Market Insight

Indian online rental leader drops DVD in favour of streaming

November 23, 2011


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BigFlix.com, which claimed to be India's largest online DVD rental subscription service, has stopped offering DVDs with immediate effect, instead offering its subscribers unlimited streaming of films from its 1,000-strong catalogue for Rs 249 per month ($4.80).The company, whose catalogue is almost entirely composed of Bollywood titles and those in other Indian languages, accepts subscribers from anywhere in the world, although it does warn that 'due to distribution rights of videos [their playback] may be disallowed ... in certain countries or region.' From 7 December BigFlix will also offer a premium services, BigFlix+, offering 500-plus titles in high definition; no pricing details have yet been released.

BigFlix, part of Indian conglomerate Reliance Entertainment, recently unveiled a video on demand movie app for Samsung's Galaxy mobiles phones, which it says will be extended on to other Samsung connected devices, including tablets, at a later stage. 

Formed in 2008, BigFlix was one of a handful of online DVD rental companies operating in India; a difficult market with a massive counterfeiting problem. BigFlix circumvented the logics problems inherent in a country the size of India by delivering DVDs to subscribers by bicycle courier. While by no means an unusual strategy in India, this did mean that, like those of its rivals, the company's consumer base for physical rental was always going to be limited to urban areas.

BigFlix's decision to abandon the physical rental service appears to have taken its subscribers by surprise and we understand that it has generated widespread customer dissatisfaction. The company has apparently offered subscribers who do not seek a refund on their membership fees a package of 25 DVDs, presumably from its now-redundant inventory, supporting the theory that the decision reflects the failure of the company to make the online DVD rental model pay. Separately SeventyMM, another relatively high profile online rental company which is backed by VC funding from Draper Fisher Jurvetson and Indo US Venture Partners (IUVP), has shifted its focus away from DVD rental (although it still offers this) to encompass the retail sale of DVDs and a wide range of other film-related merchandise. According to local reports, by September 2011, over half of SeventyMM's revenues came from e-commerce rather than subscription rental.

Given the logistical and economic challenges facing the distribution of physical discs in India, it is not surprising that BigFlix considers movie streaming to be a more viable model for India, especially in view of Netflix's decision to expand internationally through streaming-only services. According to IHS Screen Digest research, less than 10% of Indian households are expected to have Internet access by end 2011, with fewer than 5% having a broadband connection. Given the sheer size of the country, however, this still equates to an installed base of 11.7m broadband homes. However, Indian broadband consumer packages continue to be both expensive and subject to fair usage caps. Broadband speeds are also lagging development in many other markets with universal availability of 4mbps speeds, even in urban areas, still some way away.

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