PVR Inox's ‘Passport' Could Bode Well For Small Budget Films, But Will They Sell?

The Covid-19 pandemic, and the months that followed, was hard on the entertainment industry, especially multiplexes. Though this year’s back-to-back box office hits like Jawan, Gadar 2, Rocky Aur Rani Ki Prem Kahani and others came as a sigh of relief as audiences thronged back to theatres, the footfall is yet to match to pre-pandemic levels. In a bid to boost business, PVR INOX has now introduced a subscription scheme that allows moviegoers to watch up to 10 films a month for a fixed monthly charge. 

Sounds familiar, doesn’t it? Experts believe PVR INOX is drawing inspiration from OTT platforms that became the go-to for movie buffs during the pandemic. Trade analyst Komal Nahta told The Core, “This scheme is aimed at bringing back the people who have outgrown cinema halls and moved to OTT, and it might work too. But, they will have to really promote this aggressively.” 

The ‘PVR INOX Passport’ is priced at Rs 699 per month and allows the holder to watch up to 10 movies monthly. However, there is a minimum lock-in period of three months, it can only be availed on weekdays and only 20,000 ‘passports’ have been introduced for now.  Gautam Dutta, Co-CEO of PVR INOX said on LinkedIn, “This Program is more than a consumer-centric campaign; it is a strategic business move for the prospect of houseful and sold-out shows couldn't be ignored. It is a bold gamble, for if the occupancy didn't double, revenue would dwindle. But if consumers realised the value for their money, it could be an unprecedented success.”

While they welcomed the intent, noting that small and medium budget films required an extra push from theatres, experts said some concerns remained. Karan Taurani of Elara Capital told The Core that 20,000 passes was too little to make a difference. He said, “It’s a good promotional strategy, but it will only work if people actually come in large numbers to the theatres and if it is extended beyond the 20,000 cohort.”  

Nahta added that to make a difference to footfall, distributors would need to target those who have not visited the theatre in months, as the regular audience will keep returning. 

A Rocky Road for Cinema Halls

Indian cinema halls have had quite the rollercoaster of a journey after the pandemic. Audience preferences shifting to OTT platforms, complaints of considerably high food and beverage prices, and poor quality content had the industry hanging by a thread. All-India footfalls in 2022 stood at 89.2 crores, the lowest in more than a decade, excluding the pandemic years (2020 & 2021), when theatres were shut for most part according to media consulting firm Ormax.

A series of Hollywood and Bollywood blockbuster films followed bringing in hope. Shah Rukh Khan-starrer Pathan alone revived 25 single screen theatres in the country. Avatar-Wary of Water, Drishyam 2, RRR and Brahmastra released in 2022 were also box office hits, while ticket sales from Jawan, Jailer, Gadar 2 helped the first quarter numbers for FY24. 

PVR’s revenue from operations for Q1FY24 came in at Rs 1,266.6 crore, compared to Rs 961.5 crore year-on-year (YoY), which is a rise of 31.73%. With releases like Animal, Dunki and Ek Tha Tiger 3, the rest of the year looks hopeful too. 

Small Budget Films Need A Hand

However, the problem of reviving a theatre going audience remains as the revenue growth in the last few months was completely dependent on big budget films. These seem to be the only ones bringing people to the theatres. “Our dependence on large budget films has increased considerably. They account for approximately 85-90% of box office collections today,” Taurani said.

While the films that did attract audiences were star-driven or big budget, Taurani said, “It’s a tough ask for this momentum to continue forever. You will require support from small and medium budget content.” 

As it stands, for small and medium budget films, people prefer ‘waiting for OTT’; which by the way, many film critics also use as a yardstick to rate movies. While makers have experimented in the past with offers to bring in audiences — like the ‘buy one and get one’ offer on tickets for Dream Girl 2 and Adipurush reducing ticket prices to as low as Rs 150, it’s still the big films that made the difference. The top 10 films in India accounted for around 40% of footfalls in the country in 2022, according to a Ormax report.   

Earlier, as people looked for alternative sources of entertainment, the prices of tickets for small budget films, even on weekdays, were quite inflated. The ticket prices have increased by more than 20% from pre-pandemic levels. 

“While the quality of content is important, another factor that worked against small budget films was the high prices. They never got a chance. So giving a concessional pass might help them,” said Nahta. PVR has already made pricing changes to their F&B offerings for weekdays to nudge customers to come to the theatres. 

Is Consistency Key? 

The passport scheme could help attract audiences to the theatres on weekdays as the scheme is only applicable only from Monday to Thursday. According to an Elara Capital report, during this time of the week, theatres see only 17% occupancy as compared to 40% on weekends. 

It could also help bring in consistency in footfall in the long term as even quarter-wise footfall has been inconsistent. “We have seen this earlier as well, last year one quarter reported a very strong performance while the other two quarters were very weak. They want to drive their footfall consistently, so they're doing this,” Taurani said.  

Elara Capital expects a potential revenue growth of 3-6% for exhibitors after factoring in the lower average ticket price because of discounting, higher occupancy and higher F&B revenue. However, it is worth noting that close to 41% of costs for exhibitors are fixed - rentals, employee cost, overheads and electricity cost. Therefore, the increase in EBITDA, as predicted by Elara Capital, will be around 7-15%. 

For PVR Inox, the average food and beverages spend per head was Rs 119 in the quarter ended March 2023. This means that if they are able to bring people to the theatres with this scheme, there is much more scope of earning through F&B sales. 

Will It Sell? 

The challenge, Nahta believes, won't be to get people to come to the theatres once the passes are sold. “Nobody would like to waste money. But I’m unsure about the passes getting sold in the first place,” he told The Core. 

One glaring caveat in the scheme is that it warrants a minimum lock-in period of three months. To purchase the subscription, effectively a user will have to shell out about Rs 2,100 at once. Nahta considers this price too high. 

“The minimum three months (lock-in period) doesn't make sense. For a month, as an experiment people might pay Rs 700 but asking for Rs 2,100 for use by one person is not a calculated move. Especially when they are already questioning the quality of content they will get to watch. My prediction is that they will have to revise this at some point, and remove the three month lock-in period,” he said. 

While the scheme currently looks more like a pilot, if it sticks and manages to get audiences back to the theatre on at least three weekdays in a month, it seems like a win-win situation – cinema lovers who pay much lesser for every ticket, as well as the multiplex chain which can greatly improve the utilisation of its fixed assets. 

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