Game for success

Reeba Zachariah, TNN Aug 19, 2011, 06.14am IST

Twenty years ago, when Rakesh Dugar, a chartered accountant, and Hasmukh Gada, a commerce graduate, decided to get into the video game console business, little did they know that their firm, Mitashi Edutainment, would become one of the biggest players in the segment in India.

Not keen on joining their families' jewellery and grocery businesses, the two friends decided to cut their own path with something new and challenging. They took Rs 5 lakh from their families and started what they called Maze Marketing from a small office in Ghatkopar, a central suburb of Mumbai. Maze Marketing was later renamed Mitashi Edutainment.

Market research showed that the TV video gaming business offered growth potential since it was nascent and largely unorganized . Dugar and Gada started off by becoming distributors of Columbus, a local brand. "It (the kids-TV video gaming console market) was a difficult market to crack. Parents were the main hurdles. They stopped children from playing video games. And breaking the parents' mindset was not easy," says Gada, 49.

Initially, the partners struggled to press the right button in the business. Three years later, in 1995, they decided to pitch for the distributorship of Sega, the Japanese manufacturer of home video game consoles. At that point Sega was being distributed by Shaw Wallace Electronics , owned by the late liquor baron Manu Chhabria. The products were being sold at Rs 18,000.

"One of the barriers to growth was high prices," says Dugar, 42, Mitashi's chairman and managing director. "We told Sega's management that the Indian market would work for them if it got its pricing model right." Maze won the distributorship , reworked the pricing and brought it down by half. Initially volumes were low because Sega products were sold primarily in Maharashtra and Gujarat. However, margins were fairly decent.

In 1999, there came a turning point when Dugar and Gada decided to launch their own electronic gaming consoles at low prices to increase penetration. And thus was born Mitashi, which in Japanese means 'to watch' . They imported lowpriced consoles from China. They also rolled out games like Contra, Mario, Roadfighter and Pooyan played on an 8-bit cartridge . Sales were nothing to write home about.

Mitashi's big break came when they used their in-house R&D; centre in Bhiwandi on the outskirts of Mumbai to develop a cricket game. That product, Dugar says, became an instant hit and sold one million pieces. In 2006, they launched virtual gaming like boxing, tennis and pingpong , perhaps the first in the country to launch such interactive games.

But despite this success, soon the partners began to feel the pressure from other segments like online gaming and gaming console players like Sony and Microsoft that had their Playstation and X-Box . The video gaming market started changing at a dramatically rapid pace.

So in 2004, Mitashi decided to diversify into other electronic items, starting with DVD players. The company focused on lesser-known segments like portable radios , wireless headphones and other electronic accessories. "We decided to leverage on our decade old expertise," says Dugar. In each case, the company played on the value card to draw customers. They kept their prices lower than market rates. Most products were imported from China

and Taiwan.

About a year ago, Mitashi took a big call—to get into the hyper-competitive TV space. The Mumbaibased company is perhaps the only domestic firm to enter the consumer electronics market in decades, which once had many local brands like Bush, BPL, Dyanora, Salora and Nelco Blue Diamond. Multinational players like Samsung, LG and Sony now dominate this space.

Mitashi's TV models don't cover the entire spectrum of TV categories. Its LCD/ LED variants start from 19 inch versions. A Mitashi flat screen 19 inch LCD is priced at Rs 9,990, compared to LG's 19 inch version that's sold at Rs 11,990. They also did in-house R&D; for these electronic products . They were among the early ones to launch video support for LCD/LED TVs. It allowed customers to plug a USB into the TV and watch a film or family photos. Margins in the TV business are wafer thin, so it will be interesting to see how Dugar and Gada manage with such low prices.

Mitashi Edutainment is a great instance of a company that started with a small capital to grow into what is now a Rs 160-crore entity. Dugar and Gada are now hoping that their planned forays into mobile handsets and home appliances will lead them further ahead.

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