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June 17, 2010

BIGFlix Takes Franchise Route To 150 Stores By March 2011; Separates Streaming Site



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17th June 2010, Mumbai:

There appears to be a change in strategy for Reliance BIG Entertainment’s movie rentals and streaming business BIGFlix: a few days ago, the company announced that it is moving its online movie streaming business to a separate site, and now they’ve announced a franchise business model for expansion of the movie rental business.

At present, visitors to BIGFlix.com have to choose between entering the sub-site for the rentals and streaming ventures, certainly not your ideal landing page. So those who wish to view video streaming content will now have to visit www.MyBIGFlix.com for video-on-demand online. BIGFlix is substantiating

this move by quoting a KPMG researh report saying that on demand media will continue to grow, and wanting to create a ‘more personalized connect with users’ by adding playlists; BIGFlix claims 10 million

unique visitors month on month across the world, 5-6 million of them from India, with an average time

spend of 110 minutes per user per month.

 Internationally, in most parts of the world, the movie rental business is more so of an online version, where you can search, browse and read reviews (similar to NetFlix.com), you mail in the movies once you have watched them and then mail them back.

 We think BIGFlix should also rebrand what is now MyBIGFlix, and completely separate the subscription based movie rental business, and focusing more on the expansion of the subscription business, and sharing only one service (rental) at the main site BIGFlix.com. BIGFlix is taking the franchise route to

expanding operations from 9 cities with 60 stores, to as many as 150 stores in several Tier II cities, including Jaipur, Vadodara, Surat, Lucknow, Nasik, Jamshedpur, Kochi, Patna, Nagpur and Kanpur, among “many more”. They currently have 10 franchise stores in Mumbai, Pune, Delhi, Chandigarh,

Faridabad and Panipat and will “start operations once they have their respective logistics partners finalized for these cities.”

 

BIGFlix has targeted 150, 000 customers from their 150 stores by March 2011, up from 80,000 by March 2011. They’re following two models – Store franchise and Master franchise; in case of the former, anyone can set up a single store in a specific city, and the latter, an interested party can take a franchise of a set number of stores for a specific geographic location. Puneet Sachdeva is leading their franchise operations, and says in the release that 75-80% of their registrations come from the offline route.

 One of the BigFlix Stores is located at Thakur Village, Kandiwali. While understanding their franchise model, we understand that about 60% of their current customers still prefer to order movies online. The Franchisee will have no role to play if those customers will hail from that locality, and will hence lose out

that business. Secondly, it is yet to be seen, if customers prefer to rent movies from the store or online. Given a choice, with all the convenience and speed, online definitely seems to be a great choice.

 Some other parameters that would hurt the franchisee business are, disruptive innovation, a lot of downloads are now completely moving to the online space, thanks to Apple's iTunes Store. There are also several illegitimate ways of getting your movie, through pirated copies or unlawful downloads. India,

still has a reasonably strong amount of piracy, including the recent high profile incident. Also, companies like Moser Baer have been offering 3 Popular Movies for as little as Rs. 35 to 100, hence, making it difficult for people to consider renting a movie, instead of simply purchasing.

 How’s SeventyMM doing?