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VC-backed Seventymm Focusing On Merchandising; DVD Biz On Backburner

20 September, 2011

Seventymm started in 2005 as an organised DVD rental service (à la Netflix) and raised $21.4 million in funding from venture capital firms Draper Fisher Jurvetson, Matrix Partners and NEA-Indo US Ventures. But the rampant piracy of DVDs, the lack of logistics infrastructure in India and the growing popularity of torrents (widely used for free movie downloads) resulted into low traction for its DVD rental model.

Although the firm has not shared previous revenue details, audited figures for the year ended March 2010 indicate that it had recorded sales of Rs 6.8 crore, as per VCCedge, the financial research platform of VCCircle.

A strategic change was, therefore, needed. Its competitor Reliance BIGFlix moved into online video streaming and so did Seventymm. But in February this year, the company swung into movie merchandising and launched a beta version of its e-commerce portal for Bollywood buffs. Today, over 50 per cent of the company’s revenues come from e-commerce and Seventymm is chasing a monthly revenue run rate of $1 million (Rs 4.8 crore), to be achieved by March 2012.

The Shift & The Growth

Seventymm evolved into a movie merchandise firm by keeping a finger on the pulse of its consumers and their demands. In fact, their feedback first led the company to launch DVD sales and the decision was validated when the third purchase on its site was for 52 DVDs in one single order.

Demand for movie-inspired apparel was also high and that led to the next move. According to Mudit Khosla, CEO of Seventymm, “We are identified as a cinema brand by our consumers. We asked them what else they would like to buy from us and they asked for movie merchandise.” That was how  was born.

The site is positioned as a movie merchandise store and it is targeting the $2 billion market in India, inclusive of DVDs and merchandise, says Khosla.

Seventymm partnered with Bollywood movies such as Band Baaja Baraat and Delhi Belly for DK Bose T-shirts. But observing the low availability of products, the company decided to move on to merchandising. It has set up a separate merchandising team and partnered with 40 vendors for manufacturing the goods. It now offers original T-shirts with Bollywood catchphrases like Mogambo khush hua or Abbey, ek du kya, as well as customised mugs and coasters.

Over 25 character licences for merchandise are owned by Seventymm and by September-end, the company will own manufacturing rights for 10 characters. The site has just begun the soft launch of RA.One movie merchandise and Spacetoon is next.

Bollywood Merchandising

Shop.Seventymm.com targets both adults and children with a wide range of offerings – right from designer clothes worn by actresses or mugs spotted in Zindagi Milegi Na Dobara with a message about life to Barbie or Doraemon T-shirts. The site has 16,000 SKUs in all and sells apparel and accessories (watches, jewellery and other merchandise), besides DVDs. It also plans to launch a fourth category for staged events.

The company is also using brand ambassadors to make the shopping portal more appealing. “We have noticed that Bollywood stars and brand ambassadors don’t connect with the products they are promoting when it comes to online shopping. Take Lavie, endorsed by Kareena Kapoor, or Toshiba, which signed Sachin Tendulkar as its brand ambassador for India. You don’t see the stars connecting with the brands when you go online or go to a store to buy those products,” says Khosla.

Shop.Seventymm.com also sells consumer electronics – home theatres, DVD players, music systems, cinema screens, LCD TVs, Plasma TVs and so on. Khosla claims that these products are also relevant to its movie theme. But this might also be a way to cash in on the e-commerce boom in consumer electronics space and compete with the likes of Letsbuy.com or Futurebazaar.com.

While the site is still evolving, the company claims a 2x monthly growth in turnover and ‘hundreds’ of daily transactions. However, Khosla would not share the specifics. The shopping site has more than six lakh active users, though, compared to its previous consumer base of five lakh for DVD rentals.

Also, more than 50 per cent of its revenues come from e-commerce. “The monthly revenue from Bollywood merchandising has already overtaken the DVD rental revenue generated per month,” details Khosla.

On The Cards

Currently, the company has operations in Delhi, Mumbai and Bangalore, and employs 200 people in these cities. With its own logistics personnel, the company hopes to cut down on costs and ensure that the 12-hour delivery deadline can be met. For the rest of India, it has partnered with courier companies and has no plans to hire the feet on the street (FOTS) for other cities.

Meanwhile, more categories and more tie-ups with movie production houses and license owners like Disney and Cartoon Network are in the works for the website. However, the company is not looking at fundraising yet, says Khosla.

DVD Rental: Paused, Not Discarded

Seventymm is waiting for Internet growth and online streaming to take off in India before returning to its DVD rental business. “We are ready. We understand the movie rental space very well and have relationships with Indian and Hollywood production houses. Even as we speak, we have thousands of videos on our site. So that stays and continues, but it is on the backburner right now,” says Khosla.

According to him, even in the USA, it was difficult to get customers until streaming took off. Content streaming through Roku (a gadget that allows you to stream videos to a television) or other set top boxes in India is at least 18-24 months away, he informs.

 


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VC-backed Seventymm Focusing On Merchandising; DVD Biz On Backburner

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