Multiplexes feel the squeeze from TV channels

Multiplexes feel the squeeze from TV channels

New Delhi/Mumbai: Star India Pvt. Ltd has picked up the television broadcast rights for Shah Rukh Khan super-hero movie Ra.One, which is currently set for an October release.

The company didn’t say how much it paid for the movie rights to one of the year’s most highly anticipated films, but it reflects the aggression with which TV is pursuing Bollywood. With brand new films guaranteed to attract viewers, broadcasters are spending as much as 300 crore a year to purchase TV rights of films, according to media buyers, who declined to be named.

Star has also bought the rights for films currently running in theatres—Stanley ka Dabba and Dum Maaro Dum—ensuring that those who don’t see them at the local multiplex can catch the movies on TV soon.

The gap between theatrical release and TV premiere is shrinking and with it the window of opportunity for the cinema halls to make money from a film.

The release window has shrunk to three to four months in the last one year from six to nine months, according to Pramod Arora, chief operating officer of PVR Ltd, which owns PVR multiplex and stand-alone screens. Some small-budget films even air on television within a few weeks of the theatrical release, he said.

The Multiplex Association of India, the apex body of the country’s leading companies in the business, is planning to meet top production companies to address this narrowing gap, Arora said.

The development comes as the two-month-long Indian Premier League has forced producers to avoid releasing films when the Twenty20 tournament is being held.

There are 1,000 multiplex screens in the country, according to a report prepared by the Federation of Indian Chambers of Commerce and Industry (Ficci) and KPMG for 2011.

“The Hindi film industry releases roughly 800 films annually and in the last one year, 15-20% of the films have shrunk their release window considerably," said Arora. “This doesn’t allow multiplexes to exploit the film to its maximum potential."

Theatrical revenues are still the biggest source of income for film production companies, which is why producers should time the release of their films on television more carefully, said Sunil Punjabi, chief executive of Cinemax India Ltd.

But the shift could be inevitable and permanent. Already, the biggest bump for multiplexes comes on the first weekend of any release. Sleeper hits —those that take time to catch the public’s fancy—are becoming increasingly rare.

The Ficci-KPMG 2011 Entertainment and Media report points out that with income from other platforms going up, the share of theatres is declining. Having gone to 74% of the total in 2010 from 76% in 2009, the share is set to decline to 70-72% by 2015.

Media analysts report that revenue from syndication deals for film production companies have gone up from 7% in 2009 to 12-15% in 2010.

“The sale of cable and satellite rights have gone up because of the increased intensity of competition in the market," said Rajesh Jain, head of media and entertainment at global consultants KPMG.

Media buyers say that new films bring in a rush of gross rating points (GRPs) for channels, which also get to charge premiums on ad inventory.

“If ad inventory is sold at 1 lakh on prime time on a leading general entertainment channel (GEC), inventory on films (on that channel) would be priced at 1.5 lakh (for 10 seconds)," said Sujata Dwibedy, general manager, India Media Exchange (IMX), the centralized buying unit of Publicis Groupe.

High prices for film rights don’t deter broadcasters. Colors has bought the rights to the Salman Khan film Ready, and will air it soon after it opens in theatres on 3 June. It will air Patiala House, which was released in February, this month.

Rights to new films are expensive, but broadcasters are confident of returns, said Gaurav Gandhi, head, international business and chief operating officer, Sun18, the joint venture between Sun TV and Network18 for channel distribution.

“Movies are an extremely expensive investment from a broadcaster’s point of view. In the last year-and-a-half, prices have gone up by 50-75%," said Gandhi.

Multiplexes will have to evolve, said Timmy S. Kandhari, India leader, media and entertainment practice, PricewaterhouseCoopers International Ltd.

Some of them are going upmarket as part of this process.

“We have decided to invest in 3D cinema screens, upgrade our technology overall and offer super luxury services to patrons," said Deven Chachra, managing director of Satyam Cineplexes Ltd. “Players will have to continue offering more quality services to consumers."

He doesn’t agree that multiplexes are suffering because producers are exploiting other revenue platforms, but he said that some audiences in the smaller towns and cities are tending to gravitate away from cinema halls. This is significant as multiplex operators are looking at tier II and tier III cities as growth opportunities.

Vikram Mehra, chief marketing officer of Tata Sky Ltd, agrees. Some of the latest blockbusters shown on the direct-to-home (DTH) platform have attracted as many as 100,000 people on a pay-per-view basis, many of them from such smaller towns and cities.

“Instead of spending 300-400 in a multiplex, many viewers watch it at 50 on the DTH platform," he said.

Tata Sky recently showed 7 Khoon Maaf and Tanu Weds Manu within weeks of their theatrical release. Such deals are struck directly with the producer or broadcaster (that also holds DTH rights) and based on a revenue-sharing model, Mehra said.

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