‘PVR is constantly trying to augment its portfolio of formats’
Despite the prevailing economic slowdown PVR chief business planning and strategy, PVR Pictures CEO Kamal Gianchandani feels that this fiscal could be even better than the previous one which was the best for his company in a decade.
The aim is to keep improving in all areas and technology is one of the key focus areas. It has done a deal with D-Box for motion technology and the deal kicked off with ‘War’. He also feels that there is scope for growth not just in the smaller towns and cities but also in the major metros as well.
TelevisionPost.com’s Ashwin Pinto caught up with Gianchandani to find out more about the company’s plans.
This year what are PVR’s expansion plans in terms of screen count?
We have given a guidance of 80 screens but it looks like we will exceed that. But we are on track to meet our guidance at a minimum. The whitespace for expansion is in the smaller towns. We are in 65 cities and towns. The next 50 towns are where the expansion opportunity is. But even in the big cities, there are pockets which are deprived of good quality exhibition infrastructure. Mumbai is a case in point when you look at Andheri East, Virar, Borivli, and Dadar. We believe that even the big cities offer opportunity.
How are your various brands perceived?
To be honest we have not done recent research. But I think that we are perceived to be a premium, aspirational brand which constantly tries to push the envelope and bring the next level of thought leadership into the country. But at the same time, we try not to get complacent. We try to be critical of our products and services. We keep identifying gaps and try to fill them as we go along.
There is the talk of an economic slowdown where people are hesitant to buy Rs. 5 biscuits. How is this impacting the multiplex business?
That is Britannia which is one company. If Britannia is experiencing a slowdown then I am not sure that that analogy applies to all other consumption products and services. In cinemas, we seem to have benefited. I do not like the term slowdown. I would like to think that everything is healthy. Last year was our best year in 10 years in terms of admission, average ticket price and occupancy. This year is tracking the last year and might be even better because there are six more months to go. This year comes on top of a record year and is doing exceedingly well. If at all there is an impact of the slowdown it is a positive one.
What is the CAPEX plan for this year?
When we look at the CAPEX which is a blend of small towns and big cities we look at Rs. 2.5 crores a screen. This means Rs. 200 crores a year give or take Rs. 20-25 crores. This is the market guidance.
From a P&L perspective, what is the big challenge?
The big challenge is that you have to be mindful of costs and you have to figure out new, innovative ways of managing your cost without cutting corners and impacting your service standards. This whole challenge of managing quarterly numbers and balancing it with the long term view of the business is the typical classical challenge. So far we have been able to manage this challenge.
The government has given tax sops to corporates. How will this help multiplexes?
It is a reduction of direct tax. It will help us at the PAT level and increase our margins. The extent of the benefit is still being analysed by our finance team. The government has recognised the slowdown and is taking the initiative, steps to arrest that slowdown and prop up the GDP and the economy. I think that we see this as the first step in a continuous process by the government to engage with the industry and give the industry the needed impetus wherever the government thinks that it can add value.
Industry experts feel that India can learn from China’s multiplex industry which has grown rapidly. What is your take?
We can learn from the execution capabilities because China has been adding 6000 – 7000 screens per annum. India adds 300 screens per annum. Clearly, their execution skill sets and capabilities are at another level. This is something that we can learn from them. But apart from that India is a different market. India is a different ecosystem. The retail infrastructure set up is different as is the permission set up. It is tough to compare the two countries.
What role does technology play in PVR’s strategy?
Technology is playing a part in every business. Whether you consciously advance your initiatives and make them digitised whether they are consumer-facing or internal processes or backend stuff whether you are savvy and you do it as a thought leader or even if you are not savvy then market forces will force you in that direction because consumers have moved to handheld devices and consuming digital services and products. They are forcing all businesses to move in that direction.
PVR and the film business are no exceptions. The way films are shot, the way they are distributed, the way they are exhibited, the way tickets are sold, the way we engage with our customers in terms of feedback everything has become digitised. Of course a lot of stuff internally at PVR in terms of internal processes, analytics, understanding data better and using that data to do targeted communication all of that is happening in our business. So technology is very important and is a critical piece of what we do today. We also believe that it will have a larger influence as we move forward.
How did the deal with D-Box come about?
D-Box is a pioneer in offering a motion-based immersive experience within cinemas. PVR is constantly trying to augment its portfolio of formats. We focus on offering very unique, different experiences to our patrons. D-Box and PVR have been trying to work out a relationship for long. Finally, this marriage came about.
How many films are you looking at for D-Box?
About 70-80 Hollywood films in a year. We are targetting 10-15 local films and gradually we will ramp it up. On the local front, the producers we deal with will decide whether D-Box is a format that they want to deal with.
Across how many screens are you taking D-Box?
To start with 11 screens across Delhi and Mumbai. Gradually we will ramp it up. We look at consumer’s propensity to spend, their receptiveness to new technologies and we find that in the top 15 cities the behaviour is fairly homogeneous.
What is the investment being made into this?
We are not sharing numbers. But what we can share is that on premium screens we invest 50-60 per cent more than on a mainstream screen which is Rs. 3 crores.
What is the difference in the ticket price for a film which uses technology?
It varies from movie to movie, format to format but typically the ticket costs 50-100 per cent more than a regular ticket price. This is a zone that consumers are usually comfortable with. But the ticket price for D-Box will evolve. We will have to learn on the basis of customer feedback. We will have a much more accurate answer to give on this question of the D-Box ticket price three to four months down the line.
But technology is important. When a film is released in 2D and 3D 75 per cent of its revenue comes from 3D. India continues to be a 3D market, unlike the West where 3D is sort of depleting. We don’t see this changing in the near future. Indians are technologically savvy, like to experiment, are aspirational and look for different experiences.
What are the other technologies that you are thinking about introducing or have recently launched?
We have a lot of technological interventions in different aspects of our business. From a consumers perspective, different formats that we offer include Imax, 4DX. D-Box is a new addition to our portfolio. We have the top-end luxury format screens which we call Luxe. We have got Playhouse which targets the young ones and family audiences. We have P[XL] which is our in-house large screen format which is 70-80 feet, widescreen. We have Director Cut which is in Delhi which has all luxury format screens and the experience is augmented by a clubhouse that adjoins the cinema. It has the license to serve alcoholic drinks.
What trends are we seeing in terms of multiplex attendance?
What we are collecting is a lot of rich transaction data because the bulk of customer transactions that is 60 per cent of ticket sales happen on digital channels like apps and websites. This gives us rich transaction data, history which helps us do analytics. But these are early days. We are still learning and evolving.
It is helping us improve our decision making, making it more fact, data-based and hopefully, this will result in better, more accurate decisions. Also, it is helping us to reach customers in a more targeted manner. We release so many films and many times people do not know what is coming and what is going out. With our understanding of the customer improving we are able to target them in a much more precise manner.
How has the customer evolved in terms of making a choice?
Convenience is really at the top of the consumer’s mind when it comes to going to cinemas. They do not seem to care too much about ticket price though you cannot charge in an illogical manner. The ticket price does not seem to be the driving force. Quality of offering, content choice, comfort are more important. How knowledgeable are the theatre employees? How courteous are they? How safe do consumers feel inside the cinema with one’s family? All these are more important than price. Attendance is broad-based. A big part of our agenda is to make our cinemas more accessible to people who are differently-abled and cater to all special needs.
Could you talk about the deal with Reliance Entertainment and Panorama Films for the release of Hindi films?
This is PVR Pictures. We have been distributing Hollywood for 20 years. We dominate this space from the independent filmmaker space. There is an aspiration to grow the business and so we are increasingly taking up more Indian films for distribution. We were always releasing six to seven local films but the number will go up to 12-13. The important thing is the scale of film that we release has become bigger. We released ‘Super 30’ with Hritik Roshan. We have ‘Suryavanshi’ with Akshay Kumar. Then there is ‘ ‘83’ with Kabir Khan directing it and Ranveer Singh as the lead. It is about the cricket World Cup in 1983.
What is the upside that you see from regional cinema?
Regional cinema is becoming more and more stronger. The big trend that you see is that films are doing exceedingly well in their dubbed version. ‘Saaho’ did quite well in Telugu but in Hindi, it broke all records. We never thought till three years back that a Telugu or a Tamil movie dubbed in Hindi would do well. As you know we acquired SPI Cinemas last year. SPI also has a distribution company that distributes Tamil films in Tamil Nadu. We are growing this piece.
What role does M&A play in your strategy?
M&A plays a role and we are poised for new opportunities but we never plan for these things. As and when and when an opportunity presents itself we go for it. The move has to be a strategic shift. The product has to fit with what we do in PVR. We will not pick up a chain that is doing mass-market cinemas which are inexpensive but are also low on quality, service standard. That is not the ethos that we practice in PVR.
How would you describe the box office performance this year?
Fantastic! I think that it has been excellent especially coming after a very strong last year. Every single Hindi film, Hollywood film has done well and has exceeded expectations.
The success of the ‘Avengers’ showed the people will visit multiplexes but there has to be a reason to go. Is that the big change for the industry compared to five years back?
I think that this has always been the case going back to ‘Titanic’ over 20 years ago. Films that have done well are bigger, larger than life and have a unique storyline.
How did the idea of the VKAAO mobile app come about?
We used to get feedback from customers who told us that as a Tamilian living in UP he/she does not get to see Tamil movies. We felt that we could use VKAAO as a niche distribution platform so that films can travel. It is a long-tail model which is about assimilating small demand that is present in pockets and then creating a business out of it.
How big is the movie selection and how is this being scaled up?
We offer close to 1000 films and we are scaling it up by about 200 films every quarter. The idea is to focus on good quality films. It is available in all 65 towns and cities where PVR is present.
The aim is to have VKAAO contribute 7.5 per cent of your revenues. How far are you from that?
That is not the goal. The aim is to reach 2-2.5 per cent. We are inching forward and we will get there.
Multiplexes have expressed concern about Jio’s ‘First day First Show’ initiative. How do you see OTT disrupting movie viewing?
The disruption word has been exaggerated and is being used for the film business in an excessive fashion. The OTT industry has been beneficial for us. It is another distribution platform empowering content creators to slice and dice their film in another way and create more revenue out of it. This is allowing them to make bigger and better films which in turn helps cinemas get more business when the film is released theatrically. Also, people are getting more familiar with franchises and smaller actors in terms of their skills and capabilities. So when those actors films are released they seem to be doing a lot better.
Do you see theatrical windows changing a lot?
We don’t see the eight-week window changing. It is very important from an exhibitors perspective. Our partners and content creators are equally respectful of the window. This has been a sacrosanct model for many years. This is not a philosophical argument. It is an economic argument.
Producers benefit from windows. It helps them discover the true value of their product. They can create multiple distribution platforms each of which exploits their film at different intervals. The aggregate income that is derived from doing this is better than a situation where formats or platforms are clashing with each other. We have tremendous respect for Jio. It is an incredible company. There is no confrontation. The market has a place for all of us to not just co-exist but to also prosper and grow the content eco-system. Jio’s entry is welcome and will be a big positive for everyone.
What role do non-theatrical releases play in PVR’s strategy?
They play a small but important role. It appeals to discerning audiences and thought leaders. We focus on live acts, standup comedy, sports, recorded performances. What really works is standup comedy and recorded performances. Sports is not that big a driver.
How does this expand your audience?
There is a segment of people who enjoy the out of home social experience. But in addition to movies, they want to experiment with alternate content. This is able to satisfy that need.
You also do foreign language movie initiatives like a Japanese film festival. What’s the idea behind this?
It is small but important. This segment which is not coming to cinemas is being targeted through these initiatives. So there are a lot of Japanese people in Delhi NCR as there are factories being operated by companies like Hyundai. These expats want a taste of their own culture.
What role does tying up with Jio Mami play from a marketing brand-building perspective?
Mami is such a prestigious body in India such a big proponent flag bearer of good quality cinema. We get a lot of positive rub off, sentiment. Tying up with them allows us to give filmmakers of all kinds a platform.
A film producer earlier this year approached the court regarding virtual print fee. What is your stand on this?
That case is closed. We won the case and CCI ruled in our favour. The argument made by this one producer was rejected by the CCI.