Weekly Startup Profiles > Seventymm Services Pvt Ltd

Online and offline movie rental and delivery service.

The Idea

On one of his vacations to India, former Microsoft employee and serial entrepreneur Raghav Kher ran into a problem. His young son wanted to watch the movie Batman. Raghav made a few calls and located a movie rental store 45 mins away. "When we went there, we found it was Spiderman they had, not Batman," says Raghav. The disappointed duo took the movie home, only to discover, upon opening the box, that the movie was not even Spiderman. To top it all off, they were charged a late fee. Raghav the consumer was frustrated. Raghav the entrepreneur sensed an opportunity.

"I did some research and found out that people renting movies wanted a mix of choice, convenience and community. And to cater to this need, I started Seventymm," he says.

An online movie rental and delivery service, Seventymm offers free pick-up and delivery of movie VCDs/DVDs on a subscription basis, starting at Rs 199 a month for four movies. Additionally, subscribers need to pay a refundable deposit and registration fees. Seventymm's collection has over 15,000 movies and documentary titles spread across 14 Indian languages.

Initially self-funded, Seventymm has already raised 2 rounds of venture capital and boasts of a consumer base of 25,000 subscribers.

The Opportunity

"I realized that this is a movie-crazy nation that produces nearly 900 movies a year," says Raghav. Add to this the fact that more and more movie-buffs want to - and can - watch their choices from home, and Raghav saw an opening for a new business that made watching movies at home convenient and inexpensive.

A significant fall in the prices of DVD players has lead to an explosive growth in DVD/ VCD penetration into the households, explains Raghav. While he was researching the opportunity, Raghav found, to his surprise, that not only his driver but also the other eight drivers in his building have DVD players. In fact, by 2010, as many as 50 million households, up from around 12 million currently, are expected to have DVD players.

Seventymm's customer is someone who wants to watch quality entertainment at home, and doesn't want the hassle of heading out to a store to find a CD. Quality, variety and convenience are things that a local DVD store with its pirated copies or bad prints and limited selection simply cannot provide, outlined Raghav.

Despite what appeared to be a clear opening for the businesses, Raghav took his time to understand how to proceed. "It took me almost a year to research the proposition, study the feasibility and put the back end in place," he explains.

What developed was a service based on a subscription model, rather than a pay per view model. Customers have a choice between two plans - basic (Rs 199 for four movies, registration and deposit extra) and unlimited pan (Rs 549 for unlimited movies). Both plans allow their members to rent two movies at a time and also have the luxury of keeping them as long as they want.

One can order from a website that has moved beyond a movie-rental portal. In fact, it positions itself as a 'hang out for movie buffs', with quizzes, space to create profiles, gossip and blogs.

But a big part of Seventymm's business is actually running an in-house courier company and creating this network across six cities, and soon 20 cities, according to Raghav.

Sevetymm claims to be the first organized player in the space. Other companies existing in this space include: ClixFlix in Mumbai, Catchflix and Fridayboxoffice in Bangalore and HomeView in Delhi. Seventymm perceives more number of players as an advantage more than a threat as this only means the growth of the category.

The company is taking advantage of having funds to invest, and is in acquisition mode. In June 2007, they acquired New Delhi-based competitor Madhouse for an undisclosed sum "to gain some presence in Chandigarh," says Raghav.

The Money

Initially the company was self-funded to the tune of Rs 2 crores. Once the model was starting to prove itself, Raghav approached venture capitalists for funds to build out infrastructure. For the initial round, he chose to go with the leading venture firms Draper Fisher Jurvetson and ePlanet Venture, who invested Rs 10 crore into the company.

A major portion of the investment was invested in building the website. The website is designed to handle around 1 million people across 50 cities in India. The rest of the funds were used to set up inventory management and logistic support. The company raised its second round of funding, this time of Rs 32 crores, in September 2006, in an investment round led by Matrix Partners India Ltd.

The Team

Seventymm was Raghav's brainchild. Microsoft alum, Raghav, has in the past has co-founded imandi.com and Rendition Networks.

Originally there were seven team members including COO Subhanker Sarker; CTO Nitin Yadav; head of marketing Anuj Mukherjee; and sales head Sebastian Thomas. "Today we are a 450 strong organization," says Raghav.

The Company - today and tomorrow

Today, the company has 25,000 subscribers. "We are the only company whose monthly customer churn is less than 2%," says Raghav. And the growth? Says Raghav, "We are adding 7-8000 members every month with an average rental revenue of Rs 400 per user."

Seventymm's website has already diversified from being just a movie rental portal to a hangout space for movie buffs. The company is also making inroads into the gaming arena through a strategic tie-up with Microsoft to rent out games to its subscribers.

In addition to expanding operations to Kolkata, Hyderabad, Kochi, Pune and Ahmedabad over the next three years, Seventymm also plans to widen its offerings to include digital movie downloads and distribution of games and educational content, with the speed of broadband going up to one megabite per second. To fuel this growth, Seventymm plans to raise $10-20 million (Rs 40.7-81.4 crore) in a third round of fund-raising next year.

They are targeting one million subscribers and $100 million in revenues by 2010.

What keeps you awake at night?

"70mm should be able to deliver the same quality of service to its one millionth member," says Raghav Kher.

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