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DVDs: Turning a niche market into a volumes game

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DVDs: Turning a niche market into a volumes game

Competition is rife in the digital video decoder (DVD) player market. What used to be until recently the snazzy entertainment gadget to a bunch of upwardly mobile families, is now increasingly a part of the middle-class household. DVD player manufacturers unanimously expect sales to double this year.

Three years ago, DVD players used to cost anywhere between Rs 17,000 to Rs 25,000. Today even high-end DVD players cost less than Rs 10,000 and lower-end ones, as low as Rs 4,000. Volume players like LG also expect the prices of entry-level DVD players to settle at about Rs 4,000 in six months.

Early this year Philips launched a top-open DVD player for Rs 4,990. Following that, most other companies slashed prices. Akai and Aiwa followed first by slashing prices by over Rs 2,000. The downward movement of prices has been in spurts. Just a year back a similar fully-loaded model cost Rs 9,000.

Today, Philips, Samsung and LG are leading players, selling between 20,000- 22,000 units a month each, followed by Sony, Akai, Aiwa, Onida and Videocon (the latter two are new entrants). Other brands available include Sharp and Thomson. Regional players like Beltek and Salora, are also making huge waves with competitive pricing.

Driven by volumes, companies expect to sell more than twice as many DVD players as they sold in 2003. Both LG and Samsung sold models starting at Rs 11,000 till last year. Today they are down to Rs 7,000. Based on the low price game, LG, which sold 21,000 players in calendar year 2003, thinks the market is expanding fast enough to facilitate sales of 50,000 units this year (priced between Rs 7,000-Rs 9,000).

Samsung India sold 20,000 DVD players last year, and is looking at pushing about 40,000 units this year, priced at about Rs 7,000. Panasonic India, which had two models of DVD player last year, has cut down to only one model this year. The company sold 6,500 DVD players last year, and is targeting about 12,000 units priced at Rs 7,990 this year. It is also shifting focus to a new high-end DVD recorder, which costs Rs 50,000

Regional players like Beltek and Salora, which played a significant role in enabling this market expansion, have also brought down prices tremendously. Says Beltek India vice-president and CEO RS Kandhari: “When we launched DVDs in December 2002 we had an introductory price of Rs 5,990. Today, because of immense competition, we have brought it down to Rs 3,990.” At a price level of Rs 6,990, Beltek sold only 200-300 units per month. Today it sells about ten times as much per month.

Adds Salora’s joint MD Gopal Jivarajka, “There is no comparison between prices that prevailed when we launched DVD players three years back, which were as high as Rs 18,000. Today we have two models—one selling at Rs 3,990 and the other at Rs 4,290 and there have been no change in features since then.”

So what about margins? “It’s not just the price cuts. Technological maturity and lowering of duties on components have resulted in reduced prices,” says Mr Jiwrajka. Industry sources also say that in China, DVD players are as inexpensive as $35 (Rs 1,700) and it makes sense to import from there and sell in the domestic market. Also, in the grey amrket assembled DVD players are available for prices as low as Rs 2,500.

DVD players have become popular also because software (primarily movies on DVD discs) prices have gone down. In the organised market, DVD software has come down by Rs 100 from Rs 350 to Rs 250. Besides, those on rent are available from anywhere between Rs 25 and Rs 100.

Based on these facts, the Consumer Electronic and TV Manufacturers Association (Cetma) is expecting the DVD market in the country to rise to 10 million DVD players in Indian homes by 2005.

Cetma’s secretary-general Suresh Khanna says the current volume is 70,000 to 1 lakh units a month. As much as half of this still comes from the grey market, but as organised prices fall further, the incentive to buy branded players will get a good push.

So does this trend means trouble for movie halls. Even while DT Cinemas director Kajal Aijaz may disagree by saying that this has not affected cinema going at all and that its mostly in old movies or repeat movies that DVDs are coming in handy, history may repeat itself. Time will tell.


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