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The Exhibitionists 

As we welcome the year 2019, exhibitors from some of the top cinema chains in Mumbai – Dharmesh Datta (VP Sales and Marketing, PVR Cinemas), Mayank Shroff (General Manager, Programming and Film Marketing, Cinepolis), Saurabh Varma (Chief Marketing Officer, INOX Leisure Ltd) and Kunal Sawhney (VP Operations, Carnival Cinemas), talk to Team Box Office India about how the year 2018 was for the exhibition industry, rising ticket prices and a lot more: Excerpts:

Box Office India (BOI): We saw several unexpected hits and flops last year. How was 2018 for films, according to all of you?

Dharmesh Datta (DD):  The change in trend in 2018 was that a lot of content-led films ruled at the box office and consumers have been more accepting of these films.  Also, ticket sales have been higher in the last quarter of 2018, which shows that in the underdeveloped market, like the Tier-2 and Tier-3 markets, the new multiplexes and the screens that are coming up are drawing people back to theatres.

Footfalls have also been higher in the year gone by. It’s not just the marquee films with A-listers that guarantee good box office returns, in fact, they are the ones that are struggling. It’s the content-led, high-quality movies that seem to be leaving their mark. 2018 was a good year for the industry.

Mayank Shroff (MS): Scripts have been superstars. Not that A-listers have lost their value. Aamir Khan’s film took the all-time biggest opening, `50 crore, and broke records in Bollywood. But, at the same time, how do you justify films like Stree or Badhaai Ho, which also entered the `100-crore club? That clearly says that scripts are the new superstars. We got some humongous surprises in regional industries and in Bollywood where movies like Stree, Raazi, 102 Not Out, Badhaai Ho, Soorma and AndhaDhun have done phenomenally well and exceeded expectations. I agree with Dharmesh as the trend at Cinepolis is similar. At all locations, footfalls have increased 3.5 per cent.

Saurabh Varma (SV): There is an exhibition and there are people who create content. From the creation of concept perspective, there was always a division in what films would work where. For example, a Salman Khan film works everywhere but a family film like Badhaai Ho would be limited to only a few places or is a multiplex film. When trade people watched the trailer of Badhaai Ho, there were a lot of apprehensions, like ‘this is a good film but it will run in only some kinds of screens.’ Now, that barrier has been breached. 

There’s another interesting thing that is changing. When producers used to plan their marketing strategy around a film, exhibition was not much of a priority. In 2018, there was some element of seriousness for filmmakers to focus on cinemas and cinema chains and say, ‘Hey, let me do a focused job on promoting my film there.’ They go to any lengths to promote a film but they may not look at a serious audience whom they need to target. That mindset is changing.

Kunal Sawhney (KS): In 2018, we have seen consistent performance throughout the year. It wasn’t like there were only few a big hits during the festive season. It is not that Diwali was a bumper period. In fact, October was very good. Every month performed equally well, which is probably the biggest change, and that is probably because a lot of regional content has worked. It’s not only Telugu that is working now. We have huge Marathi movies, Punjabi movies did really well, and a Gujarati film has broken records.

Movie watching is a habit. If people have to wait for Zero after Thugs Of Hindostan (TOH), and if in between there are a couple of movies releasing, they will watch the smaller movies too. And I mean not only Raazi or Stree. We brought back a movie like Tumbbad after Diwali, a horror movie, and the film is still doing very well. If the content is good, people might come back to watch it even three times. The same has happened with Badhaai Ho.

SV: In my opinion, Tumbbad was not marketed very well. The title does not tell you what the movie is all about and the posters are dark but the audience has been smart enough to sniff out a good film. So I compliment the makers because the word-of-mouth has worked so well that people are coming to watch it.

BOI: Since TOH did not do as well as expected during Diwali, do you think that’s the reason films like Badhaai Ho, AndhaDhun or a Tumbbad worked so well?

MS: Every year, there are certain films that have high expectations attached to them and they let us down. There are also ‘sleeper hits’. It was no different in the year gone by. We say acchi film paani ki tarah hoti hai. A good film will always find its own way. Yes, TOH was a threat to a lot of films and the entire industry has taken a hit since it hasn’t performed well. But Tumbbad would have survived even if TOH had worked because a good film will always survive, just like Badhaai Ho, which has set a benchmark as it has opened the eyes of a lot of content creators and I hope more content like this comes along.

KS: When a big film releases, it releases during a festival period with high ticket prices. But what happens to these smaller films is, they do not get a festival release and their ticket prices are almost 30 per cent lower than the big films. That increases the number of people who come to watch them in cinemas. Both TOH and Badhaai Ho earned more than Rs 100 crore each, but the lower ticket price of the latter drew more people to it.

MS: Regional films have been a great surprise. A really small film like Arjun Reddy turned out to be one of the biggest grossers for the Telugu industry. In Gujarati, Su Thayu has broken records, in Marathi Ani… Dr Kashinath Ghanekar was a huge hit.

KS: In Maharashtra, it was very good. It has survived almost the entire month.

BOI: There were also a lot of unexpected hits and shocking flops. Has this roller-coaster ride helped you all strategise for the future?

SV: Just like life… (Laughs).

DD: We have seen an evolution in the sensibilities of the audience. They seem to have developed preferences. They want high quality content. They come to a theatre that gives them a new experience and they are happy to pay a premium for that. With all these demographic changes, with the target audience changing, our strategy is becoming more… like you want to give them a completely exemplary service. You want to give them a new-age technology experience. You want to create an experience that cannot be replicated.

The strategy is moving towards premium and luxury cinemas. This strategy is moving towards Tier-2 and Tier-3 cities, where there is a growth opportunity, where people have higher disposable income because they do not have too many out-of-home entertainment options. People are happy to pay a premium for these experiences in Tier-2 and Tier-3 cities. Real estate development is more there. The exhibition business is focusing on growth, consumer expectations and how to meet them. Obviously, content is not in our control.

BOI: Footfalls have increased but many movie-goers are still refraining from going to theatres because of high ticket prices or not going as often as they want to. When there are big films that receive negative reviews, is it not better to lower prices and improve your chances?

MS: Ticket prices are more like demand and supply. At Cinepolis and at other multiplexes, ticket prices vary with the day of the week, whether it is the weekend, morning and night shows… it all depends on demand and supply. Lower ticket prices don’t necessarily attract more people to watch a film. We have noticed that footfalls were still very low even though ticket prices were low. It has not helped attract more people to cinemas. Conversely, we have also seen festival films work with high ticket prices. If the content is good, then the ticket price works. It is a myth that cinemas have been unnecessarily hiking ticket prices. We have been increasing our ticket prices by only 3 per cent every year, which is lower than inflation.

SV: A Gorakhpur cinema hall does not have the same ticket price as a cinema hall in Juhu, Mumbai. Ticket prices are planned correctly. If someone doesn’t want to pay more, he will wait for a Monday or a Tuesday for the film, when there are usually offers on the ticket. We have different offers every day. It’s like the airlines or the hospitality industry. Whether or not people wait before they watch a film depends on how well the film has been received by the audience. If they like the promo of a certain film, nothing will stop them. If they don’t like the promo, they won’t watch it even if you give them free tickets.

KS: I agree. Ticket prices go up by 8 per cent or 9 per cent during festivals but the base of that cinema is already high. If you want to watch a specific film, tickets are available at cheaper prices but the question is what service do you want to opt for? If I decide to eat a burger by adding cheese to it, `20 will not make a difference. If I want to see a movie, adding `20 to the ticket price does not make a difference to that decision. I am used to going a particular cinema where the average ticket price is `300.  So if the ticket price goes up by 10 per cent, it won’t matter. That’s less than the parking charges. It’s the content that pulls in the crowd.

BOI: There is a debate in the industry on whether certain films work only because they are holiday releases. You are the best people to answer this question… do films work due to their release dates or are there other reasons?

SV: Every film gets three days. If you look at whole year, we have 52 weeks. That makes 52 sets of Fridays, Saturdays and Sundays and that is what we are targeting. For a holiday film, even if the ticket prices are higher, footfalls will be higher. In a holiday week, you get the fourth day as an advantage. It’s a business based on math and statistics. That’s an added advantage for a good film.

Having said that, there’s no stopping a good film. So, if a Sanju releases on a non-holiday, which it did, then the weekdays also get a push, which is a great pre-planned strategy by the producers. During a holiday, people would like to go out in the evening. 10 years back, people did not go out to watch movies during Holi and they never went to cinemas during Diwali. Now, ‘holiday’ is synonymous with watching a movie. That is a good trend for movies as well as for exhibitors. The biggest film in Indian cinema Baahubali: The Conclusion was a non-holiday film. That makes sense, to get added revenue if a good film is releasing on a non-holiday.

BOI: How do you think the consumption of movies has changed for Hollywood films in the last three to five years?

DD: There is a change in the sensibilities of consumption of content. Suddenly, Hollywood cinema is appealing to a larger demographic within the country. Hollywood cinema is being planned a year in advance. There is a larger planning in terms of how a film is marketed, how a film is presented. There is a lot of franchise and superhero cinema that is coming in and even giving local cinema a run for its money, if the content is not strong enough.

With this all digitisation, there is a strong buzz when a strong Hollywood film releases with A-listers. The buzz drives movie-goers to cinemas. Apart from whatever is done locally, the international buzz is having a huge impact on consumers. While Hollywood has local and regional content to compete with, it is also getting a wider audience. Dubbing is getting crossover cinema-goers to watch Hollywood. There is a growth in the Hollywood segment and that will continue as long as Hollywood has these big event films, franchises and superhero films.

BOI: There were murmurs about digital platforms hampering the business of cinemas but with so many hit films last year, that has been contradicted. What do you all have to say about the impact of digital platforms?

SV: Remember when food delivery apps like Swiggy, Zomato and others came along and people thought they would negatively impact the restaurant business? But food consumption has only increased. People have started going out more because of these apps and technological advances. It is the same with films. When people watch films in any other medium, it only increases their appetite for movies.

There have always been threats. Earlier, there was VHS, which was a big threat; then there were VCDs and DVDs. There has always been something or the other. These things have always complemented films in theatres. I don’t think they have been a cause of worry for us. Having said that, the digital boom is also pushing Hindi film content to evolve and be better. I don’t think, even 3-4 years back, we could have imagined that a film like Raazi would cross the `100-crore barrier. It did so also because of the digital revolution. The appetite of people has increased and they are ready to accept new changes and content.

MS: I believe there are different types of content. There is content that is apt for digital and there is content that is more apt for cinemas. As Dharmesh mentioned earlier, more experiential content which people would like to watch in theatres, on a larger screen format or a 4DX screen. The 3D animation films will always have more appeal in theatres. There is a form of content that works very well in digital- series like Ghoul, Sacred Games and others. It also brings in a new audience. When you like something you watch on the digital platform, it encourages you to watch something else in theatres.

SV: I guess it has also created a habit of being patient. Otherwise, people don’t have the patience to watch a two-hour film but yet they binge-watch series which are sometimes a little longer.

KS: I always cite the following example… After the T-20 format came in, Test matches did not die out. In fact, it has added value. Now, more people, including women, are watching cricket, thanks to the T-20 format. I completely agree with Mayank, that digital is actually complementing cinema. Movie-watching is a habit and it only reinforces it.

SV: I don’t think we have access to the data of what is working on digital or not. There are 30-40 OTT players and everybody claims their content is doing well. But we really don’t know how well they are working. Like for Hindi films, everybody has the data even before it is published. It is like the music industry. One song is in the Top 10 list but actually we don’t know the numbers. If there is transparency in this data, I think it will benefit the industry in a much better way. Everybody is talking about Sacred Games but how much better is it than Ghoul or any other content?

MS: They create this massive hype, look at the hoardings all across the city. They do this pan-India and not even the biggest movies do that.

SV: They have redefined marketing.

DD: This is the year when OTT players have experienced the highest growth and cinema is simultaneously doing well. So, both platforms are co-existing, thriving and are mutually exclusive.

BOI: There was a ruling on the lifting of the food and beverages ban in theatres. Any thoughts on that?

KS: I don’t know about others, but it has worked in our favour. For about 15 days, there were issues but customers are smart and they are keen on value for money. Sales from our café have increased after that hype was created. Our spends, per head, per person, has gone up. The number of products that we call ‘IPH’, or the number of items consumed per head, has increased. I think people will complain if they don’t get value for money or find quality lacking. If you want to sell a product at `300 and you give them value as well as good service, then they will eat it. They won’t complain about the price but they will complain about quality if it is not up to the mark.

BOI: Nowadays, we see a lot of bookings being done online, either through your own websites or through third-party aggregators. What is the ratio of online ticket booking vis-à-vis tickets being bought physically at cinema kiosks?

DD: Approximately 50 per cent of tickets for PVR.

SV: (Cuts In) Actually, it is industry-wide.

DD: Yes, industry-wide, across aggregators and our online platforms, the tickets booked via those channels are about 50 per cent. That’s a positive because we can see the data in hand. Cinema is going from data-poor to data-rich. The greater the number of online bookings, the better you are able to profile your audience, understand their habits, and the easier it is to take decisions.

SV: The earlier habit of checking timings in newspapers has gone digital now. There is an assumption that of the 50 per cent that come to the ticket counter, 25-30 per cent of them must be checking movie timings on an app before turning up at the ticket counter to buy tickets because tickets toh mil hi jayegi. The world has gone digital and that is very important in today’s times.

BOI: Taking this forward, there is also a convenience fee attached to the online ticketing process even though there are no kiosks or no manpower needed as it is at the cinema box office. And this convenience fee is a not a small sum. So, why this additional charge even when there are no physical resources needed?

MS: I think it is more like a convenience to the customer who is booking the ticket and this is why he or she is paying an additional sum. That is probably the technology cost that an aggregator has invested in it.

SV: There is also the marketing cost and other things like that. Also, it may seem very simple but there is a lot of research and data going into it. Also, we are not telling the customer that this is the only choice. They always have a choice. If they don’t want to pay the convenience fee, they can always buy tickets at the theatre.

BOI: In the West, they have subscription-based loyalty programmes, which helps bring a larger audience to cinemas. Have you all thought of doing that to get more footfalls?

KS: Carnival started something on those lines with a movie card. It was implemented a year ago and it is doing really well. It is the same subscription programme, where you pay a fixed sum, depending on your locality, and you can watch ‘x’ number of movies. And from what we have seen, not only metro cities but in Tier II and Tier III cities also, the consumption of movies has gone up.

SV: What we have realised is that the offers that a platform like Paytm gives, or the banks give, is as good as a mini-loyalty programme. This means that you are getting an offer when you feel like watching a movie. That’s an incentive for movie-goers to go and watch a movie in cinema halls. If they get `100 off, or `150 off or 10 per cent off, it is great because these industries are offering the world to their customers. I guess there is an added incentive to watch movies and people are availing it.

MS: Cinepolis has this programme called Club Cinepolis, which they brought in from their home country. 25 per cent of our consumers come from the Club Cinepolis programme, from what we have seen in our data.

BOI: PVR has a different take on this. They have marketing strategies like the recently seen ‘Senior Shows’, where senior citizens can get tickets at discounted prices.

DD: This is an initiative to segmenting your offerings. At the end of the day, different segments have different price sensitivities. We also wanted lone cinema watchers to enjoy an incentive; we wanted to do something for them as they come alone to the watch films on weekdays. Similarly, we have the senior citizens concept and the all-women’s shows concept. PVR is trying to create these specific, niche target audience shows, which appeal to certain segments. They are customised as per the price sensitivity of a particular section. There is good traction in terms of specific programming but it is still early days and we aim to do more of that in the future, where we create consistent programming.

BOI: Any other specific marketing techniques that you are planning to target?

MS: I feel content is the biggest marketing technique that drives footfalls in cinemas.

SV: When you have data and we study it, there are segments you can pick out like women, children and senior citizens. Maybe they need an incentive to watch a film. So we have an initiative which targets schools and children. So for children and schools, we get content for them like a National Geographic screening. We package these things. There is this traditional bank that had never gone to cinemas before, never done an HR initiative involving cinemas. But when we proposed to hold screenings for old Yash Raj movies such as Silsila or Kabhi Kabhie or Bobby, they were really excited. Now, they book 180 shows all over INOX. We had a retro theme for these shows and called it a ‘flashback movie special’. And the reaction internally for these organisations has been really good.

Packaging things according to what customers want is a very interesting thing. We have done something called Burn The Stage, which is a Korean musical. We opened it with six to seven shows and within 10 to 15 minutes, it was house full. We had to increase the shows because the demand was so high. You have to experiment.

Shows like these are only targeting teenagers in the age group of 15-25. The thing is, we don’t know this generation. PVR does a show for just women and Carnival has an initiative with their movie card, and these things help us tap into an audience which we are trying to understand. There are a lot of surprises in store and movie habits, consumer habits, are changing rapidly.

BOI: When you plan to set up a multiplex, what are the logistics you look into? And how do you plan to bridge the gap between a busy area being overcrowded with multiplexes and an area which has no theatres at all?

KS: Ideally, we are trying to go into Tier III and Tier IV places which have a population of 2-3 lakh and we have got very good results. We are trying to go to places like Nagda, Neemuch and Beed, which people have not even heard of. These areas have no places specifically for entertainment and yet, for them, cinema is the only form of entertainment. They feel proud that even a budget cinema hall has opened up for them.

More than a movie, it is an experience, a destination for them. Irrespective of the film, occupancy is really high for these cinemas. In the South, people are prepared to travel 80-100 kilometres to watch a good movie. They want a place where they can go with their families, sit down and enjoy themselves. They want the basic stuff. They know, through TV and the web, which movie is releasing. If they want to watch a particular film, they have to travel a lot and they are willing to do that. That is what we are doing. We are taking basic cinema to places where there is a potential movie-going population but no cinema. And it is doing wonders for us.

SV: But if you mean a Mumbai catchment or other ones, it is not necessary that exhibition drives the vacuum in places like these. Everybody is trying to bridge the gap but there are certain places, which are governed by a lot of rules and regulations. Also, real estate prices are very high. There are areas which still need cinemas but whole systems need to work for that. I guess, going forward, cinemas are definitely going to come up in these places too.

DD: As for the logistics being considered while searching for a property for new cinema chains, I think a lot depends on the real-estate developer. When they plan a location, they are looking at a certain catchment area. Today, real estate developers, instead of making a lakh per square foot of establishment, are looking at establishments which are 2-3 lakh per square foot. They are looking for a mall that has an elaborate cinema space and an elaborate food court because these are the high-footfall businesses within a mall.

Real estate developers are looking at cinema in a big way, at food courts in a big way and, when they plan locations like these, they consider the purchase power in the catchment area, what sort of entertainment, family entertainment, competition is around, what sort of footfalls will a mall in that location get and so on. By the time a cinema comes into the plan, the real estate developer has already figured out what sort of footfalls he will garner. Cinema is more of a support to the mall, to ensure that there are greater footfalls.

BOI: Speaking of cinema footfalls, we have seen many across the Indian film industry talking about increasing cinemas halls in the country. But, more often than not, even the existing cinemas are not house full.

SV: I guess there are a lot of pockets in India, which are still to be covered. How did the whole multiplex revolution start? It started with the metros. The metros and semi-metros are now saturated. Now penetration will happen in B and C centres, especially C centres. Today, the focus is on an Insignia or a Gold Class but we would have to create – and obviously everyone is doing that – cinemas for the masses where tickets will be affordable and that will be easy to maintain. You build it like a king but operate it like a miser, formats like that. And when that penetration happens, a film like Badhaai Ho or Stree will double its revenues. Today, we are happy with `100 crore but maybe it will reach `1,000 crore. That kind of penetration has started happening. The number of cinemas is increasing every day.

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