Big guns spoil home video marketers' party

Vishal Bhatt, who owns a video rental outfit in Thane, wears a glum look these days. "If DVDs can now be bought for Rs 34, why will anyone rent them for Rs 60 or Rs 100?" he wonders aloud.

Bhatt is among the many who are grappling with the changes in the home video market triggered by the entry of big names that are promising rock-bottom prices and selling through large, well-organised distribution chains.

The Delhi-based optical storage media maker Moser Baer is already in, media house Nimbus Communications is getting in, and the big fish, Reliance Group, which already has interests in entertainment software, might join the fray.

Moser Baer is offering older films at Rs 34 for a DVD and Rs 28 for a VCD and promises the same with even new titles. It has acquired 1,500 Hindi titles and is on course for another 1,000 as it eyes a 50 per cent share of the market. Nimbus is likely to keep to this price benchmark.

Ultra, one of the oldest in the industry, has cut its DVD prices from Rs 300 to Rs 45 for old catalogue titles. Under the Sun and Moon offers of T-Series, three DVDs can be bought for Rs 75, or one for Rs 45.

Moser Baer entered the business last December and by the end of March had released 75 Hindi titles. The company has over 450 distributors across the country out of which 40 per cent are new distributors that earlier sold FMCG, telecom and other products.

Nimbus is making its foray with about 125 rental stores across more than 69 cities.

"The idea is to reach the customer. One can order by making a call, sending an SMS, through the Internet or by simply walking into any of our stores," said new projects head of Nimbus Sanjay Sharma.

According to PriceWaterhouseCoopers (PWC), the home video market is expected to grow at a compounded annual growth rate (CAGR) of 31 per cent to Rs 2,500 crore by 2011. Additional boost will come from the rising organisation in Indian retail.

"India is a film crazy nation but we haven't yet developed the habit of watching movies at home. We offer the choice to pick up movies at convenience and reasonable prices," said Moser Baer CEO Harish Dayani.

Rental stores have been charging Rs 50-200 for certain DVD titles. Now these would be available for a lesser price.

Experts say the home video market will turn into a low-margin and high-volume business.

Stores earlier earned 30 per cent margin, which will dip to 25 per cent. The value of title copy rights will shoot up as a result of many more, and better organised, players eyeing the pie.

The uphill task for new players, however, is the recovery of the royalty on newer films. "The survival depends on repeat orders, which are usually low" said Ultra Managing Director Susheel Kumar Agarwal. But Moser Baer believes it will sail through smoothly. "Being the world's second-largest disc manufacturer, our back-end support is strong and economies of scale is high," said Dayani.