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Summary:

This could be pretty big in movie-mad India. By the end of next year, India’s Seventymm, an online movie rental and delivery service like Netflix, could become the country’s first national DVD rental company—online or brick-and-mortar. That’s right, folks, we’re skipping Blockbuster and getting our own […]

This could be pretty big in movie-mad India. By the end of next year, India’s Seventymm, an online movie rental and delivery service like Netflix, could become the country’s first national DVD rental company—online or brick-and-mortar. That’s right, folks, we’re skipping Blockbuster and getting our own Netflix.

Seventymm is already up and running in Bangalore and Delhi. And thanks to a $7 million infusion from venture firm Matrix Partners India, announced earlier this week, it will start in Mumbai by the end of this year, in Kolkata and Hyderabad by the first quarter of 2007, and in second-tier cities, of the size of Kanpur and Chandigarh, by the end of 2007.

Also by the end of this year, Seventymm plans to extend service so customers can order movies by sending messages through their mobile phones and not just on the Internet, which could connect them to a wider customer base. (They are still tinkering with how best to do this.) Because the words reliable and Indian Postal Service do not belong in the same sentence, Seventymm and its smaller competitors have Indianised the Netflix model and use couriers to deliver movies.

To be sure, Seventymm has some way to go. The conditions in India, where hundreds of DVD/VCD vendors deliver and consumers like to watch pirated copies of films while they’re still in theaters, may make the NetFlix model more difficult to sell. And there are some problems with the Web site’s user interface, such as a weak search engine and a design that forces you to click through a lot of pages as you select movies — a painful process if your connection is slow.

But there are good reasons to believe consumers will bite. A majority of the pirated prints provided by local shops have audio or picture problems, which is annoying even though you don’t wind up paying for the rental. Perhaps more importantly, most local shops have a selection that’s limited to current films in Hindi and/or the dominant local language and a few English blockbusters. So, for me at least, its goodbye to my DVDwallah who is always offering to send me “solid action adventure” movies starring Jean Claude Van Damme or “bahut (very) funny comedies,” of the ilk of ‘Dumb and Dumberer.’ This guy also never seems to have older movies at hand (they are always in some mythical godown). Ta Ta also to bad prints and late fees.

Seventymm hopes to have a million customers and revenue of $100 million by 2011. Matrix Partners India’s Rishi Navani (now on the Seventymm board) says he expects each center (centers being cities) to be cash-flow breakeven 18 months from the time it begins operations.

And Seventymm is making some progress. In Net-savvy Bangalore, it has attracted 7500 customers in six months. India has 18 million Internet users according to ComScore Networks, while the Internet and Mobile Association of India says the country has 37 million users (including usage in offices and cyber cafes). By 2010, as many as 50 million households, up from around 12 million currently, are expected to have DVD players. (Many more households have VCD players.) That’s the opportunity first spotted by Draper Fisher Jurvetson, which provided Seventymm the initial investment of $2 million last November, and now Matrix Partners India. “We looked at all the players out there in this business and we picked Raghav Kher’s and his team’s because we have complete confidence in it,” Rishi Navani told gigaom. Matrix Partners India has likely taken a 20-30 percent stake in Seventymm.

Founded by Microsoft alum Raghav Kher (who in the past has co-founded imandi.com and Rendition Networks), Seventymm isn’t the first or only such service of its kind in India—ClixFlix in Mumbai is likely the oldest and there are others like Catchflix and Fridayboxoffice in Bangalore and HomeView in Delhi. But already it’s the biggest and arguably more popular than its competitors in Delhi and Bangalore. It has a library of 10,000 movies in English and Hindi, but also in seven other Indian languages and that really sets it apart from its competitors. Most of the world knows only about Hindi-language Bollywood films but there’s loads of (and often much better) movies made in other Indian languages. It also seems to be the best deal money-wise for consumers. (Uzanto’s Amit Ranjan has listed the schemes offered by the various players on his Webyantra blog)

Kher stresses that he is in the entertainment distribution business and so in three to five years’ time by when (hopefully) there will be a lot more broadband connections, Seventymm will move to digital delivery across platforms. (Just like Netflix says.) “Our long-term vision is any movie, any time, anywhere,” Kher told gigaom. “Then no more delivery boys. But right now broadband penetration is too low and we don’t see it as being viable.” He’s right about that.

The lessons Kher learned from the failure of imandi.com (an online auction site that matched consumers with painters, plumbers and other service providers) have helped make Seventymm a cut above the rest. Kher says. “When we started imandi we didn’t ask merchants how much will you pay for this service? We should have.” Now, Kher says, he reads every customer email to the company.

When I told him I signed up a few days ago and had my first two DVDs delivered promptly he was noncommittal. But when I said the site could use lots of improvements, he was positively ecstatic (“That’s what I’m looking for!”) and urged me to email him a list of suggestions right away. I did.

By Shailaja Neelakantan

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  1. Will they rent legit DVDs or the crap VCDs that pass for DVDs in most of India? Would be interesting to see how they deal with the Piracy issue on the rented DVDs.

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  2. hi there,

    “Would be interesting to see how they deal with the Piracy issue on the rented DVDs.”

    well, as long as they are distributing legal DVDs, they should NOT care if someone is copying from those DVDs — atleast, they should NOT be held responsible for that.

    Not sure if they can detect who made the copy( I could think of a scheme where they send Rewritable DVDs — each client will get a small change version) so that if the market is inundated with pirated copies of the DVDs, they know who to point the finger at!), though?

    BR,
    ~A

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  3. All these “me too” services, copying american business models will fall flat in India. Look at the cost, only 4 movies per month at rs.200 and rs.500 for signing up ? Most of the DVD renters are two block away from an high rise apartment and charge 1/3rd. on can walk down and pick up the dvd …its not like you have to drive 5 miles to reach a blockbuster. Feel sorry for the investors who are mislead by these “usage figures” without know the ground realities.

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  4. How many people is going to pay 549/- for unlimited dvd/vcd per month in India???

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  5. 70mm, clixflix.com, catchflix.com, homeview.in …I’ll be happy to see these ventures succeed but the ground reality is it is going to difficult, infact extremely difficult. When people can rent a quality DVD (now don’t ask me if it is pirated, the quality is good and that is what matters) in the store around the corner that costs them far less, why wait for a movie to arrive by mail/courier; speaking of which it is also a nighmare to setup a smooth distribution process.

    These days there literally are video rental stores at every street corner across the nation. What percentage would really bother about switching paths? Importantly, are these video store owners going to sit quiet without devising better options?

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  6. Their rentals and sign up are VERY EXPENSIVE. We can buy original telugu VCDs and telugu DVDs for just 40 Rs and 99 Rs in bangalore at stores like planet M. Who will pay them 500 Rs rent per month!!!

    seventymm seems to be looking at english langauge audience mainly, but over here hindi, telugu, tamil, kannada have more demand.

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  7. It won’t be easy for seventymm to grow in dvd rental market due to competition with small rental places that can be found everywhere.

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  8. What about this concept? It has a better chance of suceeding because it emphasises 24/7 sale/rent, movies at your doorstep (it could be in your building’s lobby) PLUS you can preview the movie before you rent it and FINALLY it has online bookings via a live connection to the machine. Either way, anything is worth trying out in India but I think you should start small and then grow. Major launches or lofty business plans can fail altogether if you don’t adjust to the market conditions. What say?

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  9. Why did Netflix gain popularity in US? My guess is Netflix charging $9.99 per month was a good deal against Blockbuster charging $4.32 per movie rental. If you want to buy DVDs, you need to spend anywhere from $9.99 to $29.99 for 1 movie. Then large number of American households have a broadband connection and browsing/making their wish list on Netflix is easy. Americans busy lifestyle and lack of servants at home means they have lesser time to drive few miles to Blockbuster to pick up and drop DVDs.

    In India, the rental guy just like the grocery wala or even magazine wala (in Delhi at least where you pay Rs.50 and a guy brings several magazines to your house and you keep 3 at a time) will deliver VCDs to your house. You can buy VCDs for Rs.100-150. Most of internet connections don’t work and its only younger generation or techies who seem to be comfortable. Indians have plenty of help available to return VCDs/DVDs.

    I agree that these “me too” services don’t necessarily need to be copied from US to India. Startups need to generate more localized, relevant, and original ideas.

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  10. It is not just these Netflix-clones, but potentially even the Video on Demand / IPTV folks that may not make the cut because none of them can match the convinience of calling the neighborhood DVD rental store and getting your stuff delivered right to your doorstep(atleast I can speak for Mumbai). And what’s more, these folks also come and pick the DVD up on the next day

    Beat that !

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