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Day 1: Clixflix

Here is how two Bandra boys, daring and determined, started Clixflix and redefined how people watch movies in India’s entertainment capital. Shreevatsa Nevatia reports. Special: Small Ideas Big Changes

india Updated: Nov 14, 2008 15:36 IST
Shreevatsa Nevatia

As soon as Aniceto Pereira bought himself a DVD player in 2005, he began scouting around for a video library he could rent movies from. The 27-year-old connoisseur of world cinema inspected the catalogues of several companies by visiting their websites before picking Clixflix. He felt it had the best choice for his tastes.

Idea
Pereira, a 27-year-old assistant director from Borivili, would then regularly walk into the DVD rental company's store, located near his house, and pick up what he wanted. Then he moved to Colaba, where the company had no walk-in store. Yet his cherished association with Clixflix did not end. Pereira began ordering the films he wanted over the Internet and the company had them delivered to his flat.

If there is one word that sums up why Clixflix attracted Pereira and was able to retain him as its customer, it is 'choice.' For one, the company's collection of 13,000 DVDs catering to a wide spectrum of tastes is impressive, with its foreign film department giving it an even greater edge in a globalising city where people are becoming more eclectic and experimental.

Second, and equally important, is the way in which Clixflix works: it allows customers to use any of four methods to order a film - call in, send an SMS, pick a film from its online catalogue or walk in to one of its six city stores.

This system, developed over time by the company's founders, Dale Edwards, 33, and Glenn Concessio, 40, two friends who initially conceived of Clixflix as a pure dot-com, has not merely been a huge blessing for thousands of movie fans; it has redefined the notion of home entertainment in Mumbai, a city in which traffic snarls, longer workdays, higher stress and a palate for variety picked up from increasing global exposure, coexist.

"What seems to be driving the business is the kind of attention Dale and Glenn pay their customers," said Manoj Pradhan, a Morgan Stanley economist and friend of Clixflix's founders. "The risks they take, the way films are delivered and picked up, the prices at which they are offered, where the stores are located, the kind of films that are on offer, all this together helps give the people of the city what they want cinematically."

Business
Although Concessio and Edwards never tried to replicate an existing overseas model, the close study of how foreign DVD rental services such as Netflix.com and Blockbuster Inc worked gave the two entrepreneurs some ideas. Having lived both in the US and the UK, their friend Pradhan was familiar with all this and proved to be a helpful sounding board when Clixflix was merely an idea.

The first days, however, proved to be a reality check. "We intended the business to be purely online, and believed that would generate faster growth, but it didn't happen," said Edwards, the more voluble of the two partners.

But the need to generate returns was paramount. The original and self-proclaimed Bandra boys had put in all the money they had and raised money, with their homes as collateral. Moreover, they did not have the luxury of a moratorium, which would have given them a few months' respite before they were expected to start repaying the loan and interest. "We realised that you needed to have very deep pockets to advertise, and we weren't even convinced about the size of the market," said Edwards.

So hardly 18 to 20 days after starting up, the pair opened their first store from their Borivili office. With hardly any funds to advertise, marketing was through word of mouth. Yet within a year, they had about 4,000 members, who were lured to Clixflix by its more than 2,500 film titles.

That meant decent money. The founders used the money to repay the initial loan, re-investing the rest in the business.

They now stock about 13,000 films and have six walk-in stores, located strategically in Andheri, Borivili, Malad, Mulund, Thane and Navi Mumbai's Seawoods - where there was growing demand and a lack of options, unlike in south Mumbai and Bandra. Clixflix's personnel strength is now 42, many of who are delivery boys.

The centre of all activity though still remains the duo's Borivili office, which they aptly describe as a "war-zone".

All calls made to Clixflix are routed back to this office. Of the DVDs that pour forth, some find their way into clearly labelled trays and others into Concessio's drawers.

Concessio, who looks after all content-related aspects of the business, describes the order beneath the chaos. "Say you are a customer at the Malad store, and you have asked for a film that is lying in Thane," he said. "During the course of the night, we will bring in all the films, so that in the mornings, the entire process of swapping can happen between all the stores. One wrong disc in one wrong shelf is going to mean not just a loss of revenue, but also a very angry customer at the other end. Thankfully, we usually get it right."

To bring order to chaos, Edwards and Concessio have developed in-house software that, apart from having applications for all of the business' different facets - walk-in and call-in customers, web users and administration - can also categorise films according to a customer's tastes, the film's cast, genre and language.

"Every film that a customer may have ever borrowed is stored in our database, thereby allowing us to determine the preferences of each customer vis-à-vis each genre," said Edwards. The ability to recommend a film that a customer might like is what helps Clixflix render that personal touch.

Success
So when the self-confessedly "demanding, temperamental and impatient" Ruth Varsulkar calls in for a film, the person on the other side is able to recommend a romantic comedy that she hasn't seen, and more important, a film without animals.

"Nobody else does that," she said. "Clixflix completely understands your tastes, and for that I am grateful."

Echoing Varsulkar's sentiments is her namesake Ruth D'Souza. The 43-year-old executive director of a consultancy firm is an ardent Agatha Christie fan, always on the lookout for cinematic adaptations of the author's work. "I looked everywhere and the only people who seemed to have them were Dale and Glenn," she said.

D'Souza goes on to add that earlier, the only option available for home entertainment would be the door-to-door local video salesman. "But what he would offer would often be pirated and the print would leave a lot to be desired," she said. "Ever since Clixflix has given me access to original DVDs, I find myself staying in and watching movies a lot more."

The D'souzas are now among Clixflix's 17,000 customers, helping form one of India's largest single-city membership bases.

Unlike in the US, where almost all film rental transactions take place online, India is a place where customers prefer as much to call, text or visit a store when renting a film. Nearly four years after Clixflix started up, Morgan Stanley economist Pradhan is impressed to see how the company has adapted to this reality.

He believes that Edwards and Concessio are proof of the fact that there isn't a direct co-relation between an MBA background and entrepreneurial success; both are B Com graduates.

"In Mumbai, people are open to new ideas; they are always willing to experiment," Edwards said. "But more importantly, they have given a thumbs-up to original content over pirated content, and that has been a blessing."

Edwards, as big a movie buff as Concessio, gave up his career as an event manager and consultant, their ten-year friendship finally grew into a more commercial partnership, and in August 2004, Clixflix was born.

Concessio was already in the rental business. He owned a recording studio, which he would lease, and supplied disc jockeys and musical equipment for various shows and events. He said the idea of creating a dot-com that would allow Mumbaiites to rent DVDs with a click of the mouse started to take shape when he moved from Bandra to Malad.

"In those days, we used to rent videocassettes, but in Malad there was really no place where you could go," Concessio said. "That's how we got thinking about the movie business."

By bringing cinema quite literally to your doorstep, Edwards and Concessio have given back to the city as much as they have received. Borivili resident 35-year-old Shailesh Gupte, for instance, had no other rental options in his vicinity until Clixflix opened shop. "Coming as I do from an advertising background, they have been able to fulfil my quest for world and international cinema fully," said Gupte, who has been a member for three-and-a-half years. "Recently, a few more such options have come up, but I have never felt the need to go beyond Clixflix."

Future
One of the recent options to have come up in Borivili is Reliance's BigFlicks store. Having adopted much the same strategy as Clixflix, one would have assumed they are directly competing. But Edwards argues that two people being in the same market did not automatically make them competitors. He pointed to the US.

"They have a population of about 300 million and have about 8,000 rental stores," he said. "You do the backward math on that and try and assess that in a country like India, which has around three times America's population and is more


movie-crazy, how many stores can there really be?"

Kamal Gianchandani, BigFlicks' chief operating officer, had much the same view. Welcoming competition, he said: "The home entertainment rental segment is at a nascent stage, and we will need collective effort from many players to enhance consumer attention."

BigFlicks, of course, has more money at its disposal than Clixflix.

Edwards and Concessio believe that raising funds has been one of their largest challenges. "It is kind of hard to classify us," said Edwards. "Are we a retail or service business? We are probably somewhere in between. This ambivalence makes it hard for us to find investment."

Making the case that in their small way, they have demonstrated that their model is tenable, and theirs is in fact an interesting business, they say in unison, "Put in money and we'll rock."

According to research conducted by iSuppli Corp, an US-based electronics consultant, the installed base of DVD players in India will rise from 34.5 million now to 66 million by the end of 2010. If Clixflix is to reap the benefits of this boom, they will have to carry out their plans of expanding to the country's key metros. For this investment becomes imperative.

Edwards and Concessio are optimistic, sure that they have a winning idea. Edwards believes that after you are done with work, food and sleep, the next big thing on people's priority list is entertainment. "To go to a multiplex, a family would have to spend Rs 800, when they can get actually 20 movies with us at the same price in the comfort of their own home," he said. "And they can eat their own popcorn."