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Consumers' movie habits haven't changed at all: PVR Chairman Ajay Bijli

In the age of digital entertainment platforms such as Netflix, Amazon Prime Video and Hotstar, Ajay Bijli, Chairman, PVR, says that the best possible way for him to woo audiences into his multiplexes is by offering an unparalleled theatre experience.

twitter-logo Ajita Shashidhar        Last Updated: June 13, 2019  | 20:08 IST
Consumers' movie habits haven't changed at all: PVR Chairman Ajay Bijli
Ajay Bijli, Chairman, PVR

At a time when digital entertainment platforms such as Netflix, Amazon Prime Video and Hotstar are giving serious competition to not just broadcasters but also multiplexes with their high-quality original content, Ajay Bijli, Chairman, PVR, says that the best possible way for him to woo audiences into his multiplexes is by offering an unparalleled theatre experience. In a conversation with Business Today's Ajita Shashidhar, Bijli talks about his focus on creating experiential cinemas and also about his value formats and the multiplex business at large.

Excerpts:

Business Today: Before we start discussing your new experiential formats, I would like to hear from you whether digital entertainment platforms such as Netflix actually pose a threat to multiplexes?

Ajay Bijli: Digital is another form of DVD or TV for me. How can I possibly criticise a company which is $300 billion in market cap? I know where I stand. They are doing a brilliant job, but I am comforted by the fact that there is a consumer who has gone to watch movies last year more than the year before. Movie consumption habits of consumers haven't changed at all. They are still getting out and watching not just event movies such as Avengers but also films such as Andhadhun or Uri. The going out habit of the Indian consumer is phenomenal. I am also comforted by the fact that the producers are doing both. So, a Zoya Akhtar is doing Made In Heaven for Amazon Prime Video as well as a film like Gully Boy. While I am differentiated in terms of content, my responsibility now is to differentiate in terms of experience. I have to make sure I guarantee a fantastic experience for my consumers. I have to make sure that the conduit that connects the film-goer with the film is phenomenal. If people say that the film was good but the seats were not comfortable, the food was bad or the sound was not up to the mark, then I am finished. Therefore, the investment in technologies such as IMAX, 4DX, D-Box and Playhouse and formats such as Luxe etc. I can't be responsible for what is playing on the screen, but I will make sure that the environment is worth the money you spend.

BT: Luxury cinemas seem to be the newest trend. It's not just you, but competition has also been setting up luxury theatres...

Bijli: Before the competition came up with its luxury offering, I already had mine. I opened the first luxury cinema in 2004 in Bengaluru, which was the first Gold Class. Now, we have around 40 Golds all over the country. I opened Directors Kut seven years ago which was the first all-luxury format. We are now taking luxury to the next level when it comes to (and beverage (F&B) too. We have got Australian chef Sarah Todd and Mayank Tiwari to do our menu. My inspiration is hospitality, not another cinema operator. My inspiration is Four Seasons and Singapore Airlines. If I keep looking at other cinemas I am not going to ever progress.

BT: Can you give us more details about the plan to take forward your luxury offerings?

Bijli: All the PVR Golds are getting converted into PVR Luxe, around 60 screens. We will have around 150-odd Luxe screens in the next 24 months.

BT: Can you explain the economics of your luxury offerings?

Bijli: Each Luxe screen costs Rs 5 crore but the playback criteria remain the same. We still want to get 20-25 per cent EBITDA (earnings before interest, tax, depreciation and amortization) payback. If you look at PVR's growth, we tried to make every unit count; it has to be a viable unit. Else, we will keep growing by screen count and we will forget the economics. We are a listed company and we have a responsibility to the shareholders. We don't want to get carried away. Wherever there is a pocket of consumers who are going to be appreciative of this format we will introduce, else, we can go horribly wrong. I made a mistake ages ago when I opened a single screen Gold Class at Indore. It wasn't ready for it. Now, it is doing well. We are very careful about the rollout of our luxury screens.

BT: What are plans for tier 2-3 cities?

Bijli: We are doing a product called PVR Utsav, which we are rolling out in smaller towns such as Jalgaon, Ganganagar, Ujjain etc. The price point will at the most be Rs 100. The capex is around Rs 1.5 crore per screen. Rents are low, operating expenses are low because real estate prices are cheaper. PVR Utsav will have 200-300 screens. That is where the bulk of Indian consumers are.

BT: How many screens are there in PVR Utsav?

Bijli: Anything from 3-5 screens. I also want to give choice to the consumers; otherwise, I will be like a single screen, where there is no choice. Our price points will be closer to single screens, but the experience of variety is necessary. One of the reasons why multiplexes did well in India and internationally is because 4-5 films get released every weekend and consumers want to choose. Actually, even people in smaller cities need a choice, it's not an urban phenomenon. If you go to Punjab, there is a Sunny Deol movie releasing, there is an Aamir Khan and Salman Khan movie as well as a dubbed version of Avengers. People want to watch all the four and they want to go to one destination that offers them a choice. Therefore, I felt that Utsav also can't be a single screen because I will be stuck with the difficulty of filling up the cinema and I won't be giving the choice to the consumer. The biggest thing is choice, convenience and comfort.

BT: Does a multiplex also offer better economies of scale?

Bijli: It's a chicken-and-egg situation. The reason why multiplex is more expensive is that your investment is also four times. In a 1000-seater cinema, there is one projection system, one sound system, one set of toilets and one canteen. For a multiplex, the investment is four times, so that math is something you have to keep explaining. Therefore, your operating expenditures and capex increases, hence, your ticket prices are higher than the single screen. But the prices are marginally higher in smaller towns. Balcony prices have already reached Rs 80-90 in smaller town single screens. So we are like Rs100-119 in smaller towns.

BT: What about F&B in a PVR Utsav?

Bijli: Everything is localised. For instance, if you go down South we have idlis and southern cuisine, if you go to Punjab, you need to serve samosas and channa bhatures. You can't have a one size fits all strategy in India. We have created a brand called Local Street, which is going to serve the local food of that geography. Just as Simply Sushi is a PVR brand, like that we are coming up with sub-brands for the local markets.

BT: Over 30 per cent of your revenue comes from F&B, do you see this going up in future?

Bijli: As a percentage, will remain the same. In terms of value, it will go up, as gone are the days where you only have popcorn, Pepsi and nachos. Also movies are long.  A film like Avengers was over three hours. If you have a very long Hollywood film, people insist on having a popcorn break. I am thinking that people have a stretch for time. Therefore, we decided to give the consumer everything that he needs while he is watching a movie so that the outing will become complete. So, the movie and the eating are combined into one. That's the current thinking.

BT: How has theatre advertising evolved?

Bijli: The whole revenue model for the cinema business all over the world is ticket sales, F&B and about 10-12 per cent is advertising. Therefore, it is a necessary evil to survive and make your business viable. Consumers are ok with ads in theatres, but it can't be stretched. I think that is an area we need to look at. A lot of feedback on the duration of ads has come and we are working on it. Currently, we have around 8-10 minutes of advertising prior to the movies and another 8-10 minutes during the movie. People are fine with this duration, but the moment we go beyond that they may not appreciate. In the US, the trailers are a big issue. They have around 17 trailers, so whatever restlessness people have in India with advertising, they have the same restlessness with trailers.

I am keener to increase the trailers; I don't think we are doing a good job of it. We have four trailers; I would love to take it to six. I am looking at on-screen offerings very keenly.

BT: Aren't trailers a source of revenue for you?

Bijli: No. Only if somebody says my movie is coming in 2021 and asks us to play the trailer now, then we ask.

BT: Do you see more competition entering the fray?

Bijli: It is an open market, anybody can come. Some players whose business wasn't the core exhibition, they sold out because the market was open for it.  We acquired three companies. For those whose business is only this, they will grow in a country like India which is grossly under-screened.

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