This is precisely where India’s Moser Baer, world’s second largest optical storage manufacturer, has stepped in with its content software. Recently, the Indian company opened its first retail outlet in Pondicherry, a two-hour drive away from Madras (Chennai), with about 100 movie titles on high quality CDs and DVDs in the Tamil language.
Over the next several months, Moser Baer plans to flood the market with 7,000 titles in major Indian languages, including Hindi. What makes it all attractive is the incredibly low pricing: Rs 28 for a VCD and Rs 34 for a DVD, and mind you, all legitimate, original and superb quality. Today, one has to spend at least Rs 300 for non-pirated content on a disk. Even the innumerable video libraries in India seldom charge less than Rs 50 for lending a DVD, and often these are poor camera prints.
But what is the secret behind Moser Baer’s rock-bottom prices? Moser Baer makes 10 million disks a day with the aid of a special, imported technology that ensures quality production at very high speeds, says Harish Dayani, CEO of the company’s Entertainment Division. A firm as large as this has “certain economies of scale in terms of its manufacturing costs, in terms of its ability to buy raw materials at a competitive price…Also Moser Baer has a patented proprietary expertise, which is not available to anybody else, and this also helps reduce costs”. Obviously, Moser Baer is looking at a pirated market that is very large, and has hence kept its profit margins quite low, hoping to make its money through sheer volumes.
However, Moser Baer will be able to make a real dent in piracy only when it is able to acquire the rights for newer movies. In India, the interval between a theatrical and video release is around three/four weeks, which is now the average run time for even favourite blockbusters in swanky multiplexes, whose number will go up from 120 screens to 400 next year.
Dayani does not see a conflict between home video and theatre. In the U.S., for example, the home entertainment segment has been growing around 10 per cent annually without eating into cinema attendance, and video now fetches a revenue that is half of theatre earnings. Madras’ large Satyam multiplex says that despite movies being available on disks, the attendance has been climbing.
On the contrary, plans like Baer’s will boost the home entertainment sector. There are 26 million DVD/VCD users in India, which is just a fourth of television users. Although a DVD/VCD player costs a fourth of a television set, not many buy a player because quality content is not available at affordable prices. Moser Baer hopes to change this.
(Posted on this website on February 1 2007)