Will “FIRST DAY, FIRST SHOW” announcement of RIL disrupt the Multiplex biz?

VADODARA (BARODA) | MUMBAI | AHMEDABAD-GANDHINAGAR-RAJKOT – “FIRST DAY, FIRST SHOW” announcement as announced by Reliance Industries Ltd Chairman Mukesh Ambani on 42nd Annual General Meeting held in Mumbai on Monday, of showcasing movies on the Jio Platform, as soon as it releases, has started giving jitters to the Multiplex business fraternity.

Will this announcement jeopardize the heavily invested multiplex business model?

Multiplex listed companies INOX Leisure Ltd and PVR Ltd have raised their concern, issuing a press-statement, highlighting on how this new disruptive announcement may impact the existing heavily invested multiplex business models(?) or how the theatrical viewing experience will continue to co-exist with the at-home viewing experience.

The multiplex operators have emphasized on how the announcement presently lacks clarity, how it is likely to impact the theatrical exhibitions business, confronting the ongoing media reports, how confident are the multiplex owners on the business growth and operational business model and what are the possible protective measures are ensured by the industry itself, when theatrical exhibition experience and at-home viewing experience, have co-exist all these years.

PVR Ltd in a media statement titled, “Media Statement, Theatrical Exhibition is the foundation of the Film Business” emphasized on the numbers, data and usual trade-practice, while both theatrical and at-home experience co-exist, since years.

Whereas the press statement titled “Statement from INOX Leisure Ltd” as submitted by the company to the Indian Bourses, read that, more clarity was awaited and how the trade practice has been safe-gaurding the theatrical exhibition business.


MISSING PIECE IN THE JIGSAW

We note from various media reports, that one of the India’s largest telecom enterprises, have announced that they intend to launch, by mid-2020, a service that would include, inter alia, making available movies for viewing at home, on the same day these movies are released, in cinema theatres, INOX statement read.

“While it is difficult to react based on the insufficient details available, given the wide coverage given to this announcement, and some queries we have received on the subject, we thought it would be appropriate to share our initial thoughts on the subject immediately,” the INOX statement read.

PVR Ltd. (PVR) has learnt from various media reports that one of India’s telecom enterprises, for its premium fiber customers, will make movies available at home the same day these movies are released in theatres.

“As on date, the publicly available information regarding the proposed service is limited; however, given the wide coverage in various media reports, we would like to place on record our observations,” the PVR statement said.

A more comprehensive reaction would perhaps require further details of the service being proposed, INOX said.


THE NUMBERS

Cinema exhibition remains the largest revenue contributor for the Filmed entertainment segment, PVR statement emphasized.

As per FICCI report on India’s media and entertainment sector, March 2019, out of the total Filmed entertainment revenues of INR 174.5bn in 2018, theatrical box office (domestic & overseas) contribution was ~75%.

Given India’ low screen density and the growth potential it offers, we expect Cinema exhibition to continue expanding its foot print in India for the next multiple years, which will continue growing it’s contribution to the overall revenue of the Filmed entertainment.

It’s appropriate to point out that the year 2018 was a landmark year for global cinema industry with US / Canada box office and China box office at record highs of US$ 11.9bn and US$ 7.9bn, respectively.


THE LEISURE EXPERIENCE

“The theatrical exhibition industry, led primarily by the multiplex industry, has made significant investments in world class cinema theatres, by bringing in state of the art technology, luxurious ambience, bespoke comfort and unmatched service, ultimately curating an experience which can never be matched by watching movies on television screens at home,” INOX statement said.

Theatrical and at-home are two completely different experiences and each has their own places, the INOX statement stressed.

Both these experiences have co-existed and prospered for decades and will continue to so in future.

“We are extremely buoyant about cinema exhibition’s growth prospects and remain committed to expand PVR’s reach in cities & towns across the country, while delivering an unmatched movie going experience to the Indian consumers,” the PVR statement claimed.

We strongly believe that Indian movie watchers’ love for cinema on giant screens is deep rooted and unshakeable, and this has kept, and will continue to keep, the industry alive and thriving for the past several decades, and for several decades to come, the PVR statement emphasized.


THE TRADE PRACTICE

For decades, theatrical release window has been a valuable model for exhibitors and producers alike.

In India and globally, producers have respected the release windows and kept a sacrosanct gap between the theatrical release date & the date of release on all other platforms, i.e. DVD, DTH, TV, OTT etc.

Cinemas continue bringing people together to share a communal experience, this unreplaceable element which is at the core of theatrical experience, continues to deliver a robust box office performance not just in growing market such as India but also in the more matured markets such as USA, China, Europe etc. where Cinemas have regularly competed with many similar initiatives, e.g. Netflix Original Movies etc.


WHAT SAFEGAURDS THE BIZ?

We would also like to point out that producers, distributors and multiplex owners in India have mutually agreed to an exclusive theatrical window of 8 weeks, between the theatrical release of a movie, and release on any other platform, the INOX statement emphasized.

This exclusive theatrical window is a model that is followed internationally, in order to ensure the robust financial viability of all the segments of the sector, and has been replicated in India.

The producer of the film is the owner of the creative content and is therefore entitled to choose the platform for distribution and consumption of his content.

However, in view of this mutually agreed exclusive theatrical window, he would have to choose between theatrical exhibition or release on any other platform, since release on both simultaneously would breach the mutually agreed exclusive theatrical window.


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