PVR INOX’s ad-free offering to help it earn more revenue through tickets and F&B sales

PVR INOX is now offering a seamless movie-watching experience, free from commercial advertisements before the movie and during intervals, with advertising-free movie cinemas in its select luxury properties in the country. It rolled out its ad-free offering on April 1 across select premium properties in Delhi, Gurugram, Mumbai, and Bangalore, totalling around 8-10 locations.

The cinema exhibitor has removed pre-show and interval on-screen advertisements. Previously, these segments could run up to 30 to 40 minutes, but now the interval time has been significantly condensed to just around 10 minutes.

Renaud Palliere, CEO of The Luxury Collection and Innovation, PVR INOX, says this has enabled it to save around 30 minutes per show and thus squeeze in an extra show during the day. This is exceeding the advertising revenue that it was generating before.

“By adding an extra show, we're able to make the ad-free offering commercially viable. This additional show generates more admissions, leading to increased ticket sales and higher revenue from food and beverage items. While we lose revenue from advertising, the gains from additional admissions and sales compensate for it and more,” he says.

For the audience, it provides them with an ad-free experience, especially in today's saturated ad environment. Also, it saves them time as the duration of the movie-watching experience gets reduced. Palliere anticipates that it will eventually encourage repeat visits from customers. 

“This not only reduces the audience's exposure to advertising but also offers them the benefit of experiencing a wider variety of content. However, the true impact on recall value will become apparent over time as we gather more data,” he says.

Moreover, the audience does not have to pay a higher price for this experience. Palliere says even though this particular demographic may be less price-sensitive, passing costs to the customer isn't a sustainable model and is not a viable long-term strategy.

“Our commercial structure aims to avoid burdening the consumer and instead focuses on increasing admissions, where the real opportunity lies. Our pricing already fluctuates naturally based on factors like time of day, day of the week, and the popularity of the film. This dynamic pricing model is inherent to the nature of our business, and we're hesitant to introduce additional components that could disrupt it,” he explains.

Instead of ads, the focus is now primarily on showing trailers of upcoming films and promotional content related to PVR, such as food and beverage offerings. Additionally, three key partnerships with Kotak, Pepsi, and Coke have been maintained within this 10-minute segment.

The ad-free experience is a direct response to changing audience preferences identified through social listening tools utilised by PVR INOX to gauge customer feedback. Consumers have conveyed a clear desire to immerse themselves in films without the disruption of third-party advertisements.

"Gradually, we began to receive negative feedback about the length of the pre-show advertising. Additionally, it became apparent that many attendees were arriving late, likely due to the extended advertising duration. This trend undermined the purpose of showcasing the advertising content in the first place. This behavior served as a clear trigger for reevaluation," adds Palliere.

Currently subscription-based OTT platforms, like Amazon Prime and Netflix, are considering hybrid revenue models with ads to boost revenues. According to a 2022 report by Magnite, an independent sell-side ad platform, around 80% Indians prefer some form of advertising to completely paid content. So is the theatre audience preferences different?

Palliere says the audience shift toward ad-free formats is specific to luxury formats. Within the premium product landscape, consumers are particularly time-conscious, prioritising offerings devoid of advertising content. This resonance is not counter to prevailing currents but rather aligned with broader media consumption patterns.

"However, this trend mirrors similar movements seen in other media platforms, where options to opt out of advertising are increasingly sought after. The time sensitivity of premium format audiences further underscores the appeal of the ad-free initiative, as it maximises their entertainment experience while minimising time spent," he adds.

The select PVR INOX luxury properties, where this offering is available currently, include PVR Director’s Cut, Ambience Mall, Delhi and Gurugram and in Forum Rex Walk, Bengaluru, INOX Insignia at Ardee Mall, Gurugram; INOX Insignia at R Cube, Monad Mall in Rajouri Garden; INOX Epicuria, Nehru Place and INOX Insignia in R Mall, Thane, Mumbai. Additionally, it is coming up with Director’s Cut in Kopa Mall, Pune which will also fall under this portfolio.

Currently, with about 1700+ screens the premium segment is about 14-15% of the total group. Palliere expects it to grow to around 20% of the group in the next 12 to 24 months.

In the coming months, it plans to extend this initiative to additional premium properties, marking the second phase of the program. It's likely to encompass not only tier 1 metros but also potentially expand beyond them. However, the primary target audience for this expansion remains the premium formats audience.

“We've observed demand and capacity for these formats in tier 2 cities as well, opening up avenues for further exploration and opportunities. It's clear that this product isn't limited to tier 1 cities alone,” he says.