Online DVD Rentals – an unclear road ahead

The online DVD rental business in India is still at a nascent stage but is attracting big players, funding and consolidation activity. The business is attracting interest on count of various factors like a proven viable revenue model, good market demand and convenience.

The oldest Indian player in this space, Bangalore–based Seventymm, having 25,000 subscribers across 5 cities has acquired Delhi-based Madhouse.in, making it the biggest in India. Madhouse has previously received funding of Rs 1.05 crore from private investors while Seventymm received Rs. 42 crores in 2 rounds.

The online DVD rental market is expected to grow to Rs 2,000 crore by 2010, and as such has attracted big players such as ADAG’s Bigflicks.com, Nimbus and Moser Baer. Other players in this field which are mostly self-funded are - clikflix.com, catchflix.com, CineSprite.com, fridayboxoffice.com, Homeview.in and moviemart.com. But none of them have a national footprint and are limited to select metro cities.

With Moser Baer and T-Series launching dirt cheap DVD, the services may face hard times, as consumers may prefer owning rather than renting DVD. Also, with the rampant pirated DVD market, reducing bandwidth prices, mobile population and growing multiplex culture, these ventures will find it difficult to break even.

So, the future holds good only for big players with deep pockets and the market would see a round of consolidation and shakeout. And in the competition, companies providing more titles, better deals, better DVD quality, timely deliveries and pickup (quality of service), better promotional and marketing campaigns would eventually turnout to be the survivor.