PVR INOX recently stated in an exchange filing that it plans to close 70 nonperforming screens in FY'25. The company further added that it has already shut down 85 underperforming screens across 24 cinemas during the year.
As the media landscape keeps evolving, one thing that remains constant is that with more options available, the consumer will be the king
PVR INOX recently stated in an exchange filing that it plans to close 70 nonperforming screens in FY'25. The company further added that it has already shut down 85 underperforming screens across 24 cinemas during the year.
“All of these screens were margin dilutive and/or housed in malls, which have reached the end of their life cycle with little hope of revival,” the company said in an exchange filing.
Additionally, the company aims to lower its debt and repay it using the free cash flow generated from operations. PVR INOX is also evaluating the monetisation of non-core real estate assets.
To add to it, the company also reported a net loss of Rs 136.6 crore in Q1 FY25. This was a substantial increase from the Rs. 44.1 crore loss it reported in the same quarter a year ago. The Lok Sabha elections and the Indian Premier League (IPL) were reportedly the reasons behind the same as filmmakers postponed releases.
Despite this, PVR INOX expressed optimism about the second half of FY25. The company said in a statement, “Last year's writer and actor strikes impacted Hollywood releases, but we expect a significant improvement in the Hollywood lineup in the second half of FY25.”
OTT versus Theatres: The Age Old Battle
A question that is looming for theaters constantly is the competition between OTTs and theatres. The popularity of OTT platforms has been massive in India.
A PwC report published in July 2024 projects that global subscriptions to over-the-top (OTT) video services will increase from 1.6 billion in 2023 to 2.1 billion by 2028, reflecting a compound annual growth rate (CAGR) of 5.0 per cent. The report highlights that India will be the fastest-growing OTT video-streaming market during this period, driven by its large, diverse, and widely dispersed population, many of whom have a strong interest in sports content, particularly cricket.
While it is true that there has been a surge in OTTS, the movie industry is also witnessing a comeback. An Ormax report says that the theatergoing population surged by 29 percent in India in 2023, reaching 15.7 crore. Additionally, it has increased the pre-pandemic level by 8 percent.
To increase occupancy in theaters, PVR INOX has been trying to come up with new incentives such as cinema lovers' day and movie subscription program. Further, consumers are given a wide variety of options, such as watching ten trailers of films for Rs 1, getting discounted tickets on select days, and playing alternative content such as curated movie festivals, sporting events, the Republic Day parade, and more.
While the company is trying to attract consumers, Gautam Dutta, Co-CEO, PVR INOX, told Deccan Chronicle that the term ‘OTT emergence’ is more relevant than the term ‘OTT invasion.
Dutta is also confident about the growth of cinema halls in India. On being asked why people should go to theaters when they can watch the content on screen, Dutta reportedly highlighted that cinemas are a part of the cultural fabric of India. Additionally, he mentioned that the giant screens and sound of the halls give a different experience.
Thus, for theatres, experience becomes the tag word. People go out with their friends and family to enjoy the experience along with the content. High-end cinemas are set to evolve into 'experience zones' designed for top-end multiplex audiences who seek a spectacular movie experience and a night out with friends and family, a market estimated to encompass over 100 million customers or 50 million households, according to a FICCI EY report.
Diversification by PVR INOX
While the rift between OTTs and theaters will continue, as mentioned before, PVR INOX has been trying to diversify into various alternatives to make the theater experience more attractive and compete with OTTs.
Kamal Gianchandani, CEO of PVR INOX, mentioned in an investor call that they will be focusing on extending the theatrical window and having a blackout period that can make the theater experience more attractive, potentially boosting box office sales by reducing the temptation to wait for the film's digital release. The blackout period refers to the gap between when a movie finishes its run in theaters and when it becomes available on digital platforms or television.
Another key area of expansion for PVR INOX has been the South Indian film industry. With fewer multiplexes and increased demand for watching films from that area, the company expects 40 percent of its screen additions to come from that area.
While competition between OTTs and theaters is evident, OTT platforms face their own challenges. For example, while the country has 547 million OTT users, the active paid subscriptions remain stagnant at 100 million, as per the Ormax OTT Audience Report.
The Going Out Business
Amid the tussle between OTTs and theaters, one thing that is interesting to observe is the rise of the 'going out' business. Speaking to Outlook Business earlier, Somdutta Singh, founder and CEO of Assiduus, said, “The rising disposable income and changing lifestyle preferences among urban consumers further bolster this expectation.”
To add to it, recently food delivery giant Zomato acquired the movie and ticketing platform of Paytm for Rs 2,048 crore. At an investor call, Zomato CEO Deepinder Goyal said, “We believe that there is an opportunity to further expand our going-out offering, building on top of our dining-out business. Additional use cases for customers in the going out space include movies, sports ticketing, live performances, shopping, staycations, etc., some of which we have already launched or are building as we speak.”
As Zomato prepares to challenge BookMyShow's monopoly in movie ticketing, both companies may introduce more offers and lower ticket prices to attract a larger consumer base. As the media landscape keeps evolving, one thing that remains constant is that with more options available, the consumer will be the king.