Ajay Bijli, Chairman and managing director, PVR Ltd talks to Moneycontrol about the multiplex business, impact of GST on entertainment, competition from digital content and their new privilege programme.
Rapid advancements in technology and digital offerings have brought about sweeping changes in the world of media and entertainment. How has it affected your industry and what’s your prognosis like?
Currently, the given the big budgets of the films—both international and domestic—film makers want to make something big with special effects, larger-than-life story telling formats, big actors and other similar varieties. So, the only way they can recoup the value is through theatrical release. About 60-70 percent of the revenues of a movie still come from theatrical release. Theatrical release gives you that stamp or that cache once the film has done well to go ahead with other formats on which the movie can be released and can be monetised. So, while smaller movies can get released on these new platforms, the big banner productions will continue to need big screens.
Your luxury offerings come between Rs 1,000 and Rs 2,000. Are there takers for these services, particularly at a time when people wait for a film to be available on Hotstar and Amazon Prime and can easily delay watching a new release at the theatre?
What we are very careful about is the kind of experience we are offering to our consumers, and how it is completely different from any other platform. Also, the Indian consumer does not like anything that is obsolete. They want newer experiences, the best and the latest technology and also good services. That’s where our forte is. We make all of this available to the Indian consumer who still like to go out. We are getting close to 80 million people this year, and fortunately we get people to come back to us. Movies will keep being made. All we have to do is provide an infrastructure where it can be enjoyed. The people who visit us pay for the experience they get at our properties.
In the last 12 months there has been two big events—demonetisation and GST—that have impacted the industry. Do you think these are now behind you or there are still a few things that needs to be sorted out?
While the movies that came in between demonetization all went for a toss, but we have recovered from that. GST is something where we got the wrong end of the stick. Clubbing us with casino and luxury category should not have been done. We are making representations to the government we are trying to tell them that if 2.5 billion tickets get sold in India at a price point of less than Rs 100 then how can it be called luxury?
All over the world ticket prices are not even taxed and even if they are it is not more than 18 percent to 20 percent. Blended entertainment tax was also close to 19 percent. The argument that in GST one has to pay something very similar to what they were paying earlier, therefore, doesn’t hold true. It is only Delhi and Mumbai who paid 40 percent is now paying 28 percent, rest of the places across India were paying only about 10-15 percent. Also, at a macro level, India is a country that is grossly under screened. America has got 40,000 screens; 5000 are being added in China annually, whereas in India, only 300 screens are being added every year and 500 screens are closing down (annually). The 28 percent GST is only worsening the situation.
Also read: GST woes: Govt lowers taxes on select movie tickets, film industry says relief too little
How much of a threat are players like Netflix and Amazon Prime?
Netflix is creating content but that is where we get differentiated. Netflix is showing old movies, their own content and a lot of TV programmes. While I understand that there are people who are glued to shows like House of Cards and we are losing some customers there, we get to exhibit brand new content and people do have a big appetite for it. Like I said, theatrical releases gives one a sort of cache. So, till the window is exhausted we make the most of brand new content.
Having said that, Netflix is creating great content and we would want to become a studio and have the content so that we can play them.
Major operators are all exploring Tier II cities. PVR is present in places like Moradabad and Bokaro and Panipat. How are these properties doing? Are people ready to pay the kind of money a multiplex charges?
It is the right price point that makes the theatre work. We have segmented our organization structure in categories like normal screens and luxury offering and Tier II and Tier III markets. We provide what a catchment area needs. We already have 600 screens across categories and we will open wherever we see an opportunity.
We are present in Tier II cities like Ujjain, Raipur, Bilaspur, Moradabad and we have more theatres coming up in places like Malegaon and others. We have an outlook to open at least 65-70 screens this year.
Tell us a little about your privilege membership programme.
PVR Privilege is a new initiative from PVR Cinemas, which has been at the forefront of constantly reinventing the movie watching experience in India. This program would function as the platform to power various marketing and promotional efforts and provide movie-lovers across the country with more reasons to keep coming back to PVR. With the membership on earns reward points on movie tickets and food and beverage. Then there is automated conversion of reward points into vouchers that can be used to pay for tickets and food. Members get personalised offers, and services at cinemas alongside also getting bonus points during special occasions.
Movie watching experience these days are also about F&B and retail. You have a shushi bar, a lounge facility and a premium dessert shop too. What’s next?
We are innovating on food every day. We are looking at the healthy aspect of food and what we have started at our Promenade property should soon be extended to other facilities too. We have healthy finger food, juices, protein shakes, baked fries and a host of other options. We are also looking at curating special kid-friendly menus with lot of dairy based products in the offerings.