The Indian video rental market is an attractive market. Upwardly mobile households are purchasing DVD players (whose prices are falling all the time), and the video rental market is highly fragmented. Pirated videos that you can purchase for less than a dollar are still a problem ... but the hope is that in the long run, the pirated DVD market will shrink or at least get marginalized. The market size of the video rental market is estimated at about Rs. 700 crores (say $ 140 Million) and is set to grow at over 10% every year for the next many years.
So it's hardly surprising that several players are attempting to create the Netflix.com of India. And the business that succeeds in becoming market leader will definitely be a star business.
We have two contenders in this market - BigFlix.com (owned by Anil Ambani - one of India's richest men) and Seventymm.com - which is very well financed by brand name venture capitalists.
I personally believe that BigFlix.com (which is already said to be growing at 15 to 20% per month) will succeed in becoming a star business due to the following reasons:
1. BigFlix has much deeper pockets given the financial muscle of Anil Ambani.
2. Big Flix is part of a larger business plan and includes Big Pictures which is a movie production company producing several, very successful Bollywood movies. While the market generally rewards specialists, in this case, it may actually punish the specialist - SeventyMM - because several movies may exclusively be made available only through BigFlix.
3. Big Flix has taken the effort to create physical presence in malls across many Indian cities. I personally heard about the SeventyMM service first but I signed up for the Big Flix service in a mall. Even though I'm quite Internet savvy, I chose to walk up to a physical store and sign-up for the service. However, now that I've signed-up, I have started using the service using cellphone SMS and my computer. I suspect a number of users will be like me.
4. Big Flix has a much cleaner home page. I believe that this is crucial. If you look at the SeventyMM.com home page, you will see too many calls to action, with enticements for you to click on the latest thriller, book movie tickets online through the site etc. However, if you look at the home page of BigFlix, you will see only two calls to action. One is for movie download and the other is for movie rental. So I believe that the BigFlix.com site is way more focused than the SeventyMM site.
5. Big Flix also appears to have positioned itself for a future where people may simply download movies onto their hard-drives. It has already started offering this service thereby gaining valuable experience, skills and competencies in the on-demand video rental market.
So my bet is that Big Flix becomes a star business and Seventy MM becomes a question mark with investors having to make hard-choices about whether they need to further put money into the business, change some aspects of the business to differentiate Seventy MM sufficiently from Big Flix or sell the business. Given that the investors are smart, it is likely that they will find a worthy (and fool-hardy) suitor who will acquire SeventyMM and take over the challenge.
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