service in one year time, according to its COO Subhanker Sarker. Apart from implementing new formats, diversifying content on offer, the rental services have also embarked on an expansion spree. Mansharamani said, ?After our recent tie-up with TNT courier service, we are technically present in 300 cities. Currently we are serving 10,000 customers and aim to touch about a million in five years?. Seventymm, which raised Rs 50 crore from NEA-Indo US Ventures last week and had earlier raised Rs 40 crore from VCs like Matrix Partners India, Draper Fisher Jurvetson plans to expand to 40 cities from its current six city presence in next five years. It aims to reach a target of 4 million customers from its current 70,000 in the same period. ?We plan to have 200 stores by March 2009 in minimum 10 cities and later plan to expand our presence to other Tier II cities as well.
?Our three year plans include presence in 35 cities,? said Gianchandani of Bigflix, which also owns offline rental stores and plans to capture 50% of organized rental market share by March 2009. According to industry estimates, the home video rental market in the country is as big as the sell through market, currently pegged at Rs 900 crore, growing 20-25% annually to touch Rs 1,500 crore by 2012.