Seventymm, India’s Netflix?

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.

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