Delhi Online DVD Rental Company Madhouse Gets $228,000 From Angel Investors
We had earlier written about more online DVD rental companies getting funding. It’s actually happening. Delhi-based online DVD rental company Madhouse Media has closed an angel round of $228,000 (Rs 1.05 crore) from Band of Angels in Delhi and Mumbai Angels of Mumbai, besides a few other private investors.
The company was founded in December 2004 by first-time entrepreneurs Sameer Guglani, Nandini Hirianniah and Ankur Agrawal (more about team here.)
Madhouse has both online and offline presence, and a statement from the company says that it’s the only one to have such a model. The company is currently focused on North Indian markets - Delhi-NCR, Chandigarh, Panchkula and Mohali regions. It, however, has plans to do a national roll-out in the next two years. The statement also added that it is currently working on some key business alliances to serve the customers better. One such alliance was struck recently with Netkode Solutions, which is working as a technology partner with Madhouse. (Netkode also provides end to end technology solution to Hollywoodclicks.com, Singapore’s largest online DVD rental service.).
Madhouse’s angel round is very small compared to the huge $7 million venture capital funding Seventymm.com received from Matrix Partners India a few months back. I am surprised why Madhouse has gone in for a small round of fund raising when the business is getting crowded. It’s likely that Madhouse will close a bigger round in a few months’ time.
It is also likely that Madhouse will focus its energy on expanding in North India rather than spreading it too thin. Bangalore-based Seventymm.com has also launched its service in Delhi, though.
Another online DVD rental company in Delhi region is the Gurgaon-based Cinesprite. This company is already angel funded.
With Moser Baer’s recent launch of Hindi movies on DVD at Rs 38 and also with the advent of movie downloads, there have been several questions raised about the long term viability of the DVD rental business. Let’s see how this business pans out.
Posted In: Money, M&A & Venture Capital, Venture Capital
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Comments (3)
Jan 2, 2007 5:00 PM
I made a comparison of all the online DVD rental players in my post here:
http://www.startupdunia.com/2006/12/14/online-dvd-rental-market-in-india-comparison-of-key-players/
May 19, 2007 9:43 AM
The recent focus on the home video market in India - its sheer size and potential, consuming middle class numbers and plumetting hardware prices definitely warrants the attention of the more organised, bigger boys. Enter Reliance, Nimbus and the like…
But what’s interesting is the evolution of the rental industry. Heres a brief rewind - In 2004 http://www.clixflix.com was launched with an online model - India’s First Online DVD rental co. A good 2 years later, in Feb 2006 or thereabouts catchflix and seventymm follow suit. Thereafter it becomes a free for all with another 5 or 6 entrants.
In the meantime, Clixflix undestands the market, re-aligns and launches more brick and mortar avenues (retail boom a probable cause), launches a “Dial a Movie Service” and throws in the convenience of a ‘mobile’ application. Thats integration, increasing the value proposition, better mix and CUSTOMER CONVENIENCE most importantly - apart from data mining customer preferences, tastes and viewing patterns in lieu of the larger and more varied cutomer acquisition models.
So now the big boys arrive - plush with funds.. They cut short their learning curve, reduce their possible magnified mistakes (in lieu of large rollouts) by snapping up the early movers of the industry.. The online VC funded shee shee guys struggle to prove a point - online CAN work, while the rest of us want our movies faster and are not ineterested in VC scalability which perhaps can look no further than their nose at the BIGGER picture - India is dying for ORIGINAL content first…
May 19, 2007 10:46 AM
The DVD rental business is U.S worked because of the delivery mechanism, a.k.a the USPS is quite efficient, and well developed with quality and reliability. That is a big problem in India., The matter of fact that DVD’s reach the customers on time and untampered so that the customer can enjoy the movie and the quality of the DVD media is good keeps the business alive.
Furthermore, if you look at what NetFlix and CTO of Netflix is investing time and money is on mechanisms of movie streaming as at the volume that they are doing business movie streaming keeps the revenues flowing and the model profitable. However there is a huge infrastructural investment which is quite significant, but at NetFlix’s level this is required as their USPS bills annual are north of $50 M atleast.
The DVD rental business is bound to fail. The folks that have invested money do not understand the basic principles of the business and are doing injustice to themselves by ignoring the actual fundamentals of the business. Well for the big investors like Sequoia Cap and the other $20-$30 M lost in startups is not a big deal, but the angels will suffer as their is not way this model will become profitable
SG