Optical Media Solutions company Moser Baer's strategy to launch low-priced film DVDs (Rs 34) and VCDs (Rs 28) for the home video market is being viewed with scepticism by the entertainment sector, especially, the film production companies.
Most top executives of film production companies said that they would not like to sell rights of their films cheap. Managing director of a family-run film company said: "As an owner I won't sell my content for a low price. It is like devaluing my product." Added a senior executive of one of the biggest production houses in Mumbai: "Our content is priced at a premium. As content generators we might not consider lending our content to them."
Yet other film production houses raised issues about selling rights only to companies that "understand films rights business".
But such scepticism does not bother Moser Baer's Entertainment Business head Harish Dayani.
"We already have 5,000 titles in our fold whether it is a 1950 Raj Kapoor film or a 2005 Amitabh Bachchan film," he said. "In the next few months we will have the rights to nearly 50 per cent of all the filmed entertainment produced in India since 1940 across a host of languages," he claimed.
Sandeep Bhargava, CEO of Studio 18, CNBC's motion picture business, pointed out that home video rights to old films come cheap. "Home video rights for films are usually high during the first five years," he added.
Currently, the outright sales of the home video rights, usually for a period of five years, costs between Rs 2 crore to Rs 4 crore depending on the star cast and the film banner. Critics say that Moser Baer would need to sell a huge number of DVDs and VCDs at their price points to recover the cost.
Again, Dayani says that the company is looking at scale. "Our price points indicate that we want to sell filmed DVDs and VCDs like an FMCG product. We have already set up up our distribution system and our retail chain includes the paan shops and the small provision stores as well," he added.
Speaking to Business Standard, Rajjat Barjatya, MD, Rajshri Media, said in the short run, Moser Baer's pricing strategy may create a dent in the market.
"But in the long run it might not be able to sustain the business. With such low pricing, we wonder if there will be enough margin to share with the people in the value chain. What a member in the value chain would earn with a DVD costing Rs 200 won't be the same on a DVD now costing Rs 34. Also, just because a DVD is priced low, people wouldn't watch more films, the market size remains the same."
Agreed the head of another Mumbai-based DVD distribution company: "The success of such low pricing strategy hasn't worked in other markets."
Yet, M N Kapasi, MD Excel Home videos welcomed Moser Baer's entry into this market. "There is a vaccum in the VCD/DVD segment considering the industry is at an infancy stage in the country."
Agreed Mahesh Ramanathan: CEO, Percept Picture Company, whose Hanuman sold 2.5 lakh VCDs: "It is an attempt by Moser Baer to change the market dynamics. It is probably hitting out directly at the pirate home video market. We will watch out for its performance."
"Yes, it will address piracy too. At Rs 250 crore, home video market is a joke. Pirated VCD market is 8 to 10 times that number. I want the pirates to deal in legitimate products," said Dayani.