Few takers for Moser's offer

http://www.business-standard.com/common/storypage.php?leftnm=lmnu9&subLeft=&autono=268953&tab=r

Few takers for Moser's offer

Shuchi Bansal & Aminah Sheikh / Mumbai December 23, 2006



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.


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