Watch his mov(i)es

PASSING THROUGH: Raghav Kher

"In today's ecumenical times, it seems quite logical to order a pizza, buy gifts, hunt for grooms and brides online. But when I offered to lend DVDs online, I was told that it might not be a profitable idea in the Indian market," recalls Raghav Kher, Seattle-based founder of Seventymm, an online DVD rental company.

Today, Kher, who pioneered the online retail model in home entertainment and e-commerce category, has proved that an online movie rental service can sustain and make some money too.

Seventymm has a solid cash backing, thanks to the funding it has received. Beginning with Rs 10 crore ($2 million) funding from the US-based Draper Fisher Jurvetson (a venture capitalist firm), with a commitment of more funding when needed, a second round of investment followed from Matrix Partners (India) of Rs 32 crore ($7 million) last year.

"We will break even by the end of this year," claims Kher. Currently based in Bangalore, Delhi-NCR, and Mumbai, Seventymm is hoping to expand its services to another five cities this year.

Although Seventymm essentially follows the Netflix model (US-based online rental portal), which also seems to be Kher's bailiwick, the company has started acquiring customers offline. "Phone bookings and registrations have been successful modes for us, but it is online customer acquisition that forms the bulk," he says.

The basic premise for why online DVD space has been slow to pick up in India is that it requires a very efficient postal system in order to properly run a DVD by mail programme.

"We are trying to juggle various delivery options, like maintaining two central warehouses in a city to efficient courier deliveries that should get our delivery time down to two to three hours instead of the present 24 hours," hopes Kher.

Also, on the list is a mobile registration platform that would allow users to browse and order DVDs through their handhelds. Adds Kher, "We are trying to get an SMS-based booking alert system."

Besides dolling up Seventymm with features, the site is also fast adding DVDs of popular television series like Desperate Housewives and Friends, that Kher claims are immensely popular among Indian audiences.

Seventymm also plans to add to its site digital downloads of movies. "Once we overcome issues like broadband infrastructure and digital rights management in India, we will begin digital downloads," promises Kher.

Also, since not all movies released by the major studios have digital downloadable rights available, Kher thinks that in a year or so, India will be ready to witness digital downloads from Seventymm

Additionally, he is not writing off a partnership with domestic DTH operators so that Seventymm can share movie content with a DTH subscriber base.

"Consolidation is happening in the online DVD rental space, maybe more actively in the next three years, and Seventymm could eat up a few smaller, regional DVD rental portals," finishes Kher as he clearly rules out the possibility of being "eaten up by larger organised players". Seventymm, once close to Rs 100 crore mark, plans to raise capital through an IPO for furthering its growth plans.

Kher realises, although he is reluctant to admit it, that the entrance of bigger players in the online DVD rental space like Reliance Entertainment, Nimbus and low-cost DVDs from Moserbaer, could turn Seventymm into a small fish in a large pond. Maybe that's why he is in a hurry to rake in more subscribers, get into newer cities and hope that his efforts increase customer stickiness.