Cricket, the sport which is religiously followed scores of Indians, took away the spotlight from movies in the first half of December quarter as the ICC Cricket World Cup 2023 was held from October 5 to November 19.
India's largest multiplex chain PVR Inox reported subdued performance in Q3 FY24 due to 41 percent drop in the number of releases versus the same period in the last financial year. The dip in the number of releases is attributed to the timing of the World Cup.
The number of regional films dropped to 162 in Q3 FY24 from 295 in the December quarter of FY23. While the number of Hindi films fell to 31 from 40, English films saw minimal drop of 16 releases in the quarter gone by from 17 in Q3 FY23. Total number of releases were lower at 209 in December quarter of FY24 from 352.
"It is a weak quarter in relation to Q2 FY24 (September quarter) largely because the first two months were muted due to the Cricket World Cup in India. There were hardly any big film releases during the first two months of Q3. October and November were slow and big releases came only after Diwali. Admissions (footfalls) were lower due to lack of film releases which affected the profitability. The total admissions was 3.6 crore which is down by 2 percent year-on-year and in Q2 FY24 the footfall was 4.8 crore and this was the main reason for drop in profitability," Nitin Sood, Group CFO (Chief Financial Officer) told Moneycontrol.
The company reported 20 percent slump in profits year-on-year at Rs 12.8 crore as against Rs 16 crore during the same period in the previous financial year.
The match timings overlapped with peak movie show timings in theatres and India's matches were over the weekend which made the film industry hold back releases, said Ajay Bijli, Managing Director, PVR Inox during the earnings call.
Also read: PVR Inox to script a muted December quarter after a blockbuster show in Q2 FY24
He added that movies that did well in October was only Leo from Tamil which grossed over Rs 400 crore, 12th Fail minted more than Rs 65 crore and Salman Khan-starrer Tiger 3 which was the biggest hit in November last year collected over Rs 350 crore.
The movie business made a comeback in December with Ranbir Kapoor's Animal, Shah Rukh Khan's Dunki and south superstar Prabhas' Salaar.
"December was best as it was the highest grossing month of 2023. Bulk of the profitability was concentrated in December. It was the only month that had enough content," Sood said.
While December recorded higher occupancy of 37 percent, overall Q3 occupancy level was at 25.2 percent. Occupancy and footfalls remain lower than pre-Covid levels for PVR Inox.
Fewer footfalls
"The whole industry is navigating this phase where there are a lot of changes happening on the ground. We went through a phase when everything was getting sold to streaming platforms but now we have went back to the eight week window (period after a theatrical release comes on a streaming platform). Now, we are in favourable position as OTTs (over the top platforms) globally including India have cut down on buying films significantly. Most of the films they are buying is after their theatrical release and based on their box office performance. Due to this there is a significant impact and there is volatility in terms of producers green lighting films. As a result of which there are gaps in releases," the CFO said.
He added that it will take few quarters before this problem gets solved.
Also read: PVR Inox net profit slumps 20% to Rs 12.8 crore in Q3 on a dull box office
India box office shines globally
While the Indian film industry is dealing with gaps in terms of footfalls yet it has bounced back and is in a much better position than global markets, according to PVR Inox data.
India box office is up over 12 percent to $1.5 billion in 2023 from $1.3 billion in 2019. On the other hand, US box office is down 20 percent from pre-Covid levels from $11.4 billion to $9.1 billion. Global box office is down to $33.9 billon last year from $42.3 billion in 2019.
"Most of the other global box office are taking longer to recover as they have high reliance on Hollywood. Admissions are still not back," said Sood.
He said that Hollywood film releases will see some impact due to the 2023 Writers Guild of America strike. "There will be some impact in the next year's Hollywood release plan. Some of the studios have pushed back dates. Hollywood is around 15 percent of our revenue, the impact won't be big."
Sood also said that unlike last year when films from down south dominated the year, Hindi films clearly stood out and in 2023. "Hindi films had a big bounce back. Last year South Indian films were ruling the roost. This year Hindi films have performed strong. Next year again South Indian film lineup is looking strong with Pushpa 2, Rajinikanth's Lal Salaam."
Due to Hindi box office's bounce back and with big December releases advertising income recovered 23 percent. "Advertisers are keen to advertise with big films. A lot of old clients which had moved away have come back across industries," the CFO said.
Old screens gone, new screens in
In FY24, the company has opened 97 screens and is on track to open 160 – 170 new screens. However, the company has shut down some of the older properties.
"We have shut down 62 screens this year (FY24) and overall we will shut down 75-77 screens. We have taken a call to evaluate the complete portfolio and shut down our unprofitable screens which have come to the end of their life cycle," Sood said.
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