Home video rental company BIGFlix, a subsidiary of the Reliance Anil Dhirubhai Ambani Group (ADAG), is planning to channelise over 50 percent of its total investment on expansion in tier-two cities in the second quarter this fiscal.

In 2008, BIGFlix had announced it would invest Rs.400 crore (Rs.4 billion) over three years.

"We are looking at investing 50-55 percent of our total investment (of financial year 2008-2009) in building our online business for smaller cities and are looking at expanding it to 50-100 cities apart from the current cities we service now, " company chief operating officer Kamal Gianchandani told over phone from Mumbai.

BIGFlix, launched in August 2007, currently offers home delivery service in 10 cities - Mumbai, Delhi, Chennai, Kolkata, Bangalore, Hyderabad, Ahmedabad, Pune, Chandigarh, Pune and Indore.

It now plans to penetrate into tier-two cities like Kochi, Lucknow and Bhopal.

"We have been receiving overwhelming responses from tier-two cities in terms of registrations on our website, even when we were not providing any service to them. This response encouraged us to expand our services to these cities where people have a great appetite to watch movies, " said Gianchandani.

The company has planned to tie up with a courier company to aid services to potential customers besides marketing the initiative through regular mediums like print and radio.

Though slowdown and even recession in countries such as the US have taken a toll on world economy, Gianchandani said this had not deterred the company from moving on with its business plans.

"We didn't expect the world to go topsy-turvy so soon but we remain focused on our goals like spending on building the brand, building technology and building logistics for increased penetration. One has to manage and maintain the momentum we started with and gained over the year since our launch."

According to Gianchandani, the home video business in India is flourishing.

"The appetite for movies is increasing and more films are being produced every year. And in this case, the online business is inexpensive vis-a-vis setting up shops since the real estate prices in India are very high. So that explains the logic of the increasing business, " he said.