FICCI-KPMG-Report-13-FRAMES

70 The power of a billion: Realizing the Indian dream
© 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Licensing & Merchandising (L&M) and Gaming:
L&M and Gaming are still very underpenetrated categories
in India due to inhibitors like piracy and a diverse audience
to be reached with different propositions and price points.
Also, merchandising needs sustained brand recall, which
Indian films have not been able to create as they are mostly
do not produce sequels. Hollywood has, over the years
created iconic figures such as Batman and Spiderman. India
is yet to create iconic figures on a scale that will generate
robust revenues for the producer. Disney’s Cars generated
moderate theatrical revenues in India but was immensely
popular in the merchandising segment. Disney also tied up
with consumer brands such as Pepsodent and Britannia to
popularize the Cars merchandise 35 . Gaming also remains
unexplored owing to lack of knowledge, captivity and reach.
With a plethora of sequels and organized retail emerging in
India, the merchandising and gaming markets if not tapped
into will be a missed opportunity. Licensed merchandise
today is inhibited by the lack of an appropriate retailing
infrastructure – this segment will only grow once modern
retail formats grow. With the government approving multibrand
retail in India in 2012, the industry is indeed hopeful
that this revenue stream can finally fulfill its promise.
Content syndication:
Sharing of intellectual property rights has not yet
materialized significantly in India. While a first of its kind
deal has been signed between Dutch entertainment firm
- Endemol and motion pictures maker Eros International
to share and develop properties based on their intellectual
property rights, the industry needs to actively explore this
avenue to open a new stream of revenues.
“
India lacks on content syndication in films as
compared to international markets. Indian
films are not being translated worldwide. The
overseas revenue as of now comes from the
theatrical releases alone. Merchandising has
also not taken up in India. We need to push
ourselves to find new sources of revenue.
“
- Ashvini Yardi
Co Founder,
Grazing Goat Pictures
Pay per view (PPV):
With the net DTH subscriber base growing at 18.8 percent
in 2012 36 , pay per view is expected to grow robustly over
the years. The phase 2 of TV digitization is set to cover 38
cities by March 2013 (although with likely delays) and phase
3 aims to cover smaller towns and cities by November
2014 37 . There will be considerable monetization potential for
regional pay per view services. PPV will also aid the airing
of parallel cinema movies, which often struggle to find
slots in the exhibition space. With the emergence of new
talented directors producing movies with strong storyline
and inclination of Indian audience towards good quality
content, PPV will be a strong driver for indie cinema.
35. ‘Cars2 economics: Movie, Merchandise and Kids’, Bemoneyaware.com, July 2011
36. KPMG in India analysis
37. ‘Cable TV Digitization in India’, Techmagnifier.com, November 2012
38. ‘Cinepolis India bets on small cities; to double screens this year’, The Economic Times, February 2013
39. ‘Cinépolis eyes expansion in India’, Indiantelevision.com, November 2012
Key themes
Penetration into tier II and tier III markets
Digitization has changed the face of the movie industry
in a number of ways, one being simultaneous release of
Indian movies on several screens, including those in tier II
and tier III cities. Amongst those trying to cash in on this
opportunity are movie exhibitors who now see tier II and
tier III cities as potential drivers of growth. Even though
Delhi and Mumbai contribute between 55 -60 percent 36 of
the revenues of a big budget film, multiplex expansion in
these regions is rapidly drying out. In 2012, there were no
new screen additions in Mumbai and Delhi.
“
Screen additions of multiplexes are slowing
down in metro cities while tier II and tier III
cities are observing growth. Such cities are
building what can be called as ‘valueplexes’
which are constructed at reasonable
investment and provide a better experience.
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Multiplexes like PVR Cinemas, Inox Movies and Reliance
Big Cinema are rapidly expanding their footprint in towns
such as Latur, Darjeeling, Raipur etc. Cinepolis plans to
expand its footprint in the south by opening 11 screens in
Kochi in 2013 38 . It plans to open 500 screens across the
country by 2016 39 . Multiplex chain INOX is planning to
launch around 50 screens by the end of 2013, entering new
territories such as Madurai, Bhopal, Surat, Bhubaneshwar,
Kharghar and Udaipur. PVR Talkies, PVR Cinemas’ no-frills
cinemas for consumers in tier II cities, is looking to add 50
more screens for the Talkies model in the next three years 40 .
SRS Cinemas is also looking to add screens to cities such
as Bhiwadi, Shimla and Lucknow 41 . With lower real estate
prices in smaller towns and the leeway to launch a no
frills cinema, the exhibitors are able to considerably bring
down the cost per screen. Keeping in mind demographics
of these cities, the prices of tickets are lower than those
charged by multiplexes in the metros. For instance, while a
regular PVR ticket price ranges from INR 100-275 in Delhi/
NCR, it ranges from INR 40-90 in Ujjain and INR 50-150 in
Bilaspur 42 .
“
While the domestic consumption has
maintained, experimental cinema has started
being accepted in unexpected markets.
We were surprised to see the success of
Hollywood movies in tier 2 markets like
Nanded, Bilaspur and Ujjain. 3D demand is also
on a rise as quality of content is improving. We
see increased uptake of 3D content even in
non-metros.
“
40. ‘Small Is Big!’, Franchise Plus, June 2012
41. ‘SRS Cinemas to add 18 screens by FY13’, Indian Express, November 2012
42. PVR Cinemas website, accessed March 2013
“
- Sanjay Gaikwad
Managing Director,
UFO Moviez India Limited
- Nitin Sood
Chief Financial Officer,
PVR Limited