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Concept Arbitrage: Netflix

Posted on Friday, Jun 23rd 2006

I wrote an article last October about Netflix being a ripe Concept Arbitrage opportunity for India. Netflix itself has been going gangbusters, with 2006 revenues charted to hit $1 Billion. A PwC study forecasts: “Online subscription rentals, including DVD-by-mail and broadband delivery services, will grow from virtually nothing in 2002 to $3.62 billion in 2010, compared with the then-estimated $6.18 billion in-store rental market. ”

Meanwhile, Netflix has sued Blockbuster. Does that mean, everyone else who copies the concept will get sued? Do their patents protect them internationally?

Which brings us to the company SeventyMM, an online DVD-rental service a-la Netflix in Bangalore, that hopes to hit a $100M+ revenue run rate in 5 years, by expanding into all the major metros in India. Ambitious goals, obviously, but let’s say they can get a subscriber base at an average of $40 / year. They need 2.5 Million subscribers to make that number.

India’s target is to have 20 Million broadband subscribers by 2010, and 40 Million high-speed Internet subscribers. DVD Players came in at 4 Million in 2005, likely to grow rampantly at about 25%, will be about 10 M units in 2010. The market LOVES movies, and video rental, so far, has been a less than satisfactory experience in the brick-and-mortar format. Aggressive target, but may happen.

It is not that they don’t have competition. Catchflix and Clixflix are two. They don’t have major funding yet, but as the trends catch on, I am sure they will. SeventyMM, of course, has already raised $2M from DFJ, and is looking to raise a larger round soon.

Glad to see this concept starting to gain traction in India. I have so many film buff friends in Kolkata who would love to be able to access all the foreign films that I constantly talk about …

Hope not too many companies will get funded though, as it always happens in Silicon Valley, when a good concept starts to gain traction.

All the VCs follow the trend, and inevitably crash the segment!

From that perspective, it is a good thing that the number of VCs playing in India is still reasonably limited.

This segment is a part in the series : Concept Arbitrage

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[…] SeventyMM : Online Movie Rental (funded by DFJ) […]

Sramana Mitra on Strategy » Blog Archive » Concept Arbitrage: Preface Monday, June 26, 2006 at 8:20 PM PT

i am currently Seventymm.com member … must say they are doing a super job :o) good movie collection and on time movie delivery…. a must try for Bangaloriens …

Archana Wednesday, August 23, 2006 at 9:02 AM PT

[…] Concept Arbitrage : Electronic Arts Concept Arbitrage : Netflix Concept Arbitrage : Travelocity Concept Arbitrage : Match.com Concept Arbitrage : Juniper […]

Sramana Mitra on Strategy » Blog Archive » Concept Arbitrage : Summary Trends Thursday, October 26, 2006 at 5:58 PM PT

thank u for showing concern about movie buffs of kolkata.is there any such service here in kolkata.if no,then how can we start one?

babla Sunday, February 18, 2007 at 2:48 AM PT

(I’m just browsing through you concept arbitrage links and came across this)

SeventyMM does not have a wide collection of movies. They try to cater to the common tastes and thus have the popular movies. I suspect when a DVD releases, they’ll have to get a large number of copies as the demand will be high initially and then slowly subside as the movie becomes older. So they will end up with dead inventory.

They need to get out of this model and try and cater to the long tail as well like Netflix does.

(I’ve used both SeventyMM and Netflix.)

Umang Thursday, March 1, 2007 at 12:46 PM PT

Right you are. For a lot of film enthusiasts mainly in Kolkata, cinematic experiences are limited because of the unavailability of movies. I had been a member of Netflix for a year or so, and i wish we have a similar kind in kolkata…But then again there are some problem, we have to overcome

  1. Postal service in Kolkata is not that fast nor reliable. For this reason even, i guess people would be more interested if they have a near-by outlet to visit to.

  2. Internet consumers – a vast population of the film-lovers are old people who are least interested to experience the technical complications of internet.

anybody, any feasible solution? we badly need them, I was hated the fact the seventymm is not in kolkata!! what shit?? why should we be left alone??

Aproyojonio Sunday, August 26, 2007 at 10:47 PM PT

[…] April 28, 2008 Related Content Share/Send | No comments Check other articles in the series…I wrote about Seventymm two years back, as part of the Concept Arbitrage series. In this post, we will review how the company has progressed in the interim against its stated […]

Deal Radar 2008: Seventymm - Sramana Mitra on Strategy Monday, April 28, 2008 at 10:07 AM PT

[…] by Startups News in India, Sramana Mitra at 10:07 am. Skip down to comments or read the others. I wrote about Seventymm two years back, as part of the Concept Arbitrage series. In this post, we will review how the company has progressed in the interim against its stated […]

Deal Radar 2008: Seventymm | Indian Startups In News Tuesday, April 29, 2008 at 11:18 PM PT

I agree with Aproyojonio’s concern that old people are less lilely to try services such as SeventyMM. I believe a key way for internet companies in India to penetrate non-metro markets is providing services though phone. SeventyMM, however, would have another difficulty because its services involve postal/courier delivery aspect.

Shailesh Wednesday, November 4, 2009 at 10:36 AM PT

SeventyMM does not have a wide collection of movies. They try to cater to the common tastes and thus have the popular movies. I suspect when a DVD releases, they'll have to get a large number of copies as the demand will be high initially and then slowly subside as the movie becomes older. So they will end up with dead inventory.

shekhar Wednesday, October 19, 2011 at 2:14 AM PT