Business - India;Q&A;BIG Music & Home Entertainment CEO

Gaurav Laghate

Anil Ambani is pushing hard the home video business to complete his presence in movie production, exhibition and broadcasting business.

Big Music and Home Entertainment is targeting a revenue of Rs 1 billion by the end of this fiscal. The company has signed up four big Hollywood studios - Warner Bros, Universal, Paramount and DreamWorks SKG - for home video distribution, controlling 60 per cent of Hollywood content. The content strategy is also to grab rights for big ticket Bollywood movies.

In an interview with Gaurav Laghate, Big Music and Home Entertainment CEO talks about the company's growth plans.

Excerpts:


Why is the home video market still to explode despite the entry of several players?
The home video market, which is a huge revenue spinner in developed markets, is yet to take off in India. In the US, this segment contributes to 55 per cent of the total filmed entertainment revenues.

In India, this figure is not even six to seven per cent. Due to several reasons including piracy, home video is a very small segment. India is purely a theatrical dominated movie market.


How does India shift to a strong home video market?
There are several issues which need to be addressed in a country where the pirated market is as high as 85 per cent. The distribution system is also largely music-driven - the music companies are also home video companies. We need to change this as the profile of the home video audience is different from the audio music buyers.

The hardware penetration of VCDs and DVDs is still not good. Home video companies also need to spend more money on marketing and distribution. This is beginning to happen and we will grow exponentially in the next few years. There are estimates that the Rs 8.3 billion market will grow to a size of Rs 15 billion by 2011-12.

There is also a much disorganised movie rental market which is again driven by a high level of piracy. Only recently large operators like Bigflix, Seventymm and Nimbus have come up. This is good news for the sector as we will have more organised players in the rental business.


Isn't Bollywood still dominating the home video business?
Bollywood and regional home video content garner around Rs 7 billion. The biggest player in the domestic market is Moser Baer, followed by Shemaroo and TSeries. In the Hollywood movie front, which fetches Rs 1.3 billion, we have rights to 60 per cent of the content.


Will the home video market benefit from increased competition?
The market will expand as more organised players step in. The focus will be on better distribution, marketing and packaging.

So far, the video market has not been handled in an organised way. There was a 16-18 week window between the theatrical and home video release of a movie. Obviously, that window is shrinking now and consumers are getting to watch films through the home video chain much earlier.

There is also better and more filmed content coming in as movie production companies are scaling up. The content availability on home video will, thus, be more.


With prices dropping to the bottom of the pit, are businesses becoming unviable?
Every company has its own business model. For Moser Baer, it makes sense to compete at low prices because they have a DVD manufacturing plant.

Reliance also believes in mass distribution at a good and affordable price. Our strategy is to have various segments of content. We believe in premium content.

For Hollywood content distribution in India, we have partnered with four studios -
Warner Bros, Paramount, DreamWorks SKG and Universal. We have acquired rights of Ironman, Hulk, Babe, Indiana Jones, Kung Fu Panda, The Dark Knight, Sex and the City, Mama Mia, among others. We are launching these films by January.

We believe in creating or acquiring content which is premium, then localising it, and selling it at an affordable price. Indiana Jones in English, for example, will be sold with great packaging, value-added content and at a price which the target audience will not mind to pay.

We will release the dubbed version in different languages - Hindi, Tamil, Telugu and Malayalam. The pricing will be around one-third of the English version content.

We want to disrupt the market with our content, distribution and aggressive marketing. We will be promoting home video content as if we are marketing the film. We will not just be playing the pricing game. Pricing doesn't drive the business, quality does.


'We are looking at a turnover of Rs 1 billion by the end of this fiscal. About Rs 700 million will come from home video'


Will you have a differential pricing model?
Yes, this is a global practice. During launch, you will have a certain price; you will bring this down three weeks down the line. Welcome was initially priced at Rs 149 per DVD, and later we brought it down to Rs 49.


What kind of promotions are you planning?
It will be related to the size of the product. Today in home video, there is hardly any promotional spend. We are going to market this through TV, print, internet, out-of-home, on-ground and FM radio. We are taking a 360-degree approach.


You have signed licensing deals with four major studios which were with Saregama. You also were a part of Saregama at that time…
Reliance is a huge brand in India and outside. It is because of this that we got to ink these deals. We will also be pitching for Fox and Disney once their contract gets over with Excel.


Do you have given a minimum guarantee (MG) or revenue share arrangement with the studios?
We have given a MG to the studios. A certain part of it is also on an agreed revenue share proportion.


How much will the home video segment contribute to Big Music and Home Entertainment?
We are looking at a turnover of Rs 1 billion by the end of this fiscal. About Rs 700 million will come from home video, while music labels will contribute Rs 300 million. As ours is more of a new content company, 50 per cent of our music sales will be in digital (mainly mobile) form.

We have Big Music, Big Home Video, Big Talent, and Big Music Publishing under the same company.

The business model of Big Music Publishing will be announced soon while we have already rolled out Big Talent.


What is the size of the music industry?
The music industry is pegged at Rs 9 billion, of which Rs 6.5 billion still comes from physical sales while Rs 2.5 billion comes from digital sales.

Piracy is hurting digital sales with file sharing, iPods etc. There is also leakage as the licensing business is not yet formalised.



What is the content strategy for the company?
We plan to acquire 40-50 per cent of the top ten films of Bollywood every year. We have acquired Welcome, Jodhaa Akbar, Singh is Kinng and Rock On.

So far as music goes, Bollywood would still be the driver content. The new model which we are working on is artist management - we work with them not just on the music, but also build them as brands. We have signed Hard Kaur not only for albums and films; she will also be with us for live performances, events, brand endorsements, appearances on TV and radio.

As a group, we can drive on the synergies. We can put an artist on Big FM or on our TV channels when they roll out. We also have Reliance mobile, Zapak and Big Pictures where we can promote them.