“People are missing the experience of visiting a cinema”: Kapil Agarwal, UFO Moviez

Today, the film industry revenue stands at zero. This is a business where people have to congregate in huge numbers. And since we’re fighting a disease that spreads due to human touch and we’re talking about social distancing, cinema halls were the first to close and, I think, will be the last to open. Even if the lockdown is lifted on May 3, 2020, it does not mean that cinemas will open. Our estimate is that if the lockdown is not extended and everything else goes as per plan, cinemas may start again from the end of June, certainly not before that.

Once the cinemas open, people won’t immediately start buying tickets. It will take a lot of effort from everybody in the business to bring people to theatres. People will be scared to even step out, and once they start doing that, they will only visit places they trust. It will take at least three months after the cinemas open to get the fear out of people. One thing that we have gathered so far is that people are missing the experience of visiting a cinema, and are willing to go back.

First and foremost, we will have to establish that we are safe and this is where we need to spend the next three months. The multiplexes have already announced that they will sell alternate seats, and schedule screenings in a manner that ensures limited gathering. We will need to sanitise all the multiplexes and keep the workers well protected. Work has already started on that (front). After all that is done, it will depend on the movies that are releasing. Unless big movies are released, people won't visit cinemas.

Yes, marketing will play a big role and you will have to do the 'halla-gulla', but before that, we need to act and ensure that the cinemas are actually safe. Also, you will find a lot of players in the industry diverting their B2B spends towards B2C communication. We at UFO Moviez, for example, have an advertising contract with 4,000 screens across India, and our revenues from advertising in FY19 stood at Rs 237 crore. A lot of our advertising was directed towards the agencies and advertisers. But now, we will diverted it to B2C as we need consumers to visit cinemas first, for the advertisers to show any interest.

What happens is that the content owners, depending on the scale of the movie, ask for an advance. So, to get the digital rights for a week, you will have to pay an advance of Rs 1.5 lakh-Rs 4 lakh. And then, you will get the license to screen the movie at your cinema. Now after being out of business for more than six months, nobody will have the money to pay advance. And, content owners will be reluctant to give rights without an advance because there is no clarity on whether they will get returns. Because we have the technology, we can ask the producer to give license for a day and we can collect money from the cinemas on a daily basis, or per show basis. So, you will pay me one day, I will give you the right for that day and then after you have collected the money, you will transfer it to me and I will give you the right to screen for another day. I think this is the time for the next level of innovation.

We are a 1,300-people strong team and haven’t laid off a single person yet, including third party associations. At the same time, internally, we need to reorient ourselves. Our dependence on one business is high and, therefore, we need to find out if we can use our resources, offices, various teams in some other way. Our workforce can supplement other organisations. For example, we have an advertising sales team which can provide assistance to those that depend on advertising... Actually, we have thrown a challenge to the entire team to come up with ideas on how we can reduce that dependence on one business.

My estimation is that it will be by October-November. By that time, we will see crowds in cinemas again. It is the (festive) Diwali period when big movies are scheduled for release and once that happens, we will see things changing.