The online DVD rental business in India is on the verge of taking off. Here are four reasons why I think so. Firstly, unlike most other web businesses, this has a clearly defined (and proven) revenue model, the bugbear of the internet economy. Secondly, the blueprint for a viable service model has been provided by the immensely successful Netflix, so you don’t need to reinvent the wheel. Thirdly, with cinema in India being the ‘opium of the masses’, there’s no dearth of market demand. And finally, as the success of online railway ticketing shows, Indian internet users are likely to switch online, if the service makes for real convenience. What is needed is somebody, who can think big and execute really well to take the first mover advantage.
A clutch of websites in Bangalore, Mumbai & Delhi are the first ones off the blocks. All of them have commenced operations recently, so its premature at this stage to pass verdicts on their progress. However, none of these sites has a national footprint currently. Obviously, they want to first demonstrate that the model works locally (in their respective cities) before expanding countrywide.
There are other challenges as well that these sites face. Introductory pricing for renting the DVDs don’t seem to be near the levels needed for mass market penetration. But if they can provide efficient service, I am sure the early adopters (likely to be less price sensitive) won’t complain. Efficient shipping facilities (delivery & pickup through couriers) are a prerequisite for the success of this business. While irctc.com has demonstrated that this is possible in India with paper tickets, it remains to be replicated with breakable, scratch sensitive DVDs. Moreover, a true national level scale up will require substantial financial muscles, for this is a resource intensive business. On one hand, you need to tie up with movie distributors and pay hefty license fees, and on the other hand, set up a efficient supply chain nationally.
So what is their basic service model like? You can browse the catalogues online and place rent orders for a pre-specified maximum number of concurrently rented DVDs. The same is delivered by courier subject to availability. You can set up a queue for DVDs not currently available in stock. And there’s nothing like a ‘late fee’. Something the Indians sites are offering (which Netflix doesn’t) is the order-by-phone facility. While this is ostensibly, to give a ‘Indianised’ personal touch, it also indicates a certain nervousness on part of the sites about a completely online model. And the DVDs are likely to be genuine and hence much better in quality than the pirated CDs/DVDs that your neighborhood library serves you.
Here’s the bunch of sites that are racing against each other to be the Indian Netflix…
SeventyMM (Bangalore)– this startup has commenced operations in March this year. It has raised Rs 100MN in seed funding from Draper Fischer and is unarguably, the best positioned amongst the current lot, to scale operations nationally. At present, it covers only Bangalore. It offers 10,000 titles in nine Indian languages (including English). Monthly rentals are reasonable- Rs 199 for 4 DVDs or Rs 549 for unlimited nos.. At the time of joining, customers have to pay a registration fee of Rs 500 and a refundable deposit of Rs 1000 (I hope they phase out these charges with time). SeventyMM has ambitious plans to scale up to revenues of Rs 500 crores and 10 lac customers by 2010. Something that adds credibility to its plans is that, it has Eric Mayer, one of the co-founders of Netflix on its advisory panels.
CatchFlix (Bangalore)- this site started off in May this year. Instead of a monthly rental, they charge Rs 99 per DVD for 3 days (no deposits required). It has mainly English & Hindi titles to choose from.
HomeView (Delhi/NCR)- this website operates in the NCR region; they have a monthly plan for Rs 999 where you can rent unlimited DVDs a month (but one at a time).
ClixFlix (Mumbai)- this site actually has been around since Oct,04 which makes it India’s first DVD rental site. It covers the whole of Mumbai and has 7000 members. It offers a choice of 6000 titles and its monthly charges are Rs 399 for 6 DVDs or Rs 799 for unlimited nos.
{ 33 comments… read them below or add one }
Hey Amit,
Thanks for the link to HomeView.in, I never knew such a site existed for the NCR.
And I just noted that it is written in Perl .. it already gives me that sinking feeling
SeventyMM made a bunch of newbie mistakes initially. But the good thing is that they seem to be listening to feedback and making changes. The prices were higher earlier (deposit of 2000 etc.), but maybe it’s time to try it out now. Can’t find any useful feedback on their service though.
Thejo,
I have previously read your blogpost about seventymm’s servicing issues; however I would think of those as teething problems that every new business faces. You never can get it right in one shot…its always a series of iterations that propels you in the right direction. I’m sure sooner or later, they will overcome the issues you have pointed out.
Manik,
I didn’t get the bit about Perl on their site…forgive my ignorance about platform incompatability issues.
Amit,
Great post. Being in the US, we rely on the US Postal Service when using Netflix or Blockbuster Online. It will be interesting to see how these Netflix clones are going go national with their services considering they’re doing local hand deliveries right now. I presume they’ll use couriers when delivering nationally, or they’ll setup local distribution centers. However, like you said, that will raise their expenses considerably and require serious financial resources. Could be something that a US/European VC would be willing to fund. Possible purchase by Zee or Star at some point for the leader of the pack?
Pankaj
You narrowly missed one point my friend.
Thirdly, with cinema in India being the ‘opium of the masses’,
You know what above means? Piracy!!!! obviously these netflix clones would stick to legitimate DVD copies. The indian common man would think why wait -trusting the indian postal service- for a legal quality movie, when he can grab one for damn cheap from a cornerstore which can stock on new realeses next day of the release although with a little less cam-in-the-theater quality.
Plus, with the dialup still roaming at large in india, a subscriber would have to add his telephone costs+internet minutes just to order some DVDs????
A loong shot for these companies!!!!!
About piracy, it has always existed and thats likely to be true in future as well. But that doesn’t alter the online DVD space. For one of the main drivers for these sites is that there are fairly significant number of Indians who are sick of the pirated prints (which are BAD) and are willing to pay extra for good prints.
And thats where the role of the pricing comes in. At 700-800 rupees a month for 4-5 movies, I don’t think this is sustainable. It has to come down to 300-400 per month for 4-5 movies to penetrate the market.
Take the example of Netflix; the bulk of their business comes from 20$ a month rentals. And avarage cable tv subscriptions in the US are about 40$ a month. Thats when it starts making sense.
Hi Folks,
Here is an introduction to Catchflix Online DVD Rental Service – a model tailored for Indian consumers
Movie lovers in Bangalore can log on to http://www.catchflix.com and rent original DVDs from a rich selection of English and Hindi titles.
For logistics, Catchflix has tied up with Blue Dart, one of the most reliable courier services, for delivery and pickup. Next day delivery is promised if the DVD is rented before 4:00 PM.
Unlike subscription-based DVD rental model popular in the US and other countries, Catchflix offers a transaction-based rental of Rs. 99.00 for a DVD for three days, including delivery and pickup.
In the subscription model, customers pay a fixed monthly fee whether they rent a movie or not. This is unsuitable for the value-conscious Indian consumer. In our model, you pay for what you rent. There is no monthly commitment.
Catchflix charges no membership fee or security deposit, which sets it apart from the conventional ‘brick-and-mortar’ service providers.
Our members are urban professionals who are responsible folks. Hefty security deposit is a way of making everyone pay for carelessness of a few and puts off movie aficionados. If a DVD is damaged or lost, we charge only the borrower – not everyone.
The free membership is in keeping with the times. When companies like Google and Yahoo are offering high value services free, it is unreasonable to charge a fee only to create an account. It only takes a few bytes of memory on our system. Members pay only when they use our service to rent a DVD.
Our growth plans include expanding to other major cities in the country and building rich collections of movies including documentaries, foreign language films, and other special interests that have been poorly served by traditional neighborhood libraries that stock only popular mainstream titles, and mostly pirated.
Thanks,
Ira Tondon
itondon@catchflix.com
http://www.catchflix.com
Here’s my lil contribution to the discussion.
I do not know about the rental rates in the metros and other states, but in Gujarat, the standard rate for DVD rental from the neighbourhood video rental outlet is around Rs. 50. They also tend to have membership schemes for eg. For Rs. 3000 (to be paid in instalments) you get 100 DVDs, which brings the rental cost down to Rs. 30 per DVD.
[Note: The above prices are from my visit to India in early 2005. The prices might have gone up or down since then.]
So its possible that these online DVD rental companies will face quite a bit of a challenge on the cost front at least in the smaller cities and towns.
Also some of the neighbourhood video rental services stock pretty good quality DVDs. One guy in Ahmedabad claimed to have the largest collection of english & foreign films in the whole state. They first get the pirated CAM or TeleCine copies for the ones who just can’t wait to watch the movie. And then once the original DVD’s are out in stores or hit the interent sharing sites, they update their collections with the new better copies. A crackdown on piracy will greatly help the online dvd rental take off.
Also the regional release dates for DVDs of Hollywood movies tend to be delayed. In some instances being released in India almost 4-5 months after the US/UK release dates, raising the question that will the Indian companies get the DVD’s for rental when they are released in the US or on the Indian/Asian region release date.
Amit,
Any statistics about how many members do all these online DVD rentle companies have? Only number available here is for ClixFlix from mumbai which has about 7k members, any idea about other services?
Ira,
It was nice to read your post about CatchFlix but still I am a bit skeptical about your rates. Rs 99 per rental seems to be a bit too much. For an avg indian, ‘the next door video library’ provides DVD @Rs. 50 per movie. To pay Rs 50 extra just for getting movie shiped to home doesn’t look convincing enough.
Regards,
Sarang.
Hey Guys:
visited http://www.cinesprite.com?? these guys have excellent plans to offer and great expansion plans. The plans are priced at 399 and 499 per month with unlimited DVD rentals.
The company is currently operational in Delhi and NCR and is targeting to start its operations in all the major cities by this year end
I’ve checked out all the sites mentioned in here and I like the interesting selection that Seventymm.com offers. Their World Cinema selections have really expanded since they started their DVD rental service. I’ve been seeing movies that I’m pretty sure I wouldn’t have seen otherwise.
Hey Guys:
Did check out a couple of sites on movie rental but i think Seventymm.com. takes the cake. They have a great collection of movies both old and new in a host of various languages at very affordable rate plans – Rs.199/- for 4 DVD’s/month and Rs.549/- for unlimited DVD’s/month!!! The best part of the deal – you can order movies either by visiting their website or call customer services at – (080) 4146 7070. What’s more you get your movies picked up and droped from the door step… Man I think this is the best!!!!
this day i thought of visiting most of the flicks on clicks. end of the day i find that the kinda collection http://www.cinesprite.com manages and the kind of services provided by them is very lucrative. two plans at 399 for 1 dvd at a time and 499 for 2 dvds at a time which is highly competitive for sure. free pickup and delivery, dedicated customer care and prompt response to customer queries are some of more values they have in their services. Odering movies is again done either by visiting the website or calling the customer care. and what… they immediately buy movies on customer requests. now tell me whats the best
oh yeah i forgot to tell you.. 399 and 499 per month are for unlimited movies
My Point to Ira ,ClixFlix.
The dvds are for home view not for rentals unless you have rental rights which is one hell of a cost .If you have checked this months Business Today there is a article on th esame .Technically rentlas is illegal almost piracy .Movie paridiso and all brick and mortar are working in a gray buisness .I wonder what is the case with clix flix and seventymm .
Couple of points:
1 How is it different from a Shemaroo service or for that matter any current tele based home deilivery syste-these guys have built up tremedous last mile connectivity over the lst 20 years (since VHS days).
2. Piracy (near zero cost of peer to peer DVD sharing)
2.1 Piracy (near zero cost of ‘rentals’
3. Is DVD Rentals a legal business in india (most DVD;s have a message from the FBI saying if you got it on a rental it is illegal).Are royalties accruing to publishers?
4.Logistics nite mare…in lite of long tail applied to geography…i.e One DVD in one area, and another One in other side of town – all to bes serviced 24×7, anytime, anywhere,anyplace. Lessons from Corueriers and Pizza delivery!
Net net, it is a similar problem to broadcasters having to grapple with LCO’s, and how to break in. LCO;s here are local rental stores.All they have to do is ALSO just have a online presence to boot ,along with their current phone -ins and retails outlets!
NetFlix (seventymm)is doomed. Localised plays may cater to a niche and remian profitbale.
I am subscribing to http://www.fridayboxoffice.com dvd rental service in bangalore.an unlimited plan @Rs.400 monthly is damn cheap than going to a multiplex these days.They send the best collection,dvd region 1 US prints,at a low price .Its Un believable.I really recomend their services.
I have thought over the various pros and cons of online dvd rentals program in India.
The inital cost for setting up this kind of business is huge. And people can find movies at a much cheaper rates in their nearbuy local shop, but if we look at the qualities of those dvd, it is worthless to spend money on that. Even we cannot find good English movie collection in those shops. Forget about new released English movie, but u can’t even find good old English movies there.
If you have a good collection and get in touch with a good courier system then I see huge profits in this.
Hi
I am very pessimistic about this DVD rental business simply because priacy is too large an issue to ignore. Hell, I buy DVDs for Rs 70 here in Chennai (you can get them for Rs 30-40 if you know someone at Burma Bazaar, that paradise of pirated stuff). Why on earth would I want to pay more for renting one?
Quality of print has ceased to be an issue because DVD pirates promise and deliver highest quality stuff (I can vouch for it). If in case it turns out to be bad, they’ll replace it .
Besides, if you dig a little deeper you’ll see that the black market is full of gems that rentals don’t stock.
It’s clearly a case of consumer is king. I simply don’t see the value for investment. VCs seem to know better. I wish them luck.
Splendid snapshot of the online video rental. Very good work. I just added your page to my favorites. Please continue the great work and thanks for the same.
All said and done….
i think the model will collapse itself.
very soon …probably in next 2 quarters itself….the prices of DVD’S getting slashed drastically…..
probably u might be able to own a DVD for say Rs.99/- max.
so, it wont make any sense to rent it out?
why isn’t there a audio-dvd rental site???
so, according to me once the cost-of-ownership is very less……there is no scope of renting…..because, it will no longer be a profitable business for the company……
regds!
dk
Hi Friends
Heared that a new site is coming up in INDIA with monthly scheme of 200 rs. If it hits the market it will be the cheapest in the available lot.
Anyone heard about it.
What do you think.
Regs
Matin
i want a company who take my land in rent and this site is very good to serve ur comment and share ur personal fealing .if some one start a new bussisnes in my city then call me at 9414219583 , i am in india .and in rajasthan state ok bye
Seventymm is a good site, no doubt. But some loop holes are there. First of all in the beginning they are not mentioning how much you have to pay.
After you fill in all your details then only the info is coming. But by this time they get the user’s phone number. The worst thing is that they are calling up the user time and again even after repeated refusals. This habit should be stopped as it does not give a very good impression.
hey guys,
check out for the new Online DVD rental store in chennai….has a good collection of world cinema…
seems to be cool place in chennai…….they have a systen total acess…rent thru online or exchange in the store……………………………
Guys,
I am a member of Madhouse-www.madhouse.in for last two months and have been following this space very closely as I have been a netflix customer earlier.
Must say that these guys are doing some fantastic things to roll out their ambitious business plans.Madhouse has started sending me a sachet of Act-2 popcorn with every movie I rent.They have also come up with this offer where they are offering free dvd players with annual plans.
Lets see & watch what others do to follow Madhouse
Hi all!
Bye
The Clixflix is definetly the most preferable library to join with,provided they reduce their charges to some extent.
By reducing their deposit or introducing some new flexible plan with the economical range they can invite a lot of fresh members on their list
Amrish,
Check out href=www.clixflix.com now. New plans, more compelling value and reduced deposists. IF YOU CHOOSE A MEMBERSHIP THROUGH THE STORES, YOU CAN AVOID THE SECURITY DEPOSIT. My sister is a member with Clixflix and she raves about them. It also suits her style, As a homemaker, she calls them and orders movies. She has the synopsis of a film read out before choosing the same.
In case you are a movie buff and are considering seventymm because they claim to have a vast movie collection and would deliver movies right at your doorstep.. think again..
This is how their process
works..
1) You either call or get a call from seventymm. The person’s objective would not be to share as much information with you as possible so that you can make an informed decision. He/she would rather want to rush and somehow get you to the credit card step so that they can claim a new victim. They wouldn’t even tell you tariff structures properly.
2) So.. you sign up.. have your dvd player duly connected.. have bought some microwavable popcorn and prepare your wishlist of movies on their website. Now you give them a call to order one of these.. only to realize that ALL of them are in circulation (mind you.. you have a list of some ten movies and all in circulation!!) Anyways, you dont bother much and think that this a one time phenomenon.. but just go through the seventymm reviews on internet once and you will realize that people have been banging their heads to get movies of their choice.. but to no avails..
never mind.. your popcorn wont ditch you like seventymm so you can switch on the tv.. watch some movie on any channel and munch your popcorn along..
3) Even though you were not getting movies of your choice.. some movies that you had put in your wishlist just for the heck of it… to keep getting movies were pouring in pretty regularly.. and you were still happy thinking atleast this way you would broaden your horizons and start developing a taste for different genres. But seventymm wouldnt let you have even this share of fun..
first three/four movies would flow in pretty much on time and then presto.. some one switches you off at their office.. you keep calling to get a dvd picked and get another movie in return.. but the delivery guy never lands up.. he forgot the way to your house.. when you press the executive on phone hard, he/she tells you that the delivery guy came but your house was locked.. maybe you were at your house all through the day but for some reason your neighbor had locked you from outside!
4) Angry and frustrated you call and want to get your subscription terminated.. the customer rep cries buckets and buckets of crocodile tears to persuade you to continue giving all kinds of assurances (I am sure.. if given a chance he would not fail to tell you that the delivery guy will even board a rocket from moon to earth to get your movie delivered if it comes to that!).. you are a fool (please agree that you are.. why else did you sign up with seventymm in the first place) and so you agree to continue..
5) The same story continues..
6) You call up again to get your subscription cancelled.. this time doubly sure.. they finally cancel your subscription much to your relief.. but then you realize that they have conveniently forgotten about your security deposit refund.. now either keep calling them,, or go to consumer court.. or forgive them and believe that ultimately market forces will wipe them out and your revenge would be complete…
Hi
I am interested in setting up a movie rental site along with a brick & mortar store. I understand that I have to pay rental licence fee to the distributors. Can someone please let me know how to contact the distributors for the licence fee?
I had taken subscription on a 3 month package and so far got only 1 movie and that too something which I have not ordered. they never respond to my calls though before getting my subscription, they had made several calls. A no-recommend company and a company to which legal action has to be initiated at the earliest
YES THEY DAMN GOOD IN BAD SERVICE AND THEY MAKE YOU FORCE TO MAKE PAYMENT BEFORE EXPIRY DATE IF YOU DONT THEY WILL CHANGE YOUR PLAN OR THEY BLACKMAIL YOU THEY WILL, THEN U HAVE TO PAY MORE MONEY TO GET THAT BAD SERVICE I ALREADU USED THAT THEY DONT DELIVERY DVD IN TIME AND IF U ORDER DVD THEY DELIVER VCD WITH BAD PRINT
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