An Interview with a DVD-man

Rare is the dinner in an expat restaurant in Africa which is not (politely and quietly) interrupted by a DVD-man. They have a stock of DVD’s in their backpacks, and work their way through the restaurant giving you a chance to peruse their wares. You have to see the DVDs to believe them, they are made up of several pirated Hollywood movies, with many different versions, all on one disc, enclosed in a professional-looking full color envelope. They have titles like “Segal vs Chan”… a DVD full of Steve Segal and Jackie Chan movies. Another great title is “Superhero Schoolwork”, including Spiderman, Superman, and Wonderwoman (and all the sequels thereof). The DVD’s are billed as “50 in one”, though it requires some clever counting to find 50 movies on one disc. Typically, there are more like 12 movies on a DVD — in itself an impressive achievement of DVD mastering and compression-algorithm optimization.

Today, at lunch, I was talking about an idea with Steve for how how to coopt the media in Africa. At that instant, a DVD-man came up to the table to offer his wares. I took the chance to do some market research, to figure out how his business works to feed in some ground-based-reality into my scheme.

The young man is named Mohammed. He is alone now, his father was has last relative and he died in 2005. Years ago (perhaps 5 or so) he met a woman on the beach. She was an Indian, a visitor to Sierra Leone. She worked for a bank. They started talking about his school, and how to raise enough money for his school fees. She decided to “invest” in Mohammed by giving him a gift of 100,000 leones (in today’s currency, about USD 30). With that, he bought movies and started walking around after school selling them.

After Steve and I had talked to him a while, I asked him for the “financials” of his business. It should be noted, at the beginning of our conversation, he was reluctant to talk about his business, I suspect out of fear that we were investigating piracy. Here’s how it works out… the DVDs are available one at a time from a wholesaler for SLL 8000 per disc. He sells them for SLL 10000, for a profit of SLL 2000 per disc. Mohammed keeps a stock of around 50 discs right now (“51”, he proudly told me!). His inventory has gone as high as 81 discs. He started his business years ago with 25 discs, bought using the initial capital from his Indian benefactress.

Perhaps there is a discount for buying in bulk, but Mohammed didn’t mention it. I suspect he rarely has the capital to replenish his stock. Instead, Mohammed’s business model is just like any extremely small business: he constantly balances how much money he can take out of his business to pay for school fees with how much he needs to reinvest disc by disc to replenish his stocks. I found it interesting as well that he remembered his exact highest inventory with pride — for Mohammed, his inventory is his life’s savings. Can you imagine the risk and the burden of carrying your life’s savings on your back? What if they are stolen? What if the price of DVD’s collapses?

Steve bought a DVD, “Harrison Ford Mega Pack”. That’s SLL 2000 more profit for Mohammed, but not enough to pay this week’s school fees. Here’s hoping he sells some more discs today…

As an aside, Mohammed told us that you can buy DVD’s mastered and manufactured in Nigeria for only SLL 6000. Theoretically, you can sell them for SLL 10000, just like the ones that Mohammed sells, which come from China. But Mohammed says that the Nigerian discs are lower quality and though they offer double the profit, if you sell them to a customer and it does not play right, then you lose a customer. He prefers to sell the lower profit and higher quality merchandise from China.

Steve and I were thinking about it a bit, and it’s true: when you buy these DVD’s on the street, in the marketplace, or in a restaurant, it’s just a throw of the dice if it will work. On our travels, we’ve both bought DVD’s that didn’t play right. There are certain brands of pirated DVDs that look good, and in practice prove to be good. One brand that looks particularly good is “UPS”. The pirates just took the UPS logo and slapped it on their discs, and it works! It looks professional, and it turns out the pirates professional enough to pirate a logo as well as the content, make good discs! Mohammed is right; customers prefer the Chinese discs.

This is field economics at it’s best. What a great way to spend a Saturday afternoon in Freetown!