New Delhi/Chennai: Till four months ago, Divya Gosain, an avid Bollywood follower would catch up with the latest releases at the local multiplex or on DVDs. Now, the 26-year-old architect from Hyderabad finds herself going online for her Bollywood fix.
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Gosain’s destination of choice is YouTube’s Box Office channel. Four months after it launched, the channel has a catalogue of 1,500 films; the videos are free (the service is supported by ads).
Gosain may be an early adopter (the channel has been viewed 15 million times), but soon, say experts and executives in the home entertainment business, there will be a lot more like her. They, and impending radical changes in technology could alter the dynamics of the entertainment business, they add. And the first casualty could be the DVD.
The numbers tell the story. The market for DVDs declined 16% to Rs 520 crore in 2010 and will decline sharply to Rs 130 crore in 2015, according to the India Entertainment and Media Outlook 2011 compiled by audit and consulting firm PricewaterhouseCoopers.
The big challenge in greater online dissemination and consumption of movies is the underwhelming performance of India’s mobile, broadband services. While high-speed, third-generation (3G) mobile services are available in most of India’s big cities, they are incapable of supporting much more than the low-resolution video streamed by YouTube. That may change as phone companies boost 3G speeds in response to demand and broadband wireless access (BWA) enters the picture. In recent days, there’s been much talk about the ambitious BWA plans of one company that has acquired spectrum across the country to launch this service—Reliance Industries Ltd.
“The advent of true high-speed, mobile broadband is the breakthrough that could alter the landscape of Indian entertainment,” said Mudit Khosla, chief executive of Seventymm.com, an online home video rental service. “In the next 18-24 months we sense that things could actually be on the verge of change.”
That change could be rapid and ruthless, according to Raghav Anand, segment champion, new media, Ernst & Young Pvt. Ltd. “Some sectors are bound to become extinct, they are already on their last legs.”
Like the DVD. Once the networks for transmitting or streaming content are in place, it is only a matter of time before consumers with smartphones and tablets that are already capable of running HD video make the shift.
According to Harish Dayani, chief executive of entertainment division at Moser Baer India Ltd, one of the biggest makers of DVDs, most companies in the business have reduced their output by 75% in the last two years. Moser Baer itself produces 40% fewer DVDs than it used to. The physical format is rapidly being replaced by a digital one, said Dayani. Worse, in the case of many new releases, broadcasters and DTH (direct-to-home) companies are lining up to buy rights, he added, edging out DVDs.
The growing market for tablets that can play videos is also forcing a change—not just in the market but also in consumer behaviour. For instance, because of tablets, entertainment is becoming more a solitary pursuit than the social activity it was in the past, said Kamal Jain, chief financial officer of Eros International Media Ltd. Revenue from multiplexes will still be important, he added, but over time, people will increasingly move from DVDs and want to watch movies on personal devices.
India saw sales of 158,000 tablets in the nine months to June, according to a Cyber Media Research report. That number will soar with the launch of less expensive tablets in the Rs 7,000-15,000 range, the report added. And by 2014, most experts say that one in every phone sold in India will be a smartphone. Consulting firm Technopak estimates that by 2015, India will have 250 million Internet users.
Most firms are, in response, changing their business model.
Bigflix, a chain run by the Anil Ambani-led Reliance Group recently announced a partnership with Samsung India Electronics Pvt. Ltd and launched My Movies, a video-on-demand app on Samsung’s tablets. The app comes with 2,000 hours of video, including movies, trailers, music videos and TV shows. Bigflix hopes to use the app to attract subscribers to its video rental service.
Rohit Sharma, chief executive of Reliance Entertainment Pvt. Ltd (digital business) said that the company has “taken a conscious decision to focus online”. Sharma denied media reports about Bigflix closing half its 60 stores but admitted that most will eventually close because of the online shift.
This will partly mirror the kind of move that US-based Netflix Inc. has made, which started by mailing DVDs to customers and has been widening its services over the past few years to include streaming video.
Back in India, four-year-old Seventymm.com, which focused on online DVD rentals, is more of an e-commerce site today. Smaller chains such as Movie World, a DVD and VCD rental service in Chennai, have reduced the number of outlets from a dozen till about a year ago to two-three, according to owner Vivek S.
Meanwhile, Moser Baer is looking to partner with Amazon.com the world’s largest online retailer, which is all set to enter India in the next three months, for the sale of DVDs. Moser Baer has a library of 8,000 titles and continues to acquire content. It is also looking to sell in bulk to corporate customers.