PVR and Inox merger is expected to be a game changer for multiplex market
Right when it seemed that the Coronavirus-induced pandemic would sound the death knell for big screen cinema, country’s two major multiplex chains PVR and Inox announced their merger, promising it to be a game changer for the movie going audience with the combined entity aiming to have 1,500 screens eventually. Coupled with aggressively priced tickets for consumers and an enhanced movie watching experience, they aim to recapture the market they had ceded to over the top (OTT) players in the last two years.
PVR Chairman Ajay Bijli, who will be the Managing Director of the combined entity (to be called PVR Inox Limited) and Inox Director Siddharth Jain, who has been named as the Non-Executive Non-Independent Director, shared their experience of the past two years with NDTV and explained how they plan to work with each other post the merger.
Asked how they as a combined entity plan to take on the competition being posed by OTT platforms, Mr Bijli said, “You know I have had a little contrarian view on calling OTT players as our competition because obviously their voice and their decibel level increased a lot because our shutters were down. But in home entertainment, it is something that’s always been there for the longest time through VHS, DVD, satellites and now OTT platforms, and it only actually enhances the pile of revenues that are made by the film fraternity. So traditionally, the monetisation journey is theatrical, then OTT and then satellite. That pile is something that goes back to the producers and producers make movies and more content which gets played on. But definitely there’s no shying away from the fact that in the last two years, the habits changed, the OTT players were buying movies, the film fraternity was selling movies and people were not coming to the cinemas.”
However the PVR Chairman added that there has been a long term belief that cinema going is not alien to Indians. “We love going out and lot of big releases like ‘83′, ‘Sooryavanshi’ and ‘RRR’, they all waited for theatres to open. So I think business has bounced back now, people have once again given us the verdict that cinemas are here to stay. Film fraternities are releasing movies, people have flocked back to the cinemas with the pandemic under control.”
At the same time he added that both multiplexes and OTTs can co-exist.
Mr Jain said that with the pandemic boosting the growth of OTTs owing to closure of theatres, yet it is not a question of survival. “It is more about how we can take this to the next level (post the merger). Compared to China, where there are 80,000 screens and the US with 40,000 screens, India is under-penetrated with only 9,000 screens. Considering the passion of Indians of watching films on big screens, people deserve a much larger movie going experience. We have not been able to penetrate to smaller towns and tier 2 and 3 cities due to congestion in real estate.
Explaining his point, Mr Jain said that despite the pandemic-induced disruptions, they have been able to operate their individual brands (Inox and PVR) well. He said that with the release of films like “Gangubai Kathiawadi” and “RRR”, March 2022 has turned out to be a “historic” month and with the numbers being encouraging it cannot be termed as a question of survival, rather it is all about enhancing the movie-going experience.
On how stressful it was to run a large organisation during the lockdown, Mr Jain said, “it was certainly a time you know that wasn’t scripted. I would really like to thank all our 9,000 employees for standing by the company during this time. The uncertainties in front of all of us, back in 2020 and 2021 were tremendous. Nobody knew what the future was going to hold. My entire senior management team, they have been the pillars of strength absolutely and I have the highest regard and respect for them for helping us navigate through these times and to see March 2022, potentially our highest month in history. You feel like you have been through a battle and come out of it, but I can tell you that we’ve come out on top for sure.”
Mr Bijli was more philosophical over the entire pandemic scenario, noting that it “felt like a low phase but one has to maintain equanimity”. He informed that the staff and developers were good as the company got rent reliefs.
“Business-wise we got a beating but had a chance to focus on other aspects of life,” the PVR chief said.
When asked about how the arrangement is going to work out in terms of personnel coming together seamlessly in a system, Mr Bijli said, ”Well the Jains, Mr Pavan Jain (Chairman of Inox) and Mr Siddharth Jain, they’ve been gracious enough to entrust us with this responsibility to run the day to day affairs of our company. It’s a very big task at hand. India is a massive country. We’ve 1,500 screens, 109 properties, we have a roll out plan of almost 200 screens. They’ve a fabulous team. We’ve a fabulous team and we believe that as many hands on the deck is what we need currently and we will ensure that all the human resources which are there, are going to be utilised to take on the challenge which lies ahead of us.”
Quizzed about how difficult it was to work with a competitor like PVR while protecting one’s own interests, the Inox director said, “I think it was an extremely easy decision for us. You know we have worked together at an industry level for more than a decade. We’ve known each other, we’ve respected each other for a very long time. We’re super excited. I think it’s a game changer for our industry, for our consumers and I’m just so happy to collaborate with them and it’s going to bring out the best in us. You must appreciate, it’s a big decision for two competing companies to come together in India. Companies which are promoter driven, (have) let go of their individual interests in the larger interest of all the stakeholders and that’s what really drives us.”
Explaining about the cost optimisation opportunities which the merger offers, Mr Bijli said, “the scale gives you cost efficiency on capex and operating expenses. When you have the scale, you make bulk purchases and the benefit of that will be passed on to the consumers.”
However, he added that no compromise will be made to the (movie watching) experience.
“In fact when you talk about OTT platforms and out of home watching experience, if there’s one thing we need to do a lot, it is to enhance the experience at the cinema like big screens, great sound projection system and seating comfort so that it becomes very different from watching it (films) at home. So I think we’ll be investing a lot for making sure that it’s more and more experiential when you go out and watch a movie,” Mr Bijli explained.
On whether the legal route is going to be a difficult one as the merger will require approvals from various regulatory bodies, Mr Jain said, “in course of the next six to nine months, we have regulatory tasks in front of us like seeking Securities and Exchange Board of India’s (SEBI) and National Company Law Tribunal’s (NCLT) approvals. We will comply with the law and all that is required.”
With the coming together of two big multiplex players, Mr Jain said that in terms of screen expansion they have as of now 1,500 operational space combined. “Traditionally we have been expanding at 60 to 70 screens per chain, 180 per year. But we want to set an aggressive target and double our size in the next five to seven years. We have the pipeline in our pocket and the combined number of screens we have signed are around 1,500 to 2,000 and plan to execute this in the next five to seven years,” he added.
On competing with OTTs with deep pockets, Mr Bijli said that the platforms are sensible about spending their money as they buy films wisely after gauging their theatrical performances.
“This however shows that even if they have deep pockets, OTTs still want to see the theatrical performance of a film before buying it at a reasonable price,” the PVR chairman informed, adding that the qualitative and quantitative benchmark gets set only after a film releases theatrically, unless it is only made for television.
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