Co-CEO Gautam Dutta explains PVR INOX's 'Passport' strategy

PVR INOX recently introduced a subscription service called 'Passport,' allowing subscribers to watch 10 movies per month at a rate of Rs 699. However, the offering has faced criticism from social media users due to the list of terms and conditions that availing the subscription entails. 

The primary criticism has been around the fact that the offering is valid only from Monday to Thursday, and patrons can book a specific movie once, limiting them to one movie per day. Further, PVR's premium options like IMAX, Gold, LUXE, and Director's Cut are not included, and the subscription must be purchased for a minimum of three months through the company's app or website.

Balram Vishwakarma, co-founder of Scroll Back Studios, took to social media to criticise the offering, stating, "As an average cinema enthusiast, these terms and conditions feel like an insult." Ankit Anand, founder of Samwaad, expressed his opinion, saying, "My personal opinion is there are barely 10 watchable movies in a whole year. Who has the time and patience to watch that many in just one month?"

This move comes amid challenging times for the Indian film industry. According to reports, PVR Inox reported a net consolidated loss of Rs 333.37 crore for the quarter ending March 2023, significantly higher than the loss of Rs 107.41 crore the previous year.

The industry faced setbacks during the pandemic, losing 24 million viewers, and the cumulative box office earnings for January to June 2023 were 15 percent lower than the same period in 2022. It's projected that 2023 might end with an 8 percent decrease in box office earnings compared to 2022.

In response to these challenges, PVR Inox has implemented strategies like reducing food and beverage (F&B) prices, aiming to bolster revenues during a time when cinema footfalls are declining.

Despite cinemas operating at full capacity without restrictions for over a year, footfalls are down by almost 30-35 percent compared to pre-Covid levels. On the flip side, digital media is thriving, contributing 27 percent to the Media and Entertainment (M&E) sector, up from 16 percent in 2019, according to an EY report. 

"This move clearly shows that the business is under pressure as far as frequency is concerned. Large-budget films still do well on the big screen. However, small and medium budget films don't really perform so well. You have close to 15-17 large-budget movies a year and you really can't piggy-back on these films doing well and driving occupancy and box office for the entire year. I think this is a strategy to drive frequency," Karan Taurani, senior VP- research analyst (media, consumer discretionary and internet), Elara Capital, told News9.

Speaking with afaqs!, Gautam Dutta, co-CEO, PVR INOX, says the idea behind this is to fill theatre seats on weekdays. For the April-June 2023 quarter, the occupancy rate for PVR INOX fell to 22.3 percent, compared to 31.4 percent from the same quarter in 2022. Reports indicate that weekday occupancy in multiplexes is usually around 10-15 percent, increasing to about 35-40 percent during the weekend.

"We are not targeting working professionals for Passport. The three target groups we are focusing on are students, housewives, and senior citizens. The idea behind this offering is to boost weekday occupancy," he says.

Dutta estimates that consumers visit cinemas approximately once a month. Their goal is to encourage audiences to visit cinemas 5-6 times per month. Passport significantly reduces costs, making it PVR's most economical ticket offering.

PVR's other offerings like IMAX are considerably more expensive than what the target audience is likely to invest in. The company has said that this can enhance viewership for content across genres, as audiences can now enjoy more movies while exploring newer varieties of content, without spending much.

"A single IMAX ticket costs around Rs 600-700. With Passport, patrons are only paying PVR 70 for a standard cinema experience. If we were charging a higher amount, services like weekend movies and IMAX could have been included in the Passport offering," Dutta adds.

The Passport's target audience seeks regular cinema experiences, he further asserts. He also says that an overwhelming majority of the audience doesn't go for their premium offerings, like a recliner seat or an iMAX movie experience.

They go to watch a movie in a normal arrangement. With the Passport, the company aims to promote footfall in cinema experiences that align with audience behaviour.

"While people are demanding enhancements to the Passport offering, if we demand higher payments, they won't be receptive. For Rs 699, they would have only been able to get two tickets at PVR. With Passport, they can now get 10 tickets at the same price," he emphasises.

Further addressing the online debate, Dutta says, "We believe the debate will subside as more people understand the proposition. The fact that we have only opened 20,000 subscriptions and sold around 7,000 in a day's time leads me to believe that our target audience has grasped the product's proposition. Once we reach 20,000 enrollments, we will study the consumption and then roll it out on a massive scale."