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Kiosk Based Video Rental Service Kiora Secures Funding; Viability?

Updated below:

Kiora, a startup that offers kiosk-based video rental solutions for low bandwidth regions, has secured funding from Intertrust Technologies Corporation. The exact monetary terms of the funding were not disclosed. Kiora (previously Blue Box Media

Technoligies) is headquartered at Hyderabad (India) and Sunnyvale (California,US).

According to a statement from the company, Kiora’s service uses a specially designed Internet kiosk for retail outlets or community centers where consumers can fill USB sticks with their choice of premium movies and TV shows. The content can then be downloaded at home for playback on custom-made set top boxes, which, according to the company, will retail at under $20 (Rs 1100 approx).

Kiora said that it has already licensed content from major Bollywood studios and has launched retail kiosks in its first test market in the Silicon Valley, where it wants to pilot its offering among the large South Asian community, since Silicon Valley’s conventional video rental outlets offer limited non-Hollywood content. Kiora says that its business will be expanded to other geographies with similar demographics, including other ethnic and regional content popular among immigrant communities across the world, following the pilot. To prevent piracy, Kiora will deploy Marlin-based digital rights management (DRM) protection in its content. Note that Intertrust, which is funding Kiora, is a founding member of Marlin.

At the time of writing this post, Kiora offers Tamil, Telugu and Malayalam movies, although the site also lists Hindi, Kannada and English, though it doesn’t offer any titles in these languages.

Our Take

The idea is not new, and companies such as Onward Mobility, have used the brick and mortar retail model for selling content like mobile apps. PlanetM, the chain of retail stores that offer music, mobile phones and other gadgets, had also announced plans to start selling mobile apps for all major smartphones, last year. Spice group’s mobile retail chain HotSpot had also started selling memory cards with pre-installed content including movies, wallpapers and ringtones, across its network of stores; T-Series has been selling content on USB drives as well. We’ve also seen some other companies running kiosks across retail chains like Shoppers Stop, offering music, videos and app downloads via a computer terminal, through catalogues.

All of this has been to essentially counter the illegal sale of content on memory cards and USB drives, or free-loading on content by mobile handset retailers in India, with the only advantage being the ability to transact in cash in a market like India, where credit card penetration is still very low.

Update: It appears that Kiora is modelled on FlixOnStix.com, another US based service, which is presently defunct. (Hat-tip- @beingpractical)

While the offering is targeted at markets with low internet penetration, including India, we wonder why the company decided to run a pilot in Silicon Valley. Also, we feel that the need for an additional piece of hardware (the set top box) will make the service less attractive, specially with mobile phones (including the entry level ones) offering support for external memory devices like SD cards and DVD players and PCs supporting USB drives. Also, locking the content makes the service even less attractive, at a time when CDs and DVDs with pirated content (not DRM locked) are available easily. Als, video libraries are almost at the vege of extinction, and organised players like BigFlix and 70MM have shuttered offline video rentals. We do acknowledge that limited bandwidth and high internet costs prevent an online-only video rental service to do good business in India. This is in addition to the psychological barrier of people not willing to pay for subscription based content. Perhaps Kiora could offer a software based solution, if it doesn’t want to get rid of the DRM, for PCs, and offer the same service. Also, pricing for rentals would need to be attractive, for the service to work.

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