Just to take off from what Sahad has posted about Moser Baer entering the Home Video Entertainment space, I think there are some points that need to be considered:
One way of looking at Moser Baer offering Hindi Movie DVDs at Rs.38 is that they have the movie pirates running for cover. The pricing is much lower than the expected Rs.50 per DVD. The reduction in cost is largely attributed to synergies between Moser Baer’s CD/DVD production business and the Home Video business.
On the flip side, lets just look at the various stakeholders: do these prices justify distribution and retailing costs? What kind of margins are they getting? At the point of purchase, will a mom-and-pop retailer (if they are indeed in Moser Baers scheme of things) get better margins from a pirate, or Moser Baer?
Also, when a consumer buys a DVD off the shelf, there are certain expectations of the packaging and the quality of the disk. When rented or bought off a pirate – those expectations are lowered drastically.
I’m also not sure if pirates will be affected much by this move – people buy or rent pirated disks, mostly, of the latest films, a day or two before or after the theatrical release. Unless the Home Video and theatrical release are simultaneous, the pirates will remain in business.
The online DVD rental companies, however, will have to rethink their business plans now. They average at around Rs.50 a rental, and delivery often a day after the order is placed.
I think the growth of organized retail will drive Moser Baer’s DVD sales, and they will largely be impulse purchases. The popular titles could also stocked close to the checkout lane next to chewing gum and razors.
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