For past couple of days on any website which talk about venture capital deals and opportunities in india. We can see Online DVD Rental business as the next big thing. But with every passing day new company popping up in this sector. It makes one feel how how so many players survive in market. Though every business in their pitch will give only one answer. That Market is huge. Few people have actually sat down and looked at market in terms of practical problems to be faced.
Fact 1# Most of the companies looking at this model at time of quoting numbers talk about total customer base opportunity in india.
Problem#1 Most of these firms are starting from a regional base servicing one or maximum 2 cities at one go.As reason being most of these firms business model rely on having own supply chain or pickup and drop service to customers location. Which to service far flung requires manpower. Hence shrinked market to begin the model with. Here again lot of people will talk abt scalibilty after showing proof of concept in one city. We will talk about this in detail in are comming problems.
Fact 2# The Model is dependent on aggregation of new content.Quoted numbers talk about availability of upto 900 new releases every year.
Problem2# With advent of new technologies like IPTV or Dish-TV more latest movies will become accessiable on demand at the same cost which these rental companies are charging to customers. Secondly as soon as movies are released their TV Premiere rights are sold out and you can see it hitting channel near you with in 9-12 Months. With all of these mediums fighting for consumers attention and with a Windows Media Centric PC record the movie or as Ad’s show pause and start the movie from where you left.
Fact3# Market exist as people are happy to rent Pirated DVD’s/VCD’s
Problem3# People renting Pirated DVd/VCD are mostly the people who miss the movie in theater and just would like to watch the movie in the same month of movie launch. After that once a movie is miss….you will probably wait for your local cable tv or some channel to show it.Secondly when a person can buy a copy for 35INR for one time watch why will he pay so late as in india peoples concentration is not on quality but price.
Fact4# People are spending 1000 bucx to watch a movie at theatre
Problem4# With dearths of parks and family outings available. Movie theatre is one decent experience(wont comment on type of movies releasing every year) left for family to visit. So it looks like very irreplacable keeping in mind indian liking to catch first day first show of latest release.
Fact5# Scalibility available
Problem# most of these companies being regional lack of knowledge on movie preference of other language will still be a killer in pushing content.
Answer which all of these companies have to answer in western countries from where they are tying to ape the model their exist a successful offline brick mortar model for the business. In india since advent of cable TV rental businesses pretty much died. If you look in west cable tv is still an item of luxury or expensive which in india is very cheap on Mc Index. Hence this model hasnt proven its worth offline with consumers it will be very hard to compete on online front.
Couple of comming up Online DVD Rental Stores in India
i have seen others but these are the ones most talked in VC Blogs in india.
Will ask people funding these organizations to shed more light on problem forseen from outside or past b2c experience