Multiplex operator PVR Inox has introduced a novel offering known as the "movie passport" in an endeavor to stimulate the box office performance of smaller films in theatres. This initiative coincides with the impending release of the company's financial results for the September quarter, scheduled for October 19.
In the wake of the COVID-19 pandemic, the film industry has undergone significant changes, with star-led blockbusters or large-scale productions witnessing a resurgence in popularity. However, smaller and medium-budget films have faced growing uncertainty in terms of box office performance and audience attendance.
Gautam Dutta, Co-CEO of PVR Inox, shared insights into the rationale behind the movie passport initiative. He stated, "Our goal is to make smaller and medium-sized films more appealing to audiences, fostering greater loyalty. We aim to eliminate pricing barriers. Currently, the average frequency of cinema visits is once a month. Our objective is to encourage patrons to visit cinemas 5-6 times a month." Notably, on National Cinema Day, a larger audience watched smaller films due to reduced pricing barriers, resulting in a recorded attendance of 12.5 lakh people.
The company is commencing with an initial offering of 20,000 to 25,000 movie passports, with plans to expand the program based on consumption and feedback. Dutta further explained, "We will assess the response during the first month and subsequently open it to a broader audience base."
An Elara Capital note released in August highlighted that the success rate for medium-budget films has dwindled since the end of the pandemic phase. This decline is attributed to the nature of the content, as audiences are more inclined to invest in tickets when the content is compelling and ensures a worthwhile cinematic experience.
The note further revealed that since February 2022, two small and medium-budget Hindi films have achieved collections exceeding Rs 100 crore, in contrast to 13 films in the pre-COVID fiscal year 2019-20. While the note does not anticipate an immediate reversal of this trend, even a minor shift in box office collections for smaller films could lead to improved occupancy levels.
Moreover, the note indicated that the number of Hindi films released in theatres has declined by 22% during the post-pandemic phase, from an average of 18 films per quarter in FY19 to 14 films every quarter in FY23. This shift has heightened the industry's reliance on large-budget Hindi films, which now contribute approximately 82% of box office sales, up from 44% in FY20. The note cautioned that such dependence on major films carries increased financial risk.
Despite these challenges, the cinema remains a significant source of entertainment for the public. A survey of 5,000 cinemagoers conducted by online ticketing and entertainment platform BookMyShow revealed that 90% of respondents consider movies their preferred choice for out-of-home experiences, surpassing alternatives like shopping, live events, and outdoor activities. Additionally, a considerable percentage of GenZ and millennial respondents expressed their interest in visiting a movie theatre every week or at least once every fortnight.
PVR Inox's movie passport offers a flexible subscription plan with a minimum commitment of three months. The subscription is valid on weekdays, a period characterized by lower average occupancy, with the potential to increase occupancy rates by offering discounted ticket prices. Karan Taurani, Senior Vice President at Elara Capital, anticipates a potential revenue increase of 3-6% for PVR Inox through this initiative. He also noted that profitability could experience a more substantial boost, with the potential for EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) to increase by 7-15%. This increase in profitability is likely due to higher F&B (Food and Beverage) revenue, with most other costs remaining fixed.
The movie passport subscription aims to attract three specific audience segments: homemakers, senior citizens, and youth. Each of these segments presents unique opportunities to drive foot traffic to cinemas. Senior citizens, in particular, are expected to embrace the movie passport, accounting for 8-10% of PVR Inox's overall audience demographic.
The introduction of the movie passport by PVR Inox represents an innovative approach to addressing the evolving dynamics of the film industry, emphasizing the significance of audience engagement and promoting the appeal of smaller films. As the initiative unfolds, it is anticipated that both the company and its patrons will benefit from increased accessibility and the opportunity to enjoy cinema more frequently.
