Tuesday, November 08, 2005

New avenues for marketing

Yes - after a long break, I am back to my favorite hobby :). Since the time I started to think like a marketing person, I have had a keen eye for new avenues that technology is opening up for advertising and today I am going to share one of the avenues that is going to be big pretty soon. This avenue has nothing to do with interactive marketing, but is pretty interesting to think about which is why I am covering it here.

You must be aware of how movies are distributed to various theatres and released. NO ? Ok, let me do a quick round up of the process. Traditionally, the movie producer signs up with a distributor, who then creates multiple prints of the movie ( ranging between 200 to 20,000 depending upon the budget ) and distributes it to cinema halls. Each print costs between 60,000 to 70,000 which explains why costs escalate dramatically if you want to release in multiple cinema halls simultaneously. In addition to this, the high cost of a print forces the distributor to phase out the release in Tier2 and Tier3 cities leading to huge losses in revenue. This has been a big problem for distributors for a number of years and they are desperately looking for a cost effective solution to this problem. Lately, in order to alleviate this problem, distributors have been distributing movies on hard drives, but that doesn't entirely solve the problem because the distributor loses control over the number of times the movie is played. So what is the solution to this problem ?

Many companies have been trying to solve this problem, but the three companies that stand out in the effort are "Valuable Group", "Mukta Adlabs" and "Pyramid Samira". These companies, independently, have come up with solutions to make digital copies of the movies and beam those movies to any theater capable of receiving it. Theaters who sign up for this service would be provided with the necessary equipment that can be used to download the movies and store them for a limited number of replays after which the movie would self-destruct ( doesn't it sound like a clip from a James Bond flick ). The theaters would be charged a nominal amount ( say Rs 200 ) per show as the rental for the equipment that has been provided.

Now you must be wondering how these three companies plan to make profits out of this service if all they charge is a nominal amount to the theater owners. That my friend is what marketing is all about - build up a network that has a large viewership, a network with massive reach across all demographics and you have advertisers lining up outside your door.

Coming back to the service provided by these companies, one of the big positives is the ability to reach the audience in Tier2 and Tier3 cities, and there is no other media that provides this ability today. Every marketer knows that Tier2 and Tier3 cities have huge potential for certain products, but they are afraid to target the audience in these cities because of lack of infrastructure and high costs of marketing involved. With the creation of this new channel, marketers would be able to reach their audience in Tier2 and Tier3 cities in a cost-effective manner and would love to divert some of their spending for slots inside the movie. In addition to the revenue generated from the advertisement, the companies providing these services could also ask for a dedicated area in every subscribing theater that they would use for putting advertisements or promotional campaigns.

This goes on to support my belief that the future lies in services and the one that has the largest number of users in its service net will be the king.