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Cheap home movies: the death is nigh?


A year or so of the Indian home entertainment market going into disarray after Moser Baer’s (MB) price cuts, this TOI market report suggests that cheap home videos might be unprofitable after all, and we might relive the days of expensive VCDs (and I thought they were outdated!) and DVDs…

Regular readers of this blog might recall SpicyIP’s occasional references to the pricing strategy used by the optical disc major, and how its marketing tactics were not only a deterrent to piracy, but also forced competitors like T-Series and Shemaroo to drop their rates.

The market-watchers say: “prices for hit movies will stabilise at the Rs 400-500 mark and at around Rs 200 for a DVD and VCD, respectively. An average movie on the other hand will be priced at Rs 200-300 for a DVD and Rs 160-200 for a VCD.

Already, prices, including those of MB, have begun to rise. And the reasons are many. E.g., increased operational costs. Though MB CEO Harish Dayani categorically states: “We are very clear about our strategy and we will maintain our price-points. In fact, if there are any price revisions, it will be only due to factors outside the control of Moser Baer.”

Competition from TV, which brings movies to living rooms faster than you can say ‘yeh-kya-drama-chal-raha-hai’, is another factor. As a result, the spurt in sales-volume has not matched the cut in costs.

Most importantly perhaps is the manner of sale of home video rights, which TOI tells us, are sold for about Rs 1-1.5 crore on average, for a five-year stretch at a time, before being re-auctioned. Thus, any profit has to be made within this five-year stretch.

But one concern that the industry seems to have ignored in this discussion is – to drive the point down your throat – of piracy. If prices return to their original/close to their original rates, then one won’t be surprised if incidents of infringement remain as is, or rise up. (Otherwise, were the model to remain, the piracy market might have died a natural death.)

…Which got me thinking about similar strategies in other industries*: book publishing, for example, which predates the home video tale. Like in 2004, when Chetan Bhagat’s ‘Five Point Someone’ and Rupa set the cat among the pigeons with the paperback going at Rs 95. That did get a trend of sorts going as well, with several new authors, especially in the vanity publishing market, choosing to price down their books in order to capture the largest possible audience.

Now, logically, this seems to be an excellent tactic. Price it right, and the market will create itself. And of course, not forgetting that it’s probably cheaper to buy the book than to photocopy it (same anti-piracy logic). But a lot of people fail to understand the fundamental point of it all: films (and by extension, film music) and books are “entertainment” industries. There will be no takers for them if they are not well-made/well-written…

Could marketing play a role, and raise sales, then? Surely, to a point. But the power of web 2.0 and social networking has gone above and beyond what conventional lobbying and page 3 parties could do. (Some of you who are old/young enough 😀 might recall the Three Investigators Series, and Jupiter Jones’ unique sleuthing model – the Ghost-to-Ghost Hookup. Replace the telephone with the internet, and word spreads pretty much the same way these days!)

So, bottomline, was SpicyIP prematurely celebrating this new anti-piracy model? Has the Moser Baer pricing strategy failed? I don’t quite agree. At best, it has been used poorly. Maybe this model might still work if we see film producers selling home video discs themselves, by digging into their stash of “prior art” (heh), and thus, with lesser concern about profit margins. Indeed, the anti-piracy argument might be encouragement enough to do so?!

At the end of the day, if a book/movie is bad, it won’t sell. However cheap or expensive you price it. Even in the pirated market. Quality matters. Maybe the marketers/home entertainment players should keep that in mind when they pay a couple of crores for the home video rights of average or flop films (and according to the Indian box office, this is fairly common). And maybe some smart strategising, some incisive market-studies, and some intelligent investing will help keep the profits high and the prices low. And the customer happy.

* This argument does not hold for the pharmaceutical industry, where transposing this pricing model, or following a market-based differential pricing route, might actually work.

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4 comments.

  1. AvatarGenericIPguy

    A return to Moser Baer… 😉
    a) I personally do NOT think that we will see the rise of VCD/ DVD prices go back to 200/ 400 levels again, soon.

    Though I have not purchased VCD/ DVDs; I make it a point to rent them from libraries that stock only legal CDs.. and its worth it because the original Moser Baer CDs are of great quality.

    So, I agree with you.. the strategy has not clicked as yet as the execution has been partly flawed… they day we get VCDs/ DVDs at railway platforms/ small kirana stores… this will work.
    * The point about raliway plaftorms makes sense if you see that portable players with 7 inch screens are becoming available in India at a reasonable price [less than your 8 Gb Ipods!].

    Regards,
    Generic IP Guy

    Reply
  2. AvatarSumathi Chandrashekaran

    Hi Sandeep! Yes, we’re back to Moser Baer 😀

    I just re-read my post and realised it’s incredibly incoherent – thanks for having made some sense of it!

    I like the railway platform idea – we need an AH Wheeler for DVDs now! That would be a marketing-model tailor-made for India!

    But I pitch another idea across to you – I think optical disc storage is no longer de rigueur. This feeds off your info of 7-inch portable players being cheaper than mp3 players.

    I believe we’re going to go the TIVO way, and probably air-brush this generation of storage altogether (just like what happened to pagers). Instead, we’ll head straight for soft memory storage (probably downloadable – e.g., rajshri, etc – another pet subject), on in-built hard-drives. That is probably one reason why discs are cheap right now, because market-players realise that they will soon get redundant, and want to make the most of it while things last.

    If this is so, the implications for piracy are different, and solutions will have to be tweaked for that. E.g., technology overhaul – exponential increase in internet penetration; unlimited broadband; etc etc. I’m no tech-guru, but I think this is a very possible Indian reality…

    Reply
  3. AvatarGenericIPguy

    Taking your point forward, I think that there are 2 options – Optical storage and flash based storage devices… if you want to see movies.

    I would like to think that for the next 2-3 years, Optical storage would be the way to go since it can be re-used – from one device to another… like a book read by every one at home and then even by neighbours…

    I am not a big of soft storage in India yet… I have seen unbelievable stuff in Japan… but to think that we would get great speeds in India any time soon… 🙂

    Reply
  4. AvatarSumathi Chandrashekaran

    Hmm… Yes, it’s true – I’ve totally bought into this super-speed-wifi-state-of-existence theory 🙂 Bad idea! I seem to forget the state of affairs at home.

    Yes, I was thinking primarily of movies, and similar forms of entertainment.

    If portability is a criterion, then I’m more gung-ho about flash drives than optical discs. Also, it has storage size in its favour – I just read of a whopping 64 GB flashdrive – That’s more than what my laptop has!! Also less damage prone. Etc etc. The usual list of pros. So yes, I partly agree with you. 🙂

    But then (and there’s always a ‘but’… :D) this wouldn’t help the industry much, no? This would be way easier than the bad old days of magnetic tapes… Unless everyone begins to use in-built self-encrypting programs that get activated after x number of file transfers… But then there are cracks for that too. Nothing is impermeable…

    Ok, clueless rambling again. Shall stop.
    cheers
    sumathi

    PS: tks for good, though slightly off-topic, discussion 🙂 🙂

    Reply

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