KPMG estimates that in this COVID-hit year, in-cinema advertising will be down to Rs 370 crore, as compared to last fiscal’s Rs 1,070 crore.
The Rs 18,300-crore cinema industry has just released the pause button. Since March 2020 (until now), the theatres in India were under blanket lockdown due to the Coronavirus pandemic. As a result, the leading global consulting firm KPMG now estimates the industry to shrink to Rs 6,100 crore this year.
Although the theatres have now reopened, the response across the country has been quite subdued. "We have to understand that there is no new content available now. It will take at least four to six weeks for the signs of recovery to show," says Vishal Anand, chief sales and revenue officer, INOX Leisure.
"At this stage, we are betting big on West Bengal," he adds. Durga Puja, the biggest festival in the eastern part of India, is just around the corner. The producers have as many as seven movies ready for release in and around the festival up until Diwali, which is on November 14.
A part of the film industry is in-cinema advertising. Albeit the advertising rates have come under stress in the last few years, no one could have ever imagined a dip like the one projected in 2020-21.
Last fiscal (2019-20), the in-cinema advertising, according to KPMG, was at Rs 1,070 crore, down from Rs 1,140 crore in FY19 (2018-19). In the COVID-hit year, KPMG estimates it to be down to a mere Rs 370 crore.
Not only films, but advertising, as a whole, will see a dip, reveals Ashish Bhasin, CEO APAC and Chairman India, dentsu. "As far as this calendar year (2020) is concerned, I think there will be 15-20 per cent negative growth in overall advertising, as compared to 2019."
"It will be different for different media. All of media will be impacted. Digital will still show growth, but (maybe) not as much as the previous year. Some other media (print, cinema, outdoor, etc.) will record negative growth, as compared to the previous fiscal year.”
Bhasin opines that it will take some time for the advertisers to return to cinemas because it is not just the opening of cinemas that matters. It will also depend on how the "crowd picks up." It will depend on the confidence that consumers have and the kind of films that are released. "It’s a fact that India is a cricket and film crazy country. So if there are some big releases pulling audiences to cinemas, only then will advertising start."
"Big movies should attract audiences," says Vikram Sakhuja, group CEO, Madison Media and OOH, echoing Bhasin. Sakhuja adds, "Currently, the focus is on increasing the confidence of audiences and advertisers."
Normally, the rate varies from Rs 30,000 a week for a normal release to Rs 1.5 lakh for a 10-second slot during a blockbuster. Even if the advertisers return with campaigns to promote their brands during a movie, will they be willing to pay the rates they did in pre-COVID times?
"Rates, I imagine, will be a lesser priority," says Sakhuja. "I do not think fourth quarter cinema advertising will reach last year’s levels. It will take a little longer."
In West Bengal, the multiplex chains are in conversation with brands like Manyavar and others. Anand of INOX Leisure says that it is a positive sign. "Advertisers are consumers too and they need to feel safe. Only then will they visit the cinemas both to watch and advertise. This is a process that will take three to six weeks."
Like Sakhuja, Anand also believes that the fourth quarter won't be at par with the corresponding period of the last fiscal year. "As far as advertising revenue is concerned, the first quarter of the next financial year (2021-22) could be 75 per cent of the first quarter of FY20 and that, in my estimate, is fair progress."
The multiplexes are staring at a subdued Diwali as the content pipeline is weak. The third quarter, with Diwali, Eid and Christmas, has always been the biggest for the cinema chains. Around 35 per cent of the revenue comes from the three months of the year (October-December).
"Twenty per cent of our advertising revenue used to come from the governments, both state and centre combined. The government is not spending, as tourism has not kicked in, the advertising revenue is still some time away," says Anand.
As far as rates are concerned, Anand says it is not the right time to roll out a new rate card as the hiatus is temporary. Instead, he is of the view that the multiplexes will offer a higher discount, which will vary for national, regional and local clients.