Multiplexes are looking at adjacent businesses as alternative revenue streams:Gautam Dutta

The festive season has brought much cheer to the cinema industry. With the growing COVID-19 vaccination drive pan-India and falling number of cases in most parts of the country, movie halls have been allowed to reopen – some with 50% capacity and other will full capacity. Giving a much needed fillip to the cinema industry, the Maharashtra government allowed the reopening of movie halls in the state from October 22, 2021.

Akshay Kumar-starrer ‘Sooryavanshi’, which was released in theatres during the Diwali weekend, has been creating quite a buzz for drawing in huge crowds of cine lovers. In fact, such has been the rush that certain halls in Mumbai have been screening the movie in unconventional timings of 1.15 am, 2 am, 4.30 am, 5 am and 6 am. As per media reports, each of these shows have been housefull.

In the run-up to ‘Sooryavanshi’s release, PVR Cinemas introduced a host of special initiatives/ contests to encourage people to resume their big screen movie viewing experience. As part of these initiatives, the multiplex chain carried out an innovative ‘cinema takeover’ activation at select properties across India. 

The largest film exhibitor company in India recently announced the launch of a unique luxury boutique property, PVR Maison at Jio World Drive, Bandra Kurla Complex, Mumbai, and a customised cleaning and disinfecting solution for commercial and residential segments under its newly launched business vertical, V-Pristine. The brand intends to take care of the most precious personal and private spaces and provide the same quality and standards that the customer is used to experience at all our luxurious and premium cinemas.

In conversation with Adgully, Gautam Dutta, CEO, PVR Ltd, speaks at length about how the pandemic hit the cinema industry, how are they looking at revival, various initiatives launched to offset future disruptions in the industry and much more.

How has the pandemic hit your revenues? What has been the loss like during the time the theatres were shut?

The Cinema Exhibition Sector has been one of the worst hit sectors in the entertainment industry and has witnessed two sets of lock-down. In the first lock-down, there was zero revenues in 8 months (13 March 2020 till 9 November 2020), and thereafter meagre revenues in the last 5 months (9 November 2020 till 31 March 2021). The second lock-down happened from April 2021 to July 2021. Even for a brief period when cinemas were open, operations were deeply impacted due to restrictions in capacity, night and weekend curfews and staggered permissions to open coming from states. Once cinemas were allowed to open from October 2020 to March 2021, the multiplex industry faced new challenges like lack of new film content from the Hindi film industry, which forced them to focus on promoting regional and foreign language films. So, in the real sense, we saw some kind of stability in January to February with some good Hollywood content and regional releases. In a business that we are in, we can only earn revenues when cinemas are open. This means all our revenue streams such as Box Office Collections, F&B sales, convenience fees on online ticket booking and cinema advertising can arise only when cinemas are running.

What is your revival strategy like? What steps are you taking to draw in movie goers back to the theatres?
Our strong foundation and brand equity has helped us overcome the rescue stage in our business and currently we are in the revival stage, when various state governments have given staggered permissions to reopen cinemas after the second wave with restrictions in capacity and operating hours. Movie viewing on the big screen is a natural phenomenon and audiences come to cinemas when there is a varied and abundance of movies to choose to watch. Unfortunately, the industry faced lack of content after cinemas reopened after the first wave and there were indications of revival when in the South people started returning to watch movies due to a good supply of content. After PVR reopened on July 30, Hollywood and Regional Movies have shown strong signals of revival as footfalls have grown by 100% over the past two months. With new Bollywood content, regional and Hollywood scheduled for release from this festive season onwards, we are certain movie goers would return to watching movies on the big screen as in the past.

Having said this, initially we did carry a series of confidence building measure to draw movie goers to theatres. PVR Cares was a reassurance campaign to address the concerns of guests to ensure and reinforce that cinemas are a safe and secure place to visit post-COVID-19. We got celebrity endorsements to increase virality of PVR Care. We communicated our SOPs to our audience, beyond the government mandated SOPs such as use of UV cabinets to sterilise all food packaging before serving to guests and use of anti-microbial film on most touched surfaces. We reached out to our 12 million privilege loyal customer base to communicate our readiness to reopen our cinemas. We promoted ‘Private screenings’ in a big way, an experience to amaze families and friends with a movie of their choice at incredible rates or even a private viewing of a wedding film and tasted success. During the lock-down phase, we did targeted campaigns to sell our gift cards, through which we have been able to garner incremental footfalls now when cinemas reopened.

Going forward, we are focusing our opening properties which are more experiential in nature, such as the 6 Screen luxury boutique multiplex, Maison PVR, the House of PVR at Maker Maxity, BKC Mumbai which we have opened on October 22 as we announced our reopening in Maharashtra. We need to give reasons for our customers to come out of their homes and watch movies on the big screen through an experience that can’t be replicated at home.

How did you keep the company afloat during the shutdown during the pandemic period? What other activities, investments did you actionate?

We built liquidity buffers by negotiating Rent and CAM waivers, discounts from Landlords/ developers and reducing fixed operating costs. We have successfully raised Rs 2,030 crore of additional liquidity (Rs 1,100 crore of Equity and Rs 930 crore of Debt) till date since March 2020. Post the second wave when cinemas reopened, we have been witnessing week on week increase in admits with Hollywood and Regional Content inspite of absence of Bollywood movies, capacity restrictions and operating hour limitations. Since our doors have opened, so all our revenue streams of box office, F&B, convenience fees and advertising are gradually coming back to pre-pandemic levels.

How long do you anticipate it will take for things to normalise for the movie industry?

The encouraging sign is that 4 states – Telangana, Rajasthan, Karnataka and Andhra Pradesh – have removed their capacity restrictions and are operating at 100%. Two more states – Punjab and Gujarat – have relaxed restrictions to 66% and 60%, respectively from 50%. Maharashtra has allowed cinemas to reopen from October 22 and Kerala from October 25. We expect other states to follow suit. So, if there is no third wave and there is no drastic increase in COVID-19 cases, we hope normalcy to return in the fourth quarter as Bollywood, Regional and Hollywood has already announced their release dates starting this festive season and beyond.

What steps does the movie industry, specifically the movie theatres, need to take to offset such disruptions in the future?

Movie theatres comprise of single screens, multiplexes which comprise of listed companies and smaller players. While the single screens and smaller players do not have access to capital markets, listed players can raise debt and equity at the time of crisis.

Multiplexes are looking at adjacent businesses leveraging their know-how in these areas as alternative revenue streams beyond cinemas. PVR expanded its much loved cinema F&B products through PVR Popmagic microwave popcorn and V Roast freshly brewed instant coffee sold on food aggregators and e-commerce sites. Through V Café, its food selection in cinemas has been made available to people’s homes through food aggregator platforms, which could eventually move to cloud kitchens if cinemas are closed. There are many such businesses that you would see multiplexes venturing out in the near future.