At a time when media companies are reporting lacklustre growth due to low advertising revenues, multiplex owners such as PVR and Inox have emerged as outliers in the September quarter of financial year 2019-20. "PVR and Inox posted blockbuster performances with strong double-digit revenue and EBITDA growth, and highest advertising revenue growth in our coverage (16 per cent for PVR and 6 per cent for INOX)," says an Edelweiss Securities report on the media and entertainment industry.
On the contrary, Zee Entertainment, managed to clock a meagre 1.4 per cent year-on-year growth in advertising revenue, while it declined 4 per cent year-on-year for Sun TV, though subscription revenue continued to drive growth in Q2FY20 for both ZEE and Sun TV, up 27 per cent and 17 per cent, respectively. Even more badly hurt are the print companies. Ad growth for DB Corp was down by 10.8 per cent, while Jagran Prakashan saw a 2.9 per cent dip in ad revenue.
The last one year has been one of the best years for the Indian film industry. The domestic box office collections grew by 14.7 per cent. This explains the robust growth numbers of the multiplex companies. As many as 191 million people visited multiplex chains of Inox, PVR and Cinepolis and this has actually resulted in advertiser interest in multiplexes.
Alok Tandon, CEO, Inox Leisure, in an earlier interview with Business Today, had said that in-theatre advertising had contributed 10 per cent to its overall revenues in FY19, as opposed to 6 per cent in the previous fiscal. From vanilla on-screen advertising to experiential ads, multiplexes are increasingly becoming sought after advertising destinations for brands. It not only gets them a captive audience, advertising in a multiplex also comes in cheaper. While a cinema ad is in the region of Rs 400 per show, a 10-second ad spot on a leading Hindi general entertainment channel costs lakhs.
The Edelweiss Report expects multiplexes to outperform given the strong content pipeline and high footfalls thereof. "For broadcasters, resumption in advertising growth is likely to be challenging in light of the overall economic slowdown and cutback in ad spends by key advertisers; however, momentum in subscription growth is likely to remain robust," states the report.