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Reduced government spends continue to put pressure on cinema advertising

While revenue coming from advertising is yet to reach the pre-pandemic level, ticketing and F&B earnings are acting as a buoyant force for the medium

The advertising revenue of the pandemic hit cinema halls and multiplexes is steadily recovering; although it is still short of the pre-pandemic levels. While brand advertising in cinema halls is slowly increasing with back-to-back film releases and increased footfall, reduced government advertising has continued to put pressure on the revenues. 

Rajesh Mishra

Rajesh Mishra, Executive Director and Group CEO, UFO Moviez, the in-cinema advertising platform, said, “The success of big budget movies in April'22 and May'22 provided an impetus to all revenue streams, especially the corporate advertisement revenue that has seen a substantial recovery. Whereas the lag in government advertisement spending continued to put pressure on the overall advertisement revenue.” 

PVR witnessed massive growth coming from ticketing and F&B sales, it said in its Q1FY23 earnings report that the growth in advertising revenue continues to lag. The company has reported an advertising income of Rs 63 crore which is 32% lower than the pre-pandemic figures. In other words, it reflects a 68% recovery in advertising income vis-à-vis pre-pandemic levels.

Inox Leisure reported Rs 30 crore advertising revenue in Q1FY23, depicting a steady recovery.

According to GroupM’s TYNY report of 2022, cinema advertising is expected to reach Rs 635 crore, growing by 467% from the previous year’s ad spends on the medium. Before the pandemic, the ad spend on cinema was Rs 1008 crore in 2019. It dipped to Rs 175 crore in 2020 and then Rs 112 crore in 2021.

Most recently, PVR Cinemas announced its latest innovation in the in-cinema advertising space since its come back after the pandemic. It introduced 270-degree on-screen experiential in-cinema advertising. Maruti Suzuki has become the first advertiser to use this platform to launch its new 2022 Maruti Suzuki Brezza in cinemas. 

Recently, the merger of Inox Leisure with PVR has also received ‘No Objection Certificates’ from the two stock exchanges (BSE and NSE).

Another trend that has come to the fore and is acting as a buoyant force for the multiplexes is the growing appetite of the audience to consumer regional language films. For example, ‘KGF: Chapter 2’ and ‘RRR’ were a superhit across the country. 

Mishra of UFO Moviez added, “The increasing appetite of audiences to consume movies in different languages and genres will continue to benefit our theatrical revenues.”  

The Q1 of FY23 was marked by the release of some of the biggest domestic hits like ‘KGF: Chapter 2’, ‘RRR’, ‘Vikram’, ‘Bhool Bhulaiya 2’ and Hollywood movies like ‘Doctor Strange’ and ‘Top Gun: Maverick’. KGF 2 went on to become the second largest blockbuster in the Indian market. In fact, PVR in its Q1FY23 results stated that the KGF was the highest grosser ever for PVR with a net box collection of Rs 121 crore across its cinema circuit. 

PVR has posted a consolidated net profit of Rs 53.38 crore for the June quarter. It had posted a net loss of Rs 219.44 crore in the April-June quarter a year ago.

PVR's quarter-on-quarter revenue was up 82.70% as against Rs 537.14 crore in the January-March quarter of FY22, when some of its markets were disrupted due to a rise in Covid cases. PVR's revenue from movie exhibitions was at Rs 984.04 crore and Rs 25.34 crore from movie production, distribution and gaming, among others. It is currently operating 854 screens pan-India spread over 75 cities. The company said it is on track to open 125 screens in the current financial year.

Ajay Bijli

Ajay Bijli, Chairman, Managing Director, PVR, said, “This quarter’s results are a reflection of the strength of the domestic film industry we have in India and the consumer’s unsatiated appetite to watch films on the big screen. Indian film exhibition industry has been one of the fastest to recover as compared to other international markets. The content line-up for the year ahead looks very promising and we hope this will be a very strong box office year for the Indian exhibitors. As we celebrate the silver jubilee for PVR this year, we are extremely confident that we will continue to set and exceed even greater benchmarks in the years to come.”

Inox reported a consolidated net profit of Rs 57.09 crore for the quarter ended June, whereas, it recorded a net loss of Rs 122.28 crore in the April-June period a year ago. In Q1 FY23, Inox added three new properties with 17 screens. As of June 30, 2022, Inox Leisure was operating a network of 692 screens across 163 multiplexes in 73 cities.

Siddharth Jain

Siddharth Jain, Director – Inox Group, said, “During the entire stretch of the pandemic, something which kept us hold the fort, was the belief in ourselves, our passionate moviegoers, our stakeholders and our teams. From enabling us to see through the pandemic, to charting our path out of it, this belief has driven us towards this historical and miraculous performance in Q1. While our best-ever quarter marks a moment of rejoicing, we will also ensure that it keeps inspiring us to raise the bar, while maintaining a strong focus on customer-centricity, innovativeness and profitability.”

UFO Movies’ consolidated revenue was Rs 906 million in Q1FY23 versus Rs 282 million in Q1FY22.

The future of cinema advertising seems to be bright with the content pipeline for 2022 in the months ahead looking extremely robust. Over the next few months, several big-budget Bollywood movies are lined up for release like ‘Laal Singh Chaddha’, ‘Brahmastra’, ‘Vikram Vedha’, ‘Ram Setu’, Phone Bhoot, Yodha, Drishyam 2, Cirkus, Kabhi Eid Kabhi Diwali etc. From Hollywood, Bullet Train, Paws of Fury, DC league of Super pets, Black Adam, Black Panther: Wakanda forever (Marvel), Avatar: The Way of Water amongst others. From the regional genre, Liger, Godfather, Ponniyin Selvan, are also set to release in the theatres.

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