The online DVD rental business in India is on the verge of taking off. Here are four reasons why I think so. Firstly, unlike most other web businesses, this has a clearly defined (and proven) revenue model, the bugbear of the internet economy. Secondly, the blueprint for a viable service model has been provided by the immensely successful Netflix, so you don’t need to reinvent the wheel. Thirdly, with cinema in India being the ‘opium of the masses’, there’s no dearth of market demand. And finally, as the success of online railway ticketing shows, Indian internet users are likely to switch online, if the service makes for real convenience. What is needed is somebody, who can think big and execute really well to take the first mover advantage.

A clutch of websites in Bangalore, Mumbai & Delhi are the first ones off the blocks. All of them have commenced operations recently, so its premature at this stage to pass verdicts on their progress. However, none of these sites has a national footprint currently. Obviously, they want to first demonstrate that the model works locally (in their respective cities) before expanding countrywide.

There are other challenges as well that these sites face. Introductory pricing for renting the DVDs don’t seem to be near the levels needed for mass market penetration. But if they can provide efficient service, I am sure the early adopters (likely to be less price sensitive) won’t complain. Efficient shipping facilities (delivery & pickup through couriers) are a prerequisite for the success of this business. While irctc.com has demonstrated that this is possible in India with paper tickets, it remains to be replicated with breakable, scratch sensitive DVDs. Moreover, a true national level scale up will require substantial financial muscles, for this is a resource intensive business. On one hand, you need to tie up with movie distributors and pay hefty license fees, and on the other hand, set up a efficient supply chain nationally.

So what is their basic service model like? You can browse the catalogues online and place rent orders for a pre-specified maximum number of concurrently rented DVDs. The same is delivered by courier subject to availability. You can set up a queue for DVDs not currently available in stock. And there’s nothing like a ‘late fee’. Something the Indians sites are offering (which Netflix doesn’t) is the order-by-phone facility. While this is ostensibly, to give a ‘Indianised’ personal touch, it also indicates a certain nervousness on part of the sites about a completely online model. And the DVDs are likely to be genuine and hence much better in quality than the pirated CDs/DVDs that your neighborhood library serves you.

Here’s the bunch of sites that are racing against each other to be the Indian Netflix…

SeventyMM (Bangalore)– this startup has commenced operations in March this year. It has raised Rs 100MN in seed funding from Draper Fischer and is unarguably, the best positioned amongst the current lot, to scale operations nationally. At present, it covers only Bangalore. It offers 10,000 titles in nine Indian languages (including English). Monthly rentals are reasonable- Rs 199 for 4 DVDs or Rs 549 for unlimited nos.. At the time of joining, customers have to pay a registration fee of Rs 500 and a refundable deposit of Rs 1000 (I hope they phase out these charges with time). SeventyMM has ambitious plans to scale up to revenues of Rs 500 crores and 10 lac customers by 2010. Something that adds credibility to its plans is that, it has Eric Mayer, one of the co-founders of Netflix on its advisory panels.


CatchFlix (Bangalore)– this site started off in May this year. Instead of a monthly rental, they charge Rs 99 per DVD for 3 days (no deposits required). It has mainly English & Hindi titles to choose from.


HomeView (Delhi/NCR)– this website operates in the NCR region; they have a monthly plan for Rs 999 where you can rent unlimited DVDs a month (but one at a time).


ClixFlix (Mumbai)– this site actually has been around since Oct,04 which makes it India’s first DVD rental site. It covers the whole of Mumbai and has 7000 members. It offers a choice of 6000 titles and its monthly charges are Rs 399 for 6 DVDs or Rs 799 for unlimited nos.

Two weeks ago, I had profiled Wallet365, the ‘E-Wallet’ launched by the Times of India group, expressing my skepticism about TOI’s ability to make a success out of this. It seems that TOI has been saved the blushes by the Reserve Bank of India.

For, the RBI has banned electronic purse schemes being run by non-banking institutions as per this report. While the report does not specifically name Wallet365, its not difficult to add two and two together and make sense out of this. The report however, does not seek to explain the rationale behind RBI’s move.

Not sure, if this can be termed a retrograde step for the fledgling Indian internet economy.