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Why the Rajshri biz model is flawed

May 1, 2007 · Posted in India portals, reviews

Rajjat Barjatya, one of the younger members of the Barjatya family, is credited with realizing the potential of using Internet as a distribution medium for all the content amassed by the Barjatya family. He led Rajshri into the digital age with the launch of Rajshri.com - one of the biggest entertainment portals in India.

The portal is continuously evolving and innovating - they premiered the first Indian movie - Vivah, on the Internet, have added tonnes of original programming - including old-time hits like Surabhi, Mahabharat, Shaktimaan, Malgudi Days and Fauji. Along with full length movies and TV shows, they have diversified into streaming other content such as classical concerts, documentaries, short movies and even astrology-numerology.

I strongly believe that Web1.0 or Web2.0 is irrelevant - content is king. As long as you can provide original, interesting content, the users will come.
Thanks to their deep association with the entertainment industry, getting hold of original, compelling content doesnt seem to be a challenge for Rajshri. And thats why I have no doubts what so ever that they will be extremely popular and one of the go-to destinations for Indian entertainment.

Some of their key accomplishments since launch:

* crossed 4 million video streams within a fortnight of launch
* Till the 34th episode, Mahabharat has received close to 500,000 streams
* 6000 paid downloads of the first Indian movie premiered on Internet - Vivah

Even though I’m confident of their popularity and potential, I’m skeptical about their revenue model.

Following are their means of monetization:

1) On site banner advertising and sponsorships, which should be self explanatory.

2) Download to rent movies and TV shows - explained in a little detail below:

Each movie and TV show episode can be downloaded for a fee. The price for a movie varies between $4.99 to $19.99 depending on the quality and how old the movie is. TV shows can be downloaded for $1.99 per episode. The downloaded movies and TV shows are not DRM free. Once a movie - TV show has been downloaded, you can watch it as many times as you want for the next 72 hours. After 72 hours, the licensing of the movie - TV show will expire and the file will no longer be viewable. So, inherently, you pay the amount to rent the movie for 72 hours - only distinction being that you download the rental instead of getting it from the nearby retail outlet. For further explanation on how this licensing works, refer here.

It is this download to rent model that I think is flawed. Let me explain why:

Rajshri is mainly targetting the Indian diaspora with their entertainment portal. The premise being that a lot of Indian disapora dont have access to Indian movies easily and so this diaspora can get easy, on-demand access to movies and Tv shows. Hmm..Sounds promising - but will it actually bring in the moolah ?

US visitors (the biggest NRI market) comprised of the biggest chunk - 32% of their entire traffic.
Now, the question is - how many of these US visitors would be willing to pay $9.99 for a movie download ? I would say a very,very small percentage. Piracy of Indian movies is rampant in the US. Pirated video cassettes are easily available in Indian grocery stores the very same day the movie is released in the US. I agree, the quality of the print if often circumspect. But none the less, if the video cassette is available for rent for a mere $1, I doubt how many users would be keen on downloading the movie for $9.99 from Rajshri.

Also, one needs to take into consideration the fact that inspite of having broadband Internet, the download of these movies (approx 500 MB in size) is not going to be instantaneous. In todays world of instant gratification, Waiting for a couple of hours for the download to complete may not be agreeable to a lot of users.

If pirated Indian movies are easily available in US, I wont be surprised if they are easily available in the other big NRI markets like UK, Canada, Middle East and Australia too. This translates to very few paying customers in these big NRI markets - in turn drastically impacting the feasibility of this download to rent model.

On the other hand, the bandwidth and infrastructure expsenses for Rajshri must be soaring. Since they offer the ability to view video streams of old Hindi movies and TV shows for free, all this free streaming will be piling up expenses. The figures quoted above (4 million video streams within a fortnight, Mahabharat receiving 500K streams) are staggering by all standards.

The B-I-G question is - are they generating enough revenue through the download to rent model to compensate for all the free online streaming ?

I honestly doubt it. In my opinion, Rajshri will have to start considering alternative revenue options to offset their infrastructure expenses. In the long run, as traffic to the portal keeps increasing, they will have to find means of coping with the bandwidth expenses. Download to rent is just not the best way to monetize all this traffic.

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2 Responses to “Why the Rajshri biz model is flawed”

India amongst the worst copyright offenders « Startup Dunia - Indian startups and Entrepreneurship on May 1st, 2007 2:12 pm

[...] Wow - quite a coincidence that I just discussed about piracy and how it will affect Rajshri’s download to rent business model. [...]
Prabhvir on May 5th, 2007 12:26 pm

You do have a point here; why would someone want to pay $9.99 for viewing something for 3 days or 20 times!.

max you’ll do is watch it once or twice in a span of 3 days. instead if they r following pay per view or pay per x views; they seriously need to rethink price points.

one should not be over protective about licensing…