Less about cinema, more about entertainment

Less about cinema, more about entertainment

Services

As consumers shift from single screen theatres to multiplexes across metros and non-metros, PVR is looking at a combination of content- agnostic growth and establishing 1,000 screens in three years, to capitalise on this opportunity

In November 2012, when PVR Ltd. placed big bets on Kanika Group’s Cinemax India, by acquiring a 69.27 per cent in the business, it added 138 screens in its portfolio, taking its total screen count to 350, in 85 properties, across 36 states.Four years later, only eight of the acquired properties have been rebranded as PVR, with the rest still being coined Cinemax. The thought behind this move, says CEO Gautam Datta, is to focus on how to leverage the existing brand and add to business rather than prioritise re-branding. “After acquiring a company, it’s not just about changing the name and logo, but about working inside out because what you deliver matters more,” he opines. In other words, with every acquisition, PVR first gets into the skin of the property and gradually works its way to the periphery. It starts with the back office, projection room, screens, technology, people, food and beverage and design, and at last, changes the logo. Take, for instance, the new PVR icon inside Mumbai’s Infinity Mall. The Cinemax property which it acquired in 2012 has been completely revamped with advanced technologies such as a 4K projection system and Dolby Atmos sound system, to provide an enhanced cinema viewing experience to movie goers. “We need to make it worthy enough to be called a PVR,” he quips.

While this is just one example of a differentiated strategy adopted by the brand, the company has put several  more well-thought out strategies in place to ensure that it stays relevant in the market and powers constant innovation to retain its positioning as the largest multiplex chain in India. “We are in the process of rejuvenating and creating a new product for the consumer – one that is agnostic of content,” he says.


“Today, cinema businesses continue to rely on content. We want to break that, look outward and perceive ourselves as an out-of-home entertainment business. Can we be agnostic of content and still deliver a great cinema experience? That’s what we’re working towards.”


Looking beyond content

Today, for theatre businesses in India, there’s good news and there’s bad news. The good news (or opportunity), as PVR’s Pramod Arora (Group president) and Nitin Sood (CFO) pointed out when we last spoke to them in December 2013, is a paramount shift in consumers’ go-to-movie format from single screen to multiplex theatres, and the challenge is in delivering the best possible three-hour entertainment experience to today’s time-constrained consumers. As Datta points out, “The number of screens added every year by multiplex businesses is the same as the number of single screen theatres that get shut. To quote numbers, roughly 300 to 350 multiplex screens get added every year and close to 300 get shut.” But, he assures that the situation has become better over the years, with disposable incomes rising in Tier-II and Tier-III segments fuelling multiplex (business) growth in newer markets.  “As you go further into non-metro markets, you notice that the way consumers perceive movies is very interesting,” notes Datta and adds, “They are discerning, wherein, if they see value in what they consume, they are willing to pay extra.” That being said, businesses still have to play within the buying power of this segment and adapt their product to the limitations it presents. “While what they want is largely the same, the price is almost 40 per cent lower here as compared to metros,” he shares. This revenue gap is addressed by cutting down costs on various aspects such as flooring, uniform quality, seating arrangements and more.

To tackle the challenge, that of delivering a quality entertainment experience for consumers for the three hours that they spend at the movies, Datta believes the solution lies in constant innovation and changing the way businesses perceive cinema. “Today, cinema businesses continue to rely on content. We want to break that, look outward and perceive ourselves as an out-of-home entertainment business,” he explains. PVR often presents itself with this question; if PVR wins, who loses? If it’s a restaurant, gaming centre or a similar business, that enterprise is its competition. “Can we be agnostic of content and still deliver a great cinema experience? That’s what we’re working towards,” he states. Apart from the recently launched PVR Icon, the brand has five other variants under its portfolio; PVR Imax, PVR ECX, PVR Premier, PVR Mainstream Cinemas and PVR Director’s Cut, with the tickets at Director’s Cut being priced the highest at Rs. 1,400 per ticket.

Investing in growth

The acquisition of Cinemax was one of PVR’s landmark moves, accelerating its growth significantly as compared to the year before. It built 213 screens over 17 years, while the acquisition in 2012 added 138 screens at one go and consequently, revenues jumped from Rs. 699 crore in 2011 to Rs. 1,299 crore in 2012. In June 2015, it made another acquisition, of DLF Group’s DT Cinemas for Rs. 500 crore. As a part of the deal, it brought 29 screens with 6,000 seats across eight properties in National Capital Region (NCR) and Chandigarh under its umbrella, taking PVR’s total screen count to 115 multiplexes with 506 screens across 44 properties.

In terms of revenues, FY15-16 has seen successful first three quarters for PVR, with revenues growing 24 per cent from Rs. 1181.79 crore in the same period last year to Rs. 1461.07 crore this year. As the demand for multiplex continues to grow in the coming years, PVR plans to invest Rs. 140 crore to Rs. 150 crore on an annual basis to fuel organic growth of the business and add 60 to 65 screens in its cinema circuit, with an equal penetration in Tier-II and Tier-III cities vis-à-vis Tier-I cities. In three years, it aims to take its screen count to 1,000. “The capital will be entirely funded by the internal accruals and the investments will cover setting up costs for opening new cinemas, upgrading technology like Dolby atmos surround sound and 4K digital projectionand developing customer interface platforms such as mobile app and paperless ticketing,” concludes Datta.


PVR’s Innovation Strategy

Technology modernisation

  • 1.  Launch of 4DX technology, which includes features like motion, wind, lightning, vibrationand scents that go far beyond 3D.
  • 2. Inclusion of 50 screens of Dolby ATMOS surround sound in PVR cinemas circuit.
  • 3.  IMAX technology to cinemas in North India.

New cinema formats:

  • Launch of Superplex, a 15 screen multiplex in Noida with features such as gold class, auditoriums equipped with 4DX and IMAX technology along with mainstream cinemas.
  • Introduction of a sub-brand called PVR Playhouse, an exclusive fun and entertainment destination for children aged 5-9 years.

Re-innovation of existing theatres

Select key properties for renovations and transformations, such as PVR Icon (a Cinemax property earlier), revamped with advanced technologies such as a 4K projection system and Dolby Atmossurround sound to provide abetter cinema viewing experience to consumers.


Then

Spend Rs. 175 crore to Rs. 200 crore to build 90 screens, particularly in Tier II regions

In November 2012, acquired a 69.27 per cent stake in Kanika Group’s Cinemax India Limited

350 screens in 85 properties across 36 states

Now

Spend Rs. 140 crore to Rs. 150 crore annually and add up to 65 screens a year in metros and non-metros

In June 2015, acquired DLF’s DT Cinemas for Rs. 500 crore

491 screens across 44 cities and towns across 109 properties

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