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 goals.
Seventymm was founded by Raghav Kher in Bangalore, India, in 2005. It started out as India’s first online movie rental company and has now grown to include a space online where movie buffs can hangout and discuss movies, rate them, start a club or just write review movies. The company offers access to over 15,000 movies in 14 languages. Movie enthusiasts can enjoy an original print of their favorite movie at home, at a low cost, without the hassle of pick-ups and drop-offs. Seventymm started operations in Bangalore and is now available in six cities across India, with an aim to cover several more cities in a couple of years.
The company raised $2 million in November 2005 from Draper Fisher Jurvetson and in 2006 they received their second round of financing of over $7 million from Matrix Partners. As discussed in The Economic Times the company plans to use a hub and spoke model to enter new Tier II cities in India, where Delhi may be the hub for Jaipur, Agra and Lucknow and Mumbai may cater to Pune and Ahmedabad. Subhanker Sarker, COO, states that the targeted revenue is Rs 100 crore (approx $25 million) by about 2009 and he expects 25% of it to come from Tier II cities. This is substantially short of their “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.”
The company offers its customers two plans: the Basic plan which allows subscribers to rent up to six movies every month, receive one movie at a time and return the movies in 3-4 days. The Unlimited Plan delivers two movies at a time, an unlimited number of movies in a month and allows subscribers to keep the movies for as long as they like. Its main competition is from companies like Cinesprite, Catchflix, Clix Flix and Friday Box Office, besides offline DVD parlors.
In an attempt to increase the number of customers, the company offers current customers a 1/6 fee waiver for every friend who becomes a member, so when six friends become members, the referring member gets a total fee waiver. Seventymm currently has about 60,000 subscribers, a far cry from 2.5 Million.
Aside from spending eight years at Microsoft, this is Raghav’s fourth startup and in a podcast with PodTech, he describes how finding the right employees is one of the most difficult aspects of the business. Most recently the company has been in the news for its tie up with foreign film distributor Palador Pictures.
Clearly, Seventymm is not moving at the same pace as they had imagined earlier. Nonetheless, the service is useful, and at some point, they should hit an inflection. What’s holding the adoption rate back? Is it quality of service or just that the market is not ready yet?
This segment is a part in the series : Deal Radar 2008