Moser Baer to enter home video market

NEW DELHI: There is good news for all movie buffs looking to enhance their DVD collection. The Rs 300-crore organised home video market is all set to witness a price war, what with news that Moser Baer, a big compact disc manufacturer, is all set to enter the home video market with film DVDs as low as Rs 50 through its recently set up entertainment division.

An industry heavily dependent on it’s distribution network speculates that such a move to cut costs to a rock bottom level is not the best business model to be deployed. The home video market, which is being touted as being the fastest growing business in the entertainment industry with a 30% year on year growth is slated to more than double in the next two years.

When contacted the head of Mumbai-based Moser Baer’s entertainment business, Harish Dayani, said that stepping up the volume game through price cuts was one of the various issues being delved with along with other options. “We are looking at various options and in another few weeks we should have our commercials in place,” says Moser Baer’s Dayani, former head of Saregama India’s films business.

Reacting to the strategy of employing rock bottom prices, one of the oldest players in the home video space, Atul Maru, joint managing director, Shemaroo, said, “We are deploying a wait and watch policy because such reduced prices in an organised retail scenario seems hard to justify.” Shemaroo, is banking on the growth factor and has increased its marketing spends to promote it’s offerings. “There was a time when we did not spend anything on marketing our releases but now the thumb rule is to spend around 10% of the acquisition cost of the home video rights on marketing the home video,” Maru added.

Another player in the home video business, Saregama India, feels that the move of slashing prices to an unrealistic level is not the right way ahead for the industry.

Comparing Moser Baer’s low pricing model to Rs 5 pricing by the cola companies which severely dented their bottomline, Subroto Chattapadhyay, MD of Saregama India says, “To give a wide variety of choice to consumers you need to acquire content and for that investments are needed. With bare-bone margins such a model seems flawed.” Saregama has a tie-up up with six big global studios such as MGM, Warner, Paramount and Universal and has set aside major investments to boost its distribution network and its marketing efforts. In fact, the company has been poaching marketing talent from the FMCG sector to build its sales team.

despite home videos amounting to only 10% of the total receipts currently from a movie in Bollywood unlike a whopping 35% in Hollywood, the slashing of hardware prices will catapult the category to a different level say industry players. “Since the physical sales of music has gone down dramatically it has been substituted by the home video business for producers and it will further grow with lower prices being introduced in the market,” says Navin Shah, CEO, P9 Integrated, the movie marketing of the Percept Group.

“There was a time when no marketing spends were warranted for a DVD release but now we have reached a phase where out of the total marketing budget assigned to a movie nearly 10-20% of its is being assigned to home video launches,” says BL Gupta, head-distribution, UTV.