Pitched at a nascent stage: Discover what it takes to start this business, the challenges you may face and what the market looks like
We are a nation that is proud to be called movie crazy, where an estimated 1200 movies are churned out annually and even cynical look-alikes of film stars make fortunes overnight. A place like this is certainly a good market for movie rental business.
As times and technologies change, a few players have attempted to transform this unorganized pirated CD-wala business into a chic, stylized online movie rental business.
What started off with a few small regional players saw the landscape changing with the advent of national operators. Seventymm was one of the first to hold nationwide operations. Launched in 2006, it was soon joined by the likes of Moviemart and Madhouse media (subsequently acquired by Seventymm). Of late, a few more names have entered this segment including Catchflix, Flickxpress and BigFlix (Reliance ADAG).
The basic idea is simple—to provide licensed movies on rent to the customer whenever he wants, at his doorstep. The modus operandi is also similarly simple—or at least it seems to be. The customer pays upfront for a membership and then places an order for a movie, on the Net or on phone or SMS. The customer can also decide a time slot for delivery and the movie is delivered and subsequently picked up.
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There are monthly subscription plans ranging from Rs 200 to Rs 1000 depending upon the number of movies to be ordered. Few players also charge a refundable security deposit. The key to success is in having a large enough subscriber base and achieving a high number of turns per DVD.
The elements
License To rent out movies legally the rental company needs to procure a rental license from the home video rights holder. These annual license fees range from a few thousands to lakhs.
Copies A license is not enough. Multiple copies are purchased from the distributor and the catch lies in buying sufficient number of copies. The idea is to maximize the run of a copy without compromising upon customer satisfaction. There are a lot of permutations and combinations that are taken into account before placing an order. The number depends upon the title and the expected demand for the title.
| Sector Overview |
| Major Players Seventymm, BigFlix, Moviemart, CatchFlix Challenges Piracy, Service Quality, Capital Intensive Competition Piracy, DTH movie on-order, Broadband Downloading, Video libraries |
As Suresh Mansharamani, founder of Moviemart explains, “We purchase movies from the distributors at a discount on the MRP. When it comes to popular Hindi films, we buy copies equal to five percent of our subscriber base and for less popular Hindi movies, one percent is sufficient. A hit English movie would mean buying one percent of subscriber base and a normal English movie means a quarter percent of the subscriber base.”
Logistics Multi-city operation means managing demand and supply of movies across different cities. A situation where the demand of a movie exceeds availability in one city while copies are lying idle in another city can easily arise. According to Kamal Gyanchandani, COO, BigFlix Entertainment, he uses order processing, business intelligence and demand forecasting systems to manage demand. The whole distribution system works on hub and spoke model. “We manage logistics through our own warehouse and inventory management at our distribution centers. Delivery is through third party logistics vendors.”
Customer Care Online movie rental is a service-oriented business. Most players utilize in-house customer care teams and call centers. Apart from dealing with customer request, they also work at increasing the subscriber base.
| Profit Margin | |
| Cost at which one DVD is bought by the company | Rs 300 |
| Average run of a copy | 20 customers |
| Cost of renting one movie | Rs 15 |
| Average no. of movies ordered by one customer | 12 |
| Courier charges per delivery | Rs 2 |
| Cost for supplying movies to a customer in a month | Rs 204 |
| Average monthly plan subscribed by the customer | Rs 650 |
| Profit margin | Rs 446 |
| 25% discount is provided by the distributors to movie rental companies. Average monthly plan is derived through figures provided by a single company. The cost does not include fixed cost like machinery, licensing, etc. | |
Delivery This is the customer-interaction part of the business. All companies claim free home delivery within a few hours of the order provided there is no queue for the movie. Most prefer setting their in-house delivery team, while BigFlix has outsourced the function. Why an in-house team? Flexibility seems to be the driving reason. According to Shubhankar Sarkar, COO of Seventymm, “If the customer is not available, the associate can wait for some time, visit again on the way back, or re-schedule the delivery. We provide an option of delivery preference for each day of the week. So, one can ask for an office delivery from Monday to Friday and home delivery on weekends. These help in minimizing the cases of failed deliveries.”
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written by linxiong, January 24, 2011
written by nfl football jerseys, October 12, 2010
Hope visiting this page will grab your trust, all anyone really wants is a trustworthy supplier who they can count on to deliver on quickly, correctly, and top quality every time!
written by shoaib, October 02, 2010
written by Live Watch Tv On Your PC, September 27, 2010
Cheers!
Robin
written by adolf, July 06, 2010
written by KP, June 01, 2010
Lets take example of seventymm, for delivery customer is on delivery boy's mercy. They have a fixed time for your area. If you are there, than its good, else they will not deliver the movie. Quality of movies is another major concern, many times its worse than the pirated one. Rugged, highly used and corrupted are the words I can use for describing the quality of CD/DVD delivered.
Service wise, customer service is not enough equiped to assist you. What they ensure you, is not necessary they do at the back end.While adevrtising their any service/package, they never reveal complete information, specially informations related to refund, in case you are not satisfied with service, or anything which can make your decision megative. Al those information is revealed later when to chase them in case of any problem.
written by kinomaniacs, May 01, 2009
written by shruthi, April 17, 2009
written by sonypinto, April 16, 2009
written by pavithra, April 13, 2009
written by pavithra, April 13, 2009
written by abhi, February 17, 2009
written by Ankur Bhatnagar, January 17, 2009
This is a detailed well written article on movie rental. It would be interesting to know how today's customers view this business. I, for one, have used Seventymm and I can tell you that their service sucks. I am now not so inclined to try out any other rental service.
Ankur
written by Suresh Mansharamani, October 15, 2008
We had been interviewed by many journalists in the past but no one has covered the industry in such depths.This shows your hard work.It was pleasure replying your many emails but and the result is very good,All the best for your future endeviours.
Suresh Mansharamani
President
MovieMart
written by Pallavi Deshmukh, October 15, 2008
It is good to have a awareness articles on business as such. Online Movie Rental industry contributes to the media and entertainment industry in a big way. The current size of the industry stands at around Rs 1200 crore, where more than 50% of the DVD rental bsuiness is contributed by the rental business.
written by prerna, October 01, 2008
written by Ankit Verma, September 29, 2008
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