The Hindu Business Line : BigFlix.com gets rolling on cutting down costs

Chennai, Dec. 19 BigFlix.com, the DVD rentals company belonging to Reliance Big Entertainment, will focus on managing costs and consolidating its business, due to the downturn.

It is also delaying the pace of its Rs 450-crore expansion in the hope of getting better bargains in real estate prices.

Speaking to Business Line here, Mr Kamal Gianchandani, Chief Operating Officer, BifFlix.com, said cost management and consolidation were tasks the company would normally have looked at a couple of years later.

“It is significant for a nascent company such as ours as it is growth momentum that should matter at this stage. While the downturn won’t really affect our business in terms of membership enrolment, we are focusing on eliminating waste in variable and fixed costs,” he said. Membership is now growing at 15-22.5 per cent per month but as the base gets bigger, the growth rate is expected to come down to single digits, he said.

The company had planned to have 200 stores operating by March 2009; it will now aim to do so only by June as the slowdown is expected to affect real estate prices further.

The long-term plan is to have 500 stores operating in the next four or five years in 25-30 cities. BigFlix doesn’t expect membership to slow down.

“The entertainment economy is recession-resistant, if not recession-proof,” said Mr Gianchandani, adding that it is businesses which depend on revenue from advertising, such as television, that will be hit. By the same token, he expects BigFlix’s video-on-demand (movie downloads) business — targeted at NRI audiences — which works on an ad-dependent model, to be affected.

There is “polarisation” of consumer behaviour during a recession, said Mr Gianchandani. Movie viewers would rather watch a film with big stars rather than “smaller intellectual properties” which may or may not be perceived as worth the money viewers spend on them, he said.

The number of movie releases would be a shade lower due to the recession, just about 5-10 per cent, and while the aggregation capability goes down, it wouldn’t have any significant impact on BigFlix’s business as it has 21,000 titles already, he said. “In fact, the slowdown is a great time to acquire content as it gives us a lot of bargaining power,” he says.

The challenging South

A challenge that companies such as BigFlix face in the South is the huge gap between a movie’s release in theatres and on home video. There is a 6-12 months’ gap in the case of Tamil and Telugu films; in Hindi, it’s only 2-3 months.

Long gaps affect piracy levels and BigFlix is hoping its negotiations with the producers will bear fruit as they also stand to lose a lot of money on account of piracy.

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