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.