Mumbai, India (PressExposure) June 24, 2011 -- Reliance ADA Group-promoted online movie streaming and DVD rental service BigFlix is planning to shut 24 of its standalone retail outlets to reduce operational cost.
Currently, BigFlix has 33 retail outlets across Mumbai, Pune, Delhi, Bangalore, Chandigarh, Faridabad and Kolkata. Of these, nine are franchise outlets which will continue to be operational.
Reliance Entertainment is not closing its BigFlix retail outlets. We have discontinued operations in 24 standalone outlets across five cities. This is a strategic call to boost scalability and profitability of the business," said Manish Agarwal, COO, Reliance Entertainment.
The movie-rental company will now focus on setting up call centres with relationship managers where customers can call for DVDs. "Our customers will be able to continue to rent movies like before, but by connecting with the relationship managers through phone who will deliver the movies directly at the customers doorstep," said Agarwal. The company receives nearly 60 per cent of its revenues through online-platforms and the remaining through offline.
The company recently tied up with BhartiAirtel to launch online on-demand digital video service Airtel Movies, which would allow customers to access 500 movies along with 100 TV shows, 100 trailers and 100 music videos for Rs 229 per month on their computer, laptop or tablet.
According to entertainment industry officials, rolling out new standalone outlets and paying out huge rents can be expensive. " These businesses are generally plagued by several issues such as escalating realty costs, ever increasing fee for content acquisition and lack of logistical support. This will help them reduce the cost of operation substantially," said an industry official.
When Reliance Entertainment had ventured into movie rental business in 2007, it was rolled out with a combination of retail store, home delivery and online streaming. Typically, customer had two choices, opting either for a subscription model or paying as they walk in a store. The price points for the second choice range between Rs 40 and Rs 80 per DVD/VCD, depending on the language. The group had planned to invest around Rs 400 crore to open 500 across outlets 35-40 cities.
The subscription model had various membership plans depending on number of DVDs, which could be rented at a particular point.
The model was similar to the US video rental distribution network Blockbuster Inc. Incidentally, last year, Blockbuster had filed for bankruptcy as it failed to adapt its storefront model to online technology pioneered by rivals such as Netflix and Redbox.
The organised movie rental market in India is estimated to be around Rs 40 crore with Bigflix and Bangalore-based Seventymm having a national presence. But the industry faces several challenges due to online piracy and other emerging platforms like DTH.
"Even though, we try to offer better deals and discounts to customers through our platform, the availability of pirated movie content and new releases being premiered on television and DTH platforms within two months is making the scenario challenging," said a senior official from Seventymm.
According to this year's KPMG-Ficci Entertainment report, Dabangg had over 4.32 lakh downloads across five DTH players (Tata Sky, Reliance, Videocon, Tata Sky, Airtel and Dish).
Some of the latest films like Tanu Weds Manu, SaatKhoonMaaf and Patiala House, which have been shown on the DTH platform, have at least had 100,000 pay-per-view basis. These generally cost around Rs 50-75 per view depending on the movie. Sometimes in order to drive up volumes, the DTH providers even reduce the price to Rs 25 per view.