10K VCD players sold in India this year(This is a DVD market). The Bugger Market..................................
indiaserver.com
THE BUGGER PICTURE
Date: 18-12-1997 :: Pg: 25 :: Col: a
IF THERE was one territory in India which was the almost- exclusive-preserve of Japanese electronics brands even before they formally entered the country, it was in the Video Home Systems (VHS) market. The period between the early 80s and early 90s could go down in the annals of brown goods market as the decade of VHS, which essentially comprises the Video Cassette Recorder (VCR) and the Video Cassette Player (VCP).
FAST REWIND
Panasonic, Sony, Akai, Sharp, Funai and Aiwa had occupied a pride of place in Indian homes as the main and sometimes the only source of entertainment in the form of a VCR or VCP. But, this was much before the VHS killer descended on the neighbourhood in the form of a cable operator or ''Cable Guy'' (CG, for short) who gradually got most TV sets wired to satellite television -- only to beam out among other things, advertisements of some of these major brands. So, what did CG achieve ? May not sound great, but he managed to cut down a VHS market of an estimated two and a half lakh units in 1993 to less than half that volume in 1997. No longer is a friend or relative returning from abroad -- usually one of the Gulf countries -- requested to lug along a VCR or a VCP for company, nor is the ''reliable'' contact in the grey market an important person who has the power to award you the status of owning a 'foreign video.' And that obviously becomes the case when CG tempts you with an offer to watch at least, apart from other programmes, three movies a day from umpteen channels at just Rs 100 a month. Whereas if one were to make use of the VCP at home, consider the energy and time spent in going to the video library -- very few of them left today -- and then paying Rs 10 for a cassette. So, three movies a day works out to Rs 30 per day. No comparison, forget it. It's a knock-out victory for CG.
NORMAL PLAY
Fine, CG's in charge. But what happened to VHS ? Well, in the period between the VHS high and the CG invasion, few home-grown brands managed to make a mark and have continued doing reasonably well though popularity of VHS products has declined. Videocon, BPL, Philips, Optonica and Onida are some of the names that hit the target and exist in the respective order of market shares though no absolute figures are available. Panasonic remains the hot favourite in the grey market which still accounts for more than half the VHS sales in the country.
So, what's winner CG upto, since he drives the market today ? Firstly, as jittery upstarts usually do, some of his tribe went in for top-end products like Laser Disc Players (LDPs) as it offered viewers very high clarity of picture. And mainly because most English films coming into India are on LDs. But LD is not CG's favourite for that simple reason called money: It's just too expensive, what with an LD coming for about Rs 3,000. Yes, viewers can watch clear pictures, but at the cost of clearing CG's pockets. No way.
What's on then ? Come mid-1996, and enter Video Compact Discs (VCDs). And when you have discs, you also need systems to play them. So, also enter VCD Players. It comes for anything upwards of Rs 13,000, depending on whether one wants a single, three or five CD player. But, why multiple CD players when the VCD concept itself is yet to really take off among domestic customers. Explains Ravi Nookala, Senior Manager, Consumer Marketing Division, Sony India Pvt. Ltd: ''Initially Sony produced single VCD players, models that fitted China, but then the market fell as we realised that Indian movies, because of their length, usually occupy two or three CDs. So we developed three CD players and then a five CD player in August 1997 so that cable operators can show even two movies in one go.''
Interestingly, the VCD concept has not caught on well in the West. Instead China, Indonesia and Japan are supposed to be the biggest markets. Nookala puts the size of the Chinese market at 14 million VCD players. Compare this to India, where monthly sales of VCD players are under a 1000 units and the total annual sales are estimated at a little over 10,000 units. Can't help it but miniscule would be an understatement.
So, in comes CG again -- the catalyst, the driver, the guy of the moment who will decide the fate of VCDs, at least for the time being. He's today faced with a choice of products from Samsung, Sony, Philips and Thomson. For CG, it's a viable alternative to LD because a movie VCD or the software would come for anything between a cheap Rs 200 and a high Rs 500. But CG's got a problem with VCD. It's nothing to do with the player or the software itself, but the availability of the latter. New movies are not allowed to be released on VCDs, and given the life-span of a Hindi movie today, nobody wants to watch it six months after it's released. Believe it or not, the total number of genuine VCDs available in the market today is approximately 400 Hindi movie titles and about 500 English movie titles. And this is not a VHS tape where there can be pirated camera prints. But pirated VCDs do exist in the market. Predictably, there is also a genuine echo from most quarters that the quality of software in many cases, both genuine and pirated, is poor.
Granted, CG is important, but companies are here for the general consumer who will have to buy more VCD players if the situation has to improve. Currently CG buying accounts for over half the VCD sales. But then who would be the ideal domestic customer. Explains Rajeev Puri, General Manager (Marketing), Thomson Consumer Electronics (India) Ltd: ''The target customer for a VCD player as we have identified are customers who are upgrading from VHS (VCR), have a monthly household income of Rs 50,000 plus and usually based in major metros, mini metros and class I towns.'' Puri doesn't rule out the potential video library owners who would be in the business of lending VCD software as it used to be for video cassettes.
SLOW FORWARD
So, will video re-enter Indian homes in the form of VCDs ? Things can turn better for a VCD consumer only if more players get into the software business as we already have quite a few players into hardware. And more players will not get into software because as volumes are small, returns on investment are not guaranteed. Explaining the chicken and egg situation, Nookala points out that there is not much that one can do with a current situation because VCD players contribute to less than three per cent of the company's business. The figure is not too encouraging for other brands as well. Sony and Philips are the only brands into VCD software. That too through allied businesses like Sony's entertainment business and Philips through its association with Polygram India.
When a product is not an important part of the marketing mix and it is usually there to complete the range, not much can be expected in the form of large scale promotions either. But signs of things to come are visible. Ads for television sets speak of VCD compatibility, those who also want to use an LD are being given the option of an LD-VCD combo player, CTV and VCD combo are also on offer. And an increasing segment of audio VCD combos are also in the market.
If these are just signs, a genuine marketing effort is on from Samsung whereby Samsung has not got into marketing software but has tied up with VCD libraries in cities in north, south and western parts of India. A Samsung VCD customer can access software of 60 VCDs absolutely free at any of the libraries in the city over a six-month period. Further, a customer can get an extended membership of upto two and a half years.
So, what happens to the good old VCR and VCP ? There are voices for and against the VHS. Those against, first. Says Rajeev Karwal, Vice President, Marketing, LG Electronics India Ltd: ''Recordable VCDs will come and wipe out VCRs. So, with the recording advantage of VCRs gone, VCPs may still have a better chance of survival.'' Listen then to a more Indian reason as to why VCPs should survive: ''Who records TV programmes these days? You only play things like marriage recordings or any function that has been recorded. Therefore a VCP has a better chance. Even today, the ratio is 60:40 in favour of the VCP against the VCR,'' says Nookala of Sony. That statement may be prompted more for Sony video cameras to survive as Sony is actively trying to promote its cameras. After all there should be something to play the recorded cassettes.
But, isn't there a more rational explanation of what will happen to the VHS market ? Says R. B. Tandan, Associate Director, consumer products division, National Panasonic India Pvt Ltd.: ''Actually, the concept of VCR marketing has to change. Video libraries have closed down, so now you have to start educating customers on the recording advantages of a VCR. Then the VCR would stay on even if VCDs rule the show.''
PAUSE
Now what ? Well, before one goes ga ga over VCDs, it's time to stop and listen to some more traces of things beyond VCDs. Almost everyone talks of the impending invasion of DVDs or Digital Video Discs. One DVD apparently has 12 times the storage capacity of a VCD and five to six times better clarity than a VCD. But the catch is that a DVD is three to five times more expensive too. So, is the VCD death knell already being sounded ?
Says Nookala: ''The video CD is still in its initial stages and has not picked up as expected mainly due to non-availability of software. The software manufacturers meanwhile are still not confident of investing in VCD format as they are worried that DVD may take over the VCD in coming years. Though DVD delivers the best picture and sound quality, it may take some time for this format to pick up across the world.''
The following reasons are attributed to this:
a) Regional Coding System: The world has been divided into six different zones and DVD software has to be programmed to each zone to be marketed in that area. This limits the availability of software in the concerned areas. For example, India falls under zone five along with Russia and Africa, and the interest levels in these zones will be the lowest as the main markets are US, Europe and Japan.
b) The hardware and software costs are relatively higher compared to VCD. This makes it unaffordable in the Indian market (for mass sales)
c) The total available titles worldwide for DVD are 500 which is too less for any format to kick off after one year of its launch in US and Japan.
Concludes Nookala: ''Though this format is promising, we would like to watch developments across the world and launch in India may be by year 2000. Till then we would like to concentrate on developing video CD market as DVDs can play VCD softwares as well.''
Industry sources say that piracy and regional coding hitches have to worked out before companies worldwide arrive at a standardised format for DVDs. And that would take at least three years. Time is short, but with increased availability of software and lower prices, VCDs can still make a dent.
Reporter Associate: N. Nagaraj, Chennai
|
