Manish K. PANDEY & PAWAN CHABRA feel Moser Baer can become an entertainment giant
Last year when we met Deepak Puri, the CMD, Moser Baer, the six odd inches of plastic was all that we discussed with him. Neither did he reveal nor did we have the slightest idea about his interests beyond that. But one thing which we still remember is his effervescence while recounting the Moser Baer growth saga. “We as a company have grown and evolved... and are able to forecast and adapt to change very quickly,” he had told B&E. It’s one year now and the story has definitely moved ahead with time for Moser Baer. The father-son duo of Deepak and Ratul Puri have come a long way since then, instigating some high frequency stirs and disrupting the dynamics of the industry. No doubt, FY 2006-07 was one of the most exciting ones for Moser Baer. While it posted a 19.8% increase in gross revenues to Rs.20.74 billion over the previous year, improving margins drove a robust 2,253% growth in its net profit after tax to Rs.1.09 billion. However, what was even more exciting was its entry into the home video market, where it not only leveraged its technology leadership but also initiated a paradigm shift in the market. B&E presents an insight into how Moser Baer has successfully innovated on the same ol’ six odd inches of plastic.
Tactic No. 1: Develop a new price point
By simply following the low price strategy – fixing price of all Indian film VCDs at Rs.28 per movie & DVDs at Rs.34, it gave established players a run for their money. Players who were selling titles in the Rs.150-300 range were forced to cut their margins drastically. While Ultra dropped its prices from an average Rs.300 to Rs.45, T-Series slashed them to Rs.45 for a movie on VCD and Rs.75 for a set of three movies on a single DVD. While speaking to B&E, G Dhananjayan, COO of Moser Baer Entertainment Business says, “Our strategy is not a price war but a war against piracy and the slow growth of the industry.” No doubt, according to industry estimates, today, while the original home video volume is around 25 million per annum, pirated home video volume is close to 250 million. Moreover, with projected demand for CDs & DVDs to go down by over 20% by 2007-end (as per consultancy firm Understanding & Solutions), Moser Baer’s obvious forward integration to boost its revenues from them was to add value and of course in line with their core business strategy.
Last year when we met Deepak Puri, the CMD, Moser Baer, the six odd inches of plastic was all that we discussed with him. Neither did he reveal nor did we have the slightest idea about his interests beyond that. But one thing which we still remember is his effervescence while recounting the Moser Baer growth saga. “We as a company have grown and evolved... and are able to forecast and adapt to change very quickly,” he had told B&E. It’s one year now and the story has definitely moved ahead with time for Moser Baer. The father-son duo of Deepak and Ratul Puri have come a long way since then, instigating some high frequency stirs and disrupting the dynamics of the industry. No doubt, FY 2006-07 was one of the most exciting ones for Moser Baer. While it posted a 19.8% increase in gross revenues to Rs.20.74 billion over the previous year, improving margins drove a robust 2,253% growth in its net profit after tax to Rs.1.09 billion. However, what was even more exciting was its entry into the home video market, where it not only leveraged its technology leadership but also initiated a paradigm shift in the market. B&E presents an insight into how Moser Baer has successfully innovated on the same ol’ six odd inches of plastic.
Tactic No. 1: Develop a new price point
By simply following the low price strategy – fixing price of all Indian film VCDs at Rs.28 per movie & DVDs at Rs.34, it gave established players a run for their money. Players who were selling titles in the Rs.150-300 range were forced to cut their margins drastically. While Ultra dropped its prices from an average Rs.300 to Rs.45, T-Series slashed them to Rs.45 for a movie on VCD and Rs.75 for a set of three movies on a single DVD. While speaking to B&E, G Dhananjayan, COO of Moser Baer Entertainment Business says, “Our strategy is not a price war but a war against piracy and the slow growth of the industry.” No doubt, according to industry estimates, today, while the original home video volume is around 25 million per annum, pirated home video volume is close to 250 million. Moreover, with projected demand for CDs & DVDs to go down by over 20% by 2007-end (as per consultancy firm Understanding & Solutions), Moser Baer’s obvious forward integration to boost its revenues from them was to add value and of course in line with their core business strategy.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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