You cannot miss the promos on air, and definitely not the prices. The Big B classic Kaala Pathar for Rs 49, new release Ek Chalis Ki Last Local for Rs 49, Guru for Rs 34?all DVDs. With almost every home entertainment player getting price competitive?after Moser Baer slashed prices?the consumer is king like never before.

Now, your favourite movie is not only cheaper, it?s accessible too. It cannot be smooth going for the local DVD store indeed which still charges Rs 100-plus to rent a movie. And yet, not everyone is convinced that lowering prices is the best way for the market to expand.

With industry estimates pegging retail sales at Rs 300 crore for FY07, PricewaterhouseCoopers in the report it presented at Ficci-Frames 2006-07, forecast a CAGR growth of 25% till 2011. But points out M Kapasi, MD, Excel Home Videos, which has about 16% share in the overall home entertainment industry: ?Unless the volumes? increase justifies the current price erosion, the growth factor may get impacted in the short-term.?

He, however, adds that the long-term prospects for the home entertainment industry remains very strong, ?only the impact of low prices on margins and revenue is left to be seen?.

The impact on margins does worry the players. Admits Bhusan Kumar, T-Series CMD, ?If a movie does well at the box-office, then it?s likely that we will get the desired volumes on DVD/VCD sales and make up for low prices. But we have to take a huge hit if the home video sales falter.?

Although T-Series has been forced to play the competitive-pricing game, it has decided not to slash prices on hit films, like, for instance, Shootout at Lokhandwala or the soon-to-be-released-on-home-video David Dhawan film Partner. T-Series has about 4,000 titles, including regional content.

Kumar insists that it does not make business sense to lower prices for the first five-seven months of a VCD/DVD release. ?That?s the time to cash in, when there?s an interest in the film. We can always reduce prices after the first run, and we have followed that strategy for years now.?

But Moser Baer CEO Harish Dayani counters that the strategy has paid off. ?Our aim was to make VCDs and DVDs accessible to the masses and the response has been overwhelming. In a short span of just three-four months, we are already the leaders in the Indian home entertainment market.?

Moser Baer already has rights to 8,000 titles across languages (including English), which is about 30% of the content produced in the India, and is investing Rs 500 crore in the home-video business. Kapasi says, ?We have titles like Lagaan, Apocalypto, Peter Pan and James Bond, and these are not available with anybody else. If we were to also sell Munnabhai or Spider-Man 3 at one tenth the price-point in comparison to Moser Baer or Sony that would be price war, right??

Ask Moser Baer, how does the company compete with players like Yash Raj Films, which is also releasing its films now on home video, and Dayani quips: ?India has a vast range of titles?more than 20,000 mainstream films have been produced so far. There is a place for other titles like those of Yash Raj?s and ours.?

Meanwhile, with so many players crowding the market, the pricing policy is seeing a shift. ?We have reduced prices of DVDs,? admits Hiren Gada, VP, Shemaroo Entertainment, ?but it?s nowhere close to the Moser Baer price tag.? Shemaroo has about 800 Hindi titles and has just launched a range of international movie titles. ?We have acquired 300 English movie titles across all genres. We will also be releasing non-English world cinema titles soon,? he adds.

Gada says the whole dynamic of the home entertainment segment has changed in three years. ?Ever since the cost of making DVDs has come down, we have seen a shift in pricing.? Kapasi attributes the reason why VCDs and DVDs are getting cheaper and far more accessible to a simple function of the economies of scale??the more the hardware and volumes, the cheaper they will get.?

But with no two movies the same, nor carrying the same appeal and the fact that they are almost never made on similar budgets or revenue assumptions, can this low margins-high volumes strategy work? That?s the question every major player in the segment, from T-Series, Shemaroo, Ultra, Moser Baer to Saregama and Excel Home Videos needs to be asking.

In fact, Shemaroo is already rethinking its home video strategy. Says Gada: ?Now, home videos comprise 30-35% of our total business. We want to bring that down to 25%. The market is too fragmented and the margins are very thin.?

A lot of these players are also foraying into production. Says Dayani: ?We are exploring various opportunities in the entertainment space, including film production.? Shemaroo is concentrating on ?good quality? cinema production, claims Gada. Up for commercial release is Manorama, 6ft Under, critically acclaimed in the festival circuit. Shemaroo is also getting into animation films with Bal Ganesha and Ghatotkuch being in the works.

Kapasi also raises the quality issue: ?In times of growing quality consciousness and rising disposable incomes or living standards versus lesser expendable time among consumers, plus the high-end (home theatre) hardware now available in the market, the quality will come under scrutiny sooner than later.?

Moser Baer?s Dayani and T-Series? Kumar rubbish the quality concerns. Says Dayani: ?We are the second largest optical disc manufacturer in the world. Using MB proprietary technology and its economies of scale has helped us keep prices low. Yet, there?s no question that the quality is of international standards.? According to Kumar, ?There?s no way a serious player can use a sub-standard disc.?

Moser Baer has also developed a unique tamper-proof packaging for its products, which brings us to the next big issue haunting the fragmented home-video market-piracy.

Kumar points out that even with VCD/DVD launches now closer to the theatrical release, it has not stemmed piracy in the true sense of the term. ?Pirates make merry in the first six weeks of a film?s release. Only, now they too have been forced to reduce prices further.? So, has the almost simultaneous release of DVDs not helped stem piracy at all? ?It has curbed piracy of catalogue titles,? says Dayani. ?But not for new titles since there is still some time restriction between the theatrical release of a movie and the DVD release. But the gap is coming down and will certainly help in curbing piracy.?

Kapasi points out that in the heavily fragmented home video market there are no easy solutions to the piracy issue. ?It is a well known fact that piracy thrives on the windows and consumer demands between formats. However, in an effort to curb piracy, if the industry were to eliminate such windows completely and yet not be able to control price-parity between formats, the concern is while it kills piracy it might kill the industry itself.?

He says the industry must come together and that the government too needs to be a lot more sensitive about the rampant piracy that exists, and combat it legally while driving consumer awareness programmes. ?Since pirates do not pay any taxes or royalties?there can never be a level-playing field in only commercially combating it.?

Even with piracy and cheap deals from home video players, according to estimates, the home video segment accounts for only about 10% of the filmed entertainment business compared to a developed market like the US where it is about 50%. Even in a fragmented market, therefore, there is scope for growth because software and hardware prices have never been cheaper.