Multiplex chain PVR Inox is seeing stability at the box office across languages, including Hindi, which until the previous three months had witnessed high volatility.
The company said that they are seeing smaller Bollywood films performing well at the box office. The Kerala Story turned out to be the biggest film at the box office in the June quarter.
"Along with The Kerala Story, some of the Hollywood films started doing well. Also, the concern of small- to mid-budget films not doing well wasn't there as this segment picked up, and a lot of smaller Hindi films like Zara Hatke Zara Bachke and Satyaprem Ki Katha did quite well. As a result of that, the box office was stable. While the box office business did not pick up pace, volatility was low in the first quarter. And we expect box office momentum to increase from here on, as August is looking promising. August 11 releases like Gadar 2 are seeing good traction. Then in September, we have Jawan," Nitin Sood, Group Chief Financial Officer (CFO), PVR Inox, told Moneycontrol.
Compared to the March quarter of the financial year 2023, when gross box office collection (GBOC) was at Rs 726.3 crore, the June quarter reported Rs 830.3 crore. While India GBOC of regional movies was down from Rs 1,289.9 crore in Q4 FY23 to Rs 1,081.5 crore in the quarter ended June, PVR Inox recorded a 5 percent growth in regional GBOC at Rs 241.1 crore, up from Rs 229.3 crore in Q4 FY23.
"April was slow, but in May and June, the box office picked up a bit. Also, there is less pessimism around the Hindi box office, and Hollywood is back both in terms of box office and content availability. Regional (box office) is also stable. We see stability in all language content," Sood added.
The company added that the success rate of films at the box office has been improving.
India GBOC of Hollywood films increased 69 percent quarter-on-quarter (QoQ) from Rs 254 crore in the March quarter to Rs 430 crore in Q1 FY24. The number of English movies released increased to 27 in Q1 FY24 from 24 in Q4 FY24 and 17 in Q1 FY23.
The company also saw some recovery in footfalls sequentially. Footfalls increased to 33.9 million in the June quarter from 30.5 million in Q4 FY23. But it is down annually from 43.4 million. "July has been an outstanding month. And with the lineup we have in August and September, things look positive," Sood said.
Ad spends
On the back of a strong content lineup, the company also expects an improvement in advertising revenue, which has been a laggard. "In July, we started getting more inquiries, but from Q3 onwards, we will start to see the real impact. There were concerns among advertisers because of the negative commentary on films not doing well. But that negative commentary has gone away. So, a lot of brands are ready for advertising," said Sood.
Starting the September quarter, recovery will clearly be seen in cinema advertising, said Gautam Dutta, Co-CEO (North and South), PVR Inox, during the earnings call.
"Thanks to some big releases in July, the overall noise level around cinemas is positive, and we are getting big accounts back. What was missing were long-term campaigns, which were held back because of negative chatter around the box office. Over the next 60-90 days, we look to close deals. Sectors like telecom and consumer durables, we believe, will come back strongly. We used to have 10-15 big clients throughout the year, which we are missing, and we hope to get them back," said Dutta.
Advertising income fell to Rs 89.3 crore in the June quarter from Rs 90.7 crore in Q4 FY23 and Rs 93.1 crore in Q1 FY23.
Dutta said that ad income will bounce back sharply once cinema starts to deliver footfalls. That process has now begun.
Cricket content
The company is also looking at screening World Cup cricket matches starting in October. "We are still in the discussion phase for World Cup matches, said Sood.
Dutta said that the company is in the process of signing the contract. "Mostly, we will screen India matches. Historically, we have done many shows for one-day matches. We go to corporates that end up sponsoring a certain match. And they are the ones who call in people while some tickets are left to sell at the box office. In the past, we have seen some key matches garner great interest," he added.
F&B sales
In the June quarter, food and beverage (F&B) revenue also helped the business narrow its losses. "We are seeing a positive trend, and the offer on F&B has been well received. In the near term, it will continue, and depending on response and data, we will fine-tune the discount," said Sood.
The multiplex operator reported F&B revenue of Rs 4,27.7 crore, up from Rs 352 crore in Q4 FY23. However, it was down 12 percent on a year-on-year (YoY) basis.
"All the chatter around F&B pricing being too high is mitigated, and we are getting a good strike rate," said Dutta.
Screen expansion
On the issue of screen expansion, Sood said that the company opened 31 screens in Q1 FY24 and 46 screens to date. The company plans to add 150-170 screens in FY24. PVR Inox also shut down 14 screens in the June quarter. In total, the company added 17 screens to its portfolio in Q1. "We intend to shut down around 2-3 percent of our screens. That number works out to between 50-60 screens," said Sood.
The company is also looking at increasing the portfolio of its premium formats, which include IMAX and Ice theatres, among others. Special or premium formats, which are around 229 screens, account for 13.5 percent of overall screens. We are rolling out more of these in various properties that are coming up and also in some of our existing theatres. These special formats have further room for growth. The percentage (share in the screen portfolio) will grow to 15-20 percent," said Sanjeev Kumar, Executive Director, PVR Inox, during the earnings call.
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