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Mumbai's oldest multiplex is now one of its swankiest. Having been put on the market by its developers when the previous lease-holders, Inox Leisure and Reliance MediaWorks, which could not afford the rent, the erstwhile Fame multiplex has now been relaunched by PVR (which took on the lease) as one of its ECX (enhanced cinema experience) theatres.
Kitted with screens with 2K digital projections, 7.1 Dolby digital surround sound, 3-D enabled screens with JBL's four-way speakers, and with foyers done up in Noce travertine natural stone and PVR's signature black and gold scheme, it promises to be a favoured destination for movie premieres and screenings, given its location at the heart of suburbs (Andheri west) frequented by people from both the big and small screen industries.
However, a few minutes away, down the same road, is yet another multiplex, Cinemax. While a year back, this could have been a competitor, now it means PVR Cinemas (PVR's exhibition business) has two multiplexes next to each. And, Mumbai's north-western suburb is not the only location where PVR's last year's acquistion, Cinemax, is close by. However, PVR's promoters are not concerned about a common catchment area for its two brands. Sanjeev Kumar Bijli, Joint-MD, PVR Ltd says, "We would like to see more of large format multiplexes come up. We have been able to launch some in places like Bangalore and Kochi. But in cities like Mumbai, we are still looking for space for theatres with 11-screens. So, two theatres in close proximity will let us recreate such an ambience to some extent."
With brakes applied to mall development across the country, supply of new screens for the many multiplex chains has decreased. PVR's dual brand presence in Indian cities will alleviate any downturn pang.
In fact, PVR has already started merging the two brands. "We are in the process of cherry-picking certain Cinemax theatres for the first phase of re-branding. Audits , in the past few months, have shown what upgrades in technology, staff training and food and beverage (F&B) options should be made to these properties before they can be re-branded," says Bijli. So, the Cinemax next door to Andheri's PVR would eventually flaunt the same brand name, as would the single Cinemax property in Delhi, which had required separate branding in a PVR-dominated city till now.
The acquisition has led PVR to pause its plans of expanding its non-theatre line of branded gaming and bowling centres called PVR bluO (operated in a JV with Major Cineplex). PVR is investing around Rs 250 crore to revamp some of its own (digitalise and 3-D-enable) and Cinemax's multiplexes. But the focus on non-ticket revenues such as F&B and sponsorships at its multiplexes is more intense than ever.
First, it is getting its pricing right. Amit Patil, media research analyst with Angel Broking, points out how PVR's strategy in scaling up has worked: "It has been able to variably price a number of services across the board, which have taken advantage of the changes in audience buying power through the day. It is now known for its variable ticket pricing, across time bands in almost all its theatres. In smaller cities, it has even been pricing its F&B variably. So, they have been trying a lot of things, especially in tier II and III cities to see what works." Tier III cities see prices of not more than Rs 100 per ticket.
The F&B business clocked Rs 280 crore in 2012-13 (growing at 20 per cent) with the company deploying a mix of outsourced and in-house food preparations. Its JV with L Capital, called PVR Leisure, will further develop F&B concepts. The three ECX multiplexes (two in Mumbai and one in Bangalore) will have a lot of choice along with a Popcorn Express right at the entry for people to grab some food while they wait to produce their tickets, and avoid a queue once inside.
The exhibition business is able to leverage a strong box office of not just Indian movies but also Hollywood films and other international cinema by dint of PVR Pictures' slate of films. About 90-95 per cent of the latter's films are Hollywood releases (while itself contributing less than 5 per cent, so far, to the parent's revenue). The distribution company ends up bringing in about 25-30 movies every year. "We have been lucky with both independent Hollywood film-makers as well as mainstream releases. Nearly 70 per cent of our slate comprises commercial Hollywood releases," says Bijli. He reminds that dubbing the movies in Indian languages makes them reach even more screens. Marketing costs for the movies it distributes could range from Rs 400,000 - 2 crore.
Revenue from advertisements and sponsorships may amount to Rs 86 crore for now, but with PVR and Cinemax's screens together (365 of them), the company expects it to go up to Rs 128 crore next year. "Our advertising revenue per seat is the highest in the world," says Gautam Dutta, COO of PVR Cinemas & bluO (see box for a comparison).
A strong box office and F&B revenues of both the brands drove up the exhibition business' net profit this quarter, at a growth of 26 per cent. However, its competition is consolidating too. Inox Leisure will merge its acquistion, Fame India, arming itself with economies of scale as well.
