PVR-Inox’s never-ending ‘recovery’
Is it still post-pandemic blues or has something shifted permanently for India’s biggest multiplex chain?
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This week, PVR-Inox posted a terrible, but expected set of numbers. India’s largest multiplex chain had a piss poor June quarter. Revenue fell more than 8% year on year, and losses more than doubled. June 2024 has been a bad quarter for PVR-Inox on nearly every performance metric (pdf). Despite last year’s dream run at the box office, what is still going wrong?
Elections, Cricket, and A Summer of Discontent
In previous editions of The Impression (read more here and here), we’ve discussed how Indian theatres are struggling with a broken pipeline of films and low footfalls Now, they seem to have entered a vicious cycle as filmmakers hold back films for lack of footfalls and viewers hold off on visiting theatres for lack of films to watch.
In the June quarter, this vicious cycle was even more pronounced.
“The June quarter got impacted by the 2024 general elections, the second longest polling exercise in Indian history, prompting many producers to postpone releases,” PVR-Inox managing director Ajay Bijli told analysts in an investor call earlier this week. “We also witnessed a sharp decline in the number of blockbusters, only three films crossed Rs 100 crore on the box office,” he said.
These included the sleeper Hindi hits Munjya and Chandu Champion, while the hit multilingual big-budget fantasy film Kalki 2898 AD did not add to theatres’ quarterly fortunes because it released only at the end of June. Besides, movies that were expected to become blockbusters, such as Bade Miyan Chote Miyan, bombed at the box office instead.
The impact is clear. In the months of April, May and June this year, PVR-Inox had 3.5 million fewer admits. Revenues from the sale of tickets was down 14.5% year on year while sales of food and drink, usually a saving grace, also fell by just over 6%, although average spends per head increased by 3%.
Average occupancy in the halls was at 20.9%, two percentage points lower than a year ago and still below pre-pandemic levels. And to top it all off, the multiplex chain faced more than 7% higher fixed costs (although it marginally reduced variable costs).
The lack of films hurt PVR-Inox in another way: it had to bring down ticket prices. “What you have seen in this quarter is the lack of the blockbuster films,” PVR-Inox’s CEO Kamal Gianchandani told analysts in the call quoted above. “The consumer’s willingness to pay a higher ticket price is much more for bigger films and ‘obvious’ blockbusters. This is why you have seen muted ticket pricing.” For the June quarter, PVR-Inox’s average ticket price was Rs 235, down 4.7% year on year despite the multiplex chain’s plans to hike prices to keep up with rising costs.
However, Gianchandani added, average ticket prices have risen this month as big-budget film Kalki draws audiences in droves.
Jostling for space
Indian cinemas have been starving of good films all this year, so much so that multiplexes have resorted to re-releasing older films in bigger cities to keep viewers coming. The drought was worse this year.
“[Film] producers took a view that they wanted to avoid a clash [of the general elections] with their [new] release,” PVR-Inox’s Bijli told analysts in the call quoted above. “The issue also got compounded that we had the T20 World Cup running pretty much at the same time, it also compounded the decision making around the releases.” Producers had postponed big releases during the 2019 general elections as well; the highest box office grossers of that year released in the second half of the year except Uri: The Surgical Strike that hit theatres in January. But producers worried more this year as the country held its longest ever elections, spread over nearly two months.
Theatres tried to fix this year’s problem by screening crucial T20 matches and even news channels covering the general election results (read more about it in this edition of The Impression), but it could not make up for the lack of film supply.
PVR-Inox’s management says the next two quarters are looking better, as postponed big films prepare for release and Hollywood begins churning out blockbusters post the long writers and actors strike. These include Deadpool & Wolverine, Joker Folie A Deux, Pushpa 2, Bhool Bhulaiyaa 3 among others.
But the ground beneath PVR-Inox’s feet may already have shifted a little.
Despite a drop in average ticket prices, PVR-Inox remains a premium multiplex, keeping out customers who may not want to go to a single screen but can’t afford to pay more than Rs 1,000 for a movie outing for a family of four. PVR-Inox is only strengthening its grip in the premium end of this market. Many of its new locations are in high-end and new malls in bigger cities. The company’s management also pointed out that their customers were paying more money to upgrade to recliners, or their ‘Luxe’ and other pricier theatre offerings.
However, PVR-Inox will have to contend with more competition from regional cinema chains that are rushing to offer a multiplex experience at a much lower price. In 2022, real estate group Kanakia re-entered the multiplex business with the MovieMax theatre chain, focused on cities and smaller towns in West India. Compared to PVR-Inox, MovieMax’s parent firm Cineline India has done well on the markets as well. In the last 12 months, Cineline’s share price went up over 46% while PVR-Inox fell 1.5%.
Meanwhile, technology company IMAX is signing up with smaller, regional cinema chains to offer the premium big screen experience to more audiences at a lower price than PVR-Inox (read more in this edition of The Impression). In April this year, IMAX announced a partnership with Miraj Cinemas; a month later, it announced a similar tie-up with Rajhans Cinemas, starting with a brand new IMAX screen in Surat.
Meanwhile, PVR is focused on expanding its presence in South India, where single screens and local chains thrive, eating into its share of box office earnings.
In an ongoing consumer slowdown, will PVR-Inox generate enough business selling premium movie tickets? To do so, it will need to break this vicious cycle of apprehensive producers and bored customers. And fast, before the people permanently move their attention elsewhere.
Last Scroll Down📲
Scan the big media headlines from the week gone by
Cookie, crumbled: After generating global anxiety among advertisers for four years, Google is finally ditching its plan to kill third party cookies in Chrome, leaving its proposed replacement called the Privacy Sandbox in the lurch for now.
Turn off the tap: As Apple’s streaming service fails to take off in the US, the company is looking to curb its spending on original shows and films, Bloomberg reports. So far, it has spent over $20 billion on content, including on awards favourites such as KIllers of The Flower Moon and Napoleon.
Registers ringing: Music streaming service Spotify posted record profits and added 7 million paying subscribers in the June quarter. Higher subscription prices and last year’s layoffs helped boost Spotify’s financial performance.
Deep digging: The Competition Commission of India has sent over a 100 queries to Reliance and Disney over the proposed merger of their media businesses, Reuters reported. The deal, which includes Star India, will combine India’s biggest TV, film, and streaming businesses.
Giving up: Ousted former Marvel chief Ike Perlmutter has sold his entire stake in Disney after he and activist investor Nelson Peltz failed to dislodge CEO Bob Iger and secure seats on the company’s board.
Trumpet 🎺
Dissecting this week’s viral ‘thing’
A brand-new generation is joining the voting population, and memes and fan-cam edits are running election campaigns now. India’s general elections were littered with memes featuring incumbent Prime Minister Narendra Modi and now leader of opposition Rahul Gandhi.
Now that Harris, 59, has replaced the 81-year-old Biden, the memes have come for the US presidential election too. Younger American voters, jaded by a tired battle between two extremely old candidates, now have a (relatively) candidate to consider, especially because if Harris wins, she will be the US’ first female president.
The Harris campaign is evidently aware of the power of memes and seemingly viral social media edits. In the tweet above, singer Charli XCX equated her with her latest album brat, in a nod to viral clips of Harris’ carefree laughter and ‘cringe’ dancing, an aesthetic that seems to appeal to younger voters. Soon enough. Harris’ campaign Twitter account rebranded itself in the same font and colour as the brat album and we are all awash in memes and vertical video edits of her dancing with abandon. Now singer Beyoncé has reportedly allowed Harris to use her song Freedom for her campaign.
Just last week, in this section, we discussed the unintended consequences of historic moments (and photos). The attempt to assassinate Donald Trump has forced so much change so quickly, US election discourse has shifted from heated debates on dementia to brat memes. This year’s elections around the world make one thing clear: future political leaders will spend way more time building their image in the weird recesses of the internet than in shiny, polished public appearances.
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