Gautam Dutta is a veteran of the theatrical business. As CEO of PVR, he is taking the multiplex major through one of its most exciting phases, following the tough two years of the pandemic forcing it to shut down cinema halls.
A couple of months ago – March 2022, to be exact – PVR’s promoters – the Bijlis - announced that it was amalgamating with another major theatrical player Inox Leisure, which is run by Siddharth Jain – the brother-in-law of Sony-Zee managing director Punit Goenka.
Post the merger, the combined entity will have under its umbrella 1,546 screens across 341 properties in 109 cities. Post the merger, the joint entity is to be renamed PVR Inox. Screens that already exist as PVR or Inox will continue under those names but those opened after the fusion will operate under the combined name.
Dutta joined PVR in 2006 and has managed various portfolios spanning from marketing, media sales and now overall operations. Under his leadership, media sales grew from Rs 7 crore to Rs. 375 crore in FY 2019-2020. He is also credited with launching the bowling chain bluO.
As CEO, Dutta is responsible for advancing PVR’s mission and objectives whilst keeping the brand relevant to the changing audiences, developing and monitoring strategies for ensuring the long-term financial viability of the organisation, promoting revenue and profitability, technology adoption and innovation. Dutta is also a director of Zee Maize, a subsidiary of PVR that owns the 4700BC Gourmet Popcorn brand
Indiantelevision.com’s Ashwin Pinto caught up with the once-upon-a-time advertising exec (he worked with MullenLowe Lintas and Rediffusion DYR earlier on in his career) and spoke with him about consolidation in the exhibition sector, the future and why the theatrical experience and OTT will co-exist.
Excerpts:
On the factors that prompted PVR to merge with Inox Leisure.
The combination would augur well for the growth of the Indian cinema exhibition industry, besides ensuring tremendous value creation for all stakeholders, including customers, real estate developers, content producers, technology service providers, the state exchequer and above all, the employees. With consumers at the core of the decision, the merger would focus on using the strengths of both the organisations to provide exceptional customer service and cinema experience to Indian moviegoers.
On whether consolidation is going to be a big theme in the multiplex industry in India and globally this year.
The film exhibition sector has been one of the worst impacted sectors and is going through a rapid transformational change due to the advent of technology. To compete effectively, creating scale to achieve efficiencies, it has become imperative to consolidate for the long term sustainability of the business. The merged entity will allow it to accelerate the pace of growth for further expansion to more tier two and tier three markets and take the modern multiplex experience to new cities and towns across the country in a severely under-screened market like India.
On whether consolidation will help multiplex operators negotiate better terms with movie distributors.
Consolidation will bring enhanced productivity through scale, deeper reach in newer markets and numerous cost-optimisation opportunities while continuing to delight cinema fans with world-class experiences and landmark innovations.
On whether the direct to OTT movie release day and date release on OTT will impact the theatrical business.
Cinema is an experiential medium that is difficult to replicate and the entire package comes in the form of technology, F&B, service standards and comfort. While OTT is long-form storytelling, cinema is a three-hour movie-cation experience. OTT like all other home entertainment will continue to coexist with theatrical entertainment as both are differentiated by content.
During the period while cinemas were shut, filmmakers responded to the exceptional circumstances by releasing new films on streamers, leading to a rise in OTT audiences. Audience behaviour to consume entertainment did change on account of the pandemic. Being confined at home, OTT became a necessity for people and became a part of their daily lives. But otherwise, home entertainment through VCR, video, DVD, cable TV and streaming was always there.
Now with the cinemas open, producers are back to theatrical releases as this is where they make money. A theatrical release earlier before OTT makes commercial sense to them as they know the performance of the movie and pay the price for the content accordingly. But the good thing is that due to OTT, producers get back their money and they get encouraged to make more content. There is a much bigger opportunity and not as if one thing is eating into the other.
On whether the box office in the exhibition sector has come back to normalcy.
The pandemic was unexpected and unprecedented but it is not going to stay forever and people are getting vaccinated. Things have started to regain normalcy as people flock back to cinemas with a consistent supply of good films. A host of big-ticket films have hit the theatres post the third wave.
Recently, Doctor Strange: In the Multiverse of Madness performed well in the opening weekend alone and has become the second-highest Hollywood grosser since the reopening of cinemas. Our belief in the ability of the industry to bounce back swiftly was further vindicated by our quarter’s results. Over 90 lakh admissions in March and a stellar content pipeline for the next few quarters tells us that the best is yet to come.
On how PVR adjusted during two difficult years of the pandemic when it came to operational expenses.
The Covid-19 pandemic disrupted business across the country and impacted the company’s operations. During this challenging phase, the company placed greater emphasis on safeguarding the health and well-being of its employees, customers, and communities on one hand, and continuing the business operations with greater responsibility on the other.
With zero revenue from our business never witnessed any time in the past, sustaining business operations was very difficult with restrictions on normal capacity utilisation due to the implementation of social distancing measures.
The company undertook decisive action to mitigate the adverse impact of covid-2019 on businesses by implementing cost optimisation strategies, enhancing liquidity and prudent cash-flows management
On whether the pandemic resulted in only certain kinds of films being viable in the multiplex when you talk about Hindi, Hollywood and regional cinema as older audiences may still be reluctant to visit multiplexes.
In the film exhibition business, a multiplex is viable because it can screen a wide range of films be it Hindi, Hollywood and regional with different shows in different auditoriums catering to diverse sets of audiences. In addition, there is an audience for various genres of movies that get made. For instance, while Marvel fans span multi-generation though primarily in the 15-35 age group, there are more mature audiences for movies such as Kashmir Files which have a distinct and strong storyline.
On the other hand, the appetite for movie viewing is higher in south India with passionate audiences, hence we see major Hollywood movies being dubbed in south Indian languages to reach a larger section of the cinema going audiences. India is a heterogeneous market for movie content be it regional, Bollywood or Hollywood content with their unique areas of strengths and would appeal to all kinds of audiences.
On how 2022 is looking in terms of the release slate.
We are witnessing a growing trend with regional movies breaking the geographical and language barrier leading to a cosmopolitan effect. Starting from Pushpa – The Rise - a Telugu language origin film which was released in Tamil and Hindi - received huge appreciation from pan-India audiences. The ‘Indian film’ success formula continued with the huge success of RRR which was released in five Indian languages (Telugu, Tamil, Hindi, Kannada and Malayalam) and resonated with all kinds of audiences. KGF: Chapter 2 originally a Kannada film (additionally released in Malayalam, Tamil, and Telugu) saw the Hindi version breaking all records in the first weekend of release with huge success in Hindi-speaking regions.
Audiences are returning to the cinemas for good content, unmatched sound and projection quality, the big screen experience and a community experience. Movie lovers can look forward to a robust content lineup due to the huge backlog of movies that are waiting for their turn for releases in theatres as big ticket movie producers space out their content to prevent any clashes with other big titles.
On whether PVR will be picking up films for distribution during film festivals like Cannes.
We conduct the movie distribution business through PVR Pictures, our wholly-owned subsidiary. PVR Pictures is the largest distributor of independent foreign-language films in India as well as a prolific distributor of Indian films as well. PVR Pictures aims to be the preferred distributor for Hollywood production houses that do not have a base in India for distributing movies. Our team is already there in Cannes evaluating the films that are being screened there for picking them up for distribution in India.
On the potential for multiplex growth from the smaller towns and cities which do not yet consume much OTT content.
Over the past several years, the movie-going taste has transformed in India, with audiences’ preference for multiplexes going up multifold. The multiplex growth is linked to the mall culture which has become an aspirational space, hence multiplexes have percolated to the smaller towns and have appealed to audiences due to limited options for out of home entertainment.
A lot of expansion in PVR lately has been around in smaller towns such as Jamnagar, Narsipatnam and Rourkela in view of its strategy to increase its presence in tier-2 and tier-3 cities to address the growing demands for the big screen experience from the local populace.
Better infrastructure availability, improved lifestyle choices and rising disposable incomes amplify the aspirational levels of people in smaller towns. A young and large working population have led to increasing footfalls at multiplexes. The multiplex experience characterised by a great aural and visual experience, good ambience, and comfortable seating is some of the factors driving this demand. These factors act as great opportunities for multiplexes to expand in tier-2 and tier-3 markets. Mall development is happening at a great pace in these towns providing large spaces at lower lease rentals which multiplexes find attractive.
On whether the current box office split between Hindi, Hollywood and regional cinema will change.
In the pre-pandemic year of FY 2019-20 which is a true representation of the film exhibition business, Hindi was the largest segment with a 44 per cent mix in the overall Indian gross box office collections (GBOC). This was closely followed by 41 per cent regional and 15 per cent Hollywood. Regional movies’ share in total GBOC increased from 41 per cent in CY 2019 to 54 per cent in CY 2020.
India produces the maximum number of movies due to its multi-lingual content and now Hollywood studios also consider India as an important market due to the sheer size of the movie going audience. Box-office collections of Hollywood movies have started to grow further due to their deep penetration in the Indian market. They are now being dubbed in multiple regional languages due to their easy acceptability among audiences located in varied geographies.
Regional films are becoming an important element of the Indian cinema industry, accounting for a considerable portion of net box office earnings. Films are being released in a variety of languages and the popularity and presence of regional cinema are growing at a rapid pace.
On whether screen expansion will happen now or post complete disappearance of covid-19.
We are consciously foraying into the rapidly expanding sub-urban markets to address the growing demand for the big-screen experience. Setting our foot across small towns and cities across regions in India, we at PVR are trying to reinvent and redefine the cinema experience for our patrons to provide them with a memorable one each and every time they visit us. We look forward to expanding our footprint and there is a strong impetus on screen addition as the company plans to add 120-125 screens in FY'23.
Besides, we feel extremely encouraged by the recovery trends and audience willing to come back to cinemas for high-quality content and hence we will continue to remain extremely bullish on the company’s long-term expansion plans to invest and innovate in bringing richer and more experiential formats for our audiences pan India.
On whether a 3D version of a movie helps grow revenues.
For the entertainment industry, a whole new level of interactivity and immersive storytelling and visual spectacle through presentation technologies combined helps retain cinema’s edge over home entertainment. These include 3D, Imax, 4DX, P[XL], Onyx immersive experiences that can’t be replicated at home. These formats command premium pricing, hence contributing to a higher average ticket price (ATP) and thereby revenues.
This is the precise reason in addition to Hollywood mega-blockbusters that come in these formats, there is an increasing trend among Bollywood and regional movies being made in 3D, Imax and other premium formats as well to get the extra share of the pie in the box office collections.
On the sentiment towards cinema advertising amongst advertisers.
Advertising sentiments have been turning pro on a much faster rate with the exciting big-star releases that we witnessed week on week which get further bolstered by the robust content lineup of blockbusters lately announced. Providing further fuel to the positive sentiment is the week-on-week increment of occupancy and footfalls due to the robust content lineup. Witnessing this growing trend, most of our large-scale reckoning clients have already resumed their association to capitalise on this resurgence of footfall and occupancy to increase their audience reach.
On the in-cinema advertising experiential solutions that PVR is offering.
Recently, we collaborated with OOH company Xperia group to introduce industry-first experiential in-cinema advertising in India. It would offer a one-of-its kind exposure to in-cinema advertisers and push the boundaries of on-screen cinema advertising to create a larger than life and immersive experience of brands in the mind of the consumer. This special feature of experiential in-cinema advertising intends to increase the ‘wow’ factor of the commercial which can make viewers stop, look, observe and relate.
On whether inflation will impact families’ proclivity to spend on movie outings.
The movie-going culture and love for films have long been ingrained in the public consciousness. Over the past several years, the movie-going taste has transformed in India, with the audience’s preference for multiplexes going up multifold.
In PVR, we have witnessed that in FY 22 even though admissions were lower, higher ATP and spending per head (SPH) contributed to the increase in revenues. In FY 22, we recorded the highest ever ATP of Rs 235 and SPH of Rs 124 demonstrating the fact that movie viewing is a discretionary spend and people value this form of out-of-home entertainment to bond with their loved ones as a shared experience. This shared experience of watching a movie together rates much more than other entertainment avenues as movie viewing continues to be the cheapest form of out-of-home entertainment.
The average household income is expected to grow over the next few years, resulting in a greater number of people with capabilities for discretionary spending. This is likely to have a positive impact on ticket sales and viewership. It is estimated that the average household spending on movies was pegged at Rs 620 in FY 2019-20 and it is projected to increase to Rs 660-680 by FY 2024-25.
