India is going DVD crazy

This morning with my first cup of Chai (the real thing and not the stuff Starbucks sells) I was scanning the papers when I came across an article about the booming sales of DVD players in India. I read it with interest – it was great on numbers but sketchy on details. Intrigued, and with a little bit time on my hands I headed towards Lajpat Rai market, which sits bang across the fabled Red Fort. It is one of Asia’s largest electronics marts.

In the Old Delhi section where mangly dogs, rickshaws compete for space on the road with sky-high piles of television and fancy Mercedes Benz cars, Lajpat Rai market, is the unofficial training ground for all geeks. As a kid I would go there to buy cheap components to build an amplifier and a speaker system that used earthen pots for acoustics. (Please don’t ask what I was thinking!) It is like the Akihabara electronics district in Tokyo, or Techno-mart in Seoul.

Anyway this sprawling market has not changed much, and perhaps will never change. Except there are more products on the shelves. Most men cannot speak proper Hindi, but can throw out stats about a microcontroller with the same ease Peter Gammons spews out BaseBall stats. Here any and every part is available. Anyway the story this morning said that there were DVD kits which were being sold like bananas in a bazaar. And it was true. There were buyers from the hinterland buying the DVD kits which are mostly no-name chinese products by the dozens. The average price is around $40 and the profit for those who assemble these kits is about $8 a DVD player. Talk about decent margins, and the best part is that most of these players are able to play-back, all region discs.

“I assemble 500 DVD players a month. But there is demand for 1,000 from my unit,” says a North Delhi manufacturer, who works on his terrace. “I make a profit of Rs 500 on each piece.” The sharp fall in tags of DVD players beat any consumer electronic product in recent times. While non-branded DVD players are available for Rs 2,000, a branded one retails at slightly over double.

Phillips sells some models for around $100 but others like Samsung have DVD players that range from $60-to-$125. They are strange looking boxes, many of them, especially the white label ones. The white label ones are targeted at rural buyers. I am assuming these products are well built.

“Cracking the rural market is easier said than done,” says Godrej’s Ghatak. Adds an industry observer, “The rural market will not be about pricing but about how the customer is serviced and treated. If one consumer is not happy, the entire village will know and the company can then kiss that market goodbye.” (Rediff.com)

The booming DVD sales are no surprise. The movies here are next to religion in favorite past time. Original movies sell for about $10 and pirated ones sell for around $2 a movie. With Indians being Bollywood crazy and nearly 600 movies coming out every year, it is no surprise. Actually not many know this but world’s largest DISC maker Moser Baer is based on the outskirts of Delhi.

“Software prices may fall to Rs 50. VCD software is drying up as prices have bottomed to Rs 30,” says a Palika Bazaar dealer. Big studios in India maintain that revenues from DVD sales will soon equal that of collections at theatres. While data is not available for India, the trend is visible in the US. (ToI)

So how big could the market get? I scrounged around the web and came up with this report.

The Consumer Electronics and TV Manufacturers Association (CETMA) is expecting the DVD market in the country to rise to a staggering 10 million by the year 2005, according to its President, Mr Rajeev Karwal. “CETMA has set a target of 10 million DVD players in Indian homes by 2005. We expect the Indian consumer electronics industry to export DVD players to other countries as well,” Mr Karwal said in a statement on Thursday. “India has excellent manufacturing facilities and consumer spending is indicative of a good response if good quality DVD players are made available to the consumers at affordable prices,” he said. (Business Line)

Final thoughts – it was brilliant trip down the memory lane, and it prompted me to look at the consumer electronics industry without the rose tinted eyes of someone from the West. I think the trip to LRMarket convinced me that the Indians will buy products that are cheap and good. I think that is one reason Sony is such a non-brand when it comes to mass consumption. In case you were wondering if that last statement is true about India competing with China for DVD business. I saw what I saw and I have no doubt about it. Anyway if you are wondering why no photos – well the camera has lost charge, and I forgot the charger in US. And I must bought a new one – it cost me $2.50. More photos coming up soon.

Next edition: Adventures in outsourcing land.


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