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Bollywood multiplex strike boosts DVD market

Bollywood multiplex strike boosts DVD market
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First Published: Wed, May 06 2009. 09 42 AM IST
Updated: Wed, May 06 2009. 09 42 AM IST
Mumbai: A boycott of multiplex cinemas by Bollywood producers has entered its second month, with no end in sight to the stand-off over shares in box office takings.
But as audiences dwindle to a trickle and with no new films being released, one section of India’s entertainment industry is taking full advantage -- the DVD and video rental market.
“People are flocking to us and business is good this summer,” said one DVD rental store owner in central Mumbai, asking not to be named. “I have ordered many more VCDs (video compact discs) and DVDs.
“This varies from foreign films to old Hindi films. People want to be entertained and the strike has come at the right time for us because it’s vacation time. Cartoons are a big hit among children on holiday.”
Sangram Patil, a general manager with the online DVD rental company Seventymm in Mumbai, agreed.
“The strike is working to our advantage as people are looking at other options for entertainment as they can’t go to see films in theatres,” he said.
The strike began on 4 April after producers in India’s Hindi-language film industry failed to resolve their differences with multiplex owners over their share of box office takings.
They are calling for a 50:50 split in revenues in line with practice in other countries, but the multiplex owners--who want a performance-based model--are unwilling to give up their current cut, which can be up to 60%.
According to some estimates, the strike has already cost the industry up to Rs500 million ($10 million), at a time when Bollywood is feeling the pinch from the global economic slowdown.
Compounding the misery for the multiplexes is the Indian Premier League (IPL) Twenty20 cricket tournament. Live matches on television coincide with many film screening schedules.
Indian media industry analysts said that the strike was benefiting the rental market which, unlike in the West, has yet to make a sizeable dent in cinema audience numbers.
The DVD market was estimated to be worth Rs8.6 billion in 2008 and is forecast to nearly double to Rs16 billion by 2013, according to a recent KPMG report on the Indian entertainment industry.
“The awareness among people for DVDs and the rental business was not that high until last year,” said Sheetal Malpani, a media analyst at Brics Securities in Mumbai.
“Organised players have moved in and are working in a big way so many people now know about this business. And the strike has benefited them this time.”
Corporate giant Reliance Anil Dhirubai Ambani Group’s bigflix.com has entered the market, as has CD and DVD maker Moser Baer, which has dominated the home entertainment industry for the past three years.
Each one offers a variety of rental packages at rates competitive with cinema prices.
“DVD sales are growing and are now on a par with music CD sales, but I think that is largely because of the fact that the cost of DVDs has come to a very low level,” said Mehmood Karmali, head of movie outlet Rhythm House in Mumbai.
Whether the rental market profits long-term from the strike, though, remains to be seen.
“Business has gone up for sure, but it is difficult to quantify at this moment,” said Rajesh Jain, head of information communication and entertainment at KPMG.
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First Published: Wed, May 06 2009. 09 42 AM IST