According to GroupM’s This Year Next Year – 2023 report, ad spends on cinema have grown back from Covid lows to Rs.665 crore in 2022. It is projected to grow to Rs.810 crores in 2023.
But the hits seem few and far between. Some say the content pipeline that can draw footfalls to cinemas is not robust enough, though South content seems to be making up for fewer Hindi hits. The movie content is also available on OTT platforms soon enough for people to wait it out rather than spend a bomb at the movies, they reason.
On the other hand, we saw the largest multiplex chain PVR Inox add 168 screens in FY 2023, with the stated intent of opening another 150 to 175 screens in the current financial year. In its investor update, the chain enlists a strong lineup of movies from Jawan in Hindi to Jailer in Tamil and a host of English titles.
According to one report by Ormax, while Indian box office revenue crossed Rs.10,000 cr, footfalls remained lower than the pre-2020 pandemic. Rising ticket costs is in fact cited as a reason for lower audience numbers.
So, is cinema advertising expected to keep up with the projections?
Jyoti Malladi, Managing Director, Research, Ipsos India, says, “Resurgence of audiences in theatres/ multiplexes post Covid is largely the pent up demand for entertainment with audiences seeking the theatre experience. Also the rising disposable incomes has led to a demand for entertainment in various forms. However, there are some challenges for further growth. Most new sought after movie content is available on OTT within weeks of its release. It is turning out to be more economical and convenient to watch the new releases on OTT at home.”
Multiple OTT platforms and gaming are among options competing with the theatre experience, she notes. So will OTT that has lured viewers be the beneficiary of ad revenues as well?
“While as a medium cinema has had the advantage of offering better engagement with captive audiences, OTT offers better targetability. With ROI pressures, marketers would be looking for a medium that offers more targetability,” adds Malladi.
Karan Taurani, SVP, Elara Capital, explains in the larger context: ”If you compare ad revenue of FY23 to pre-Covid levels, only 70 pc have been recovered. The major reason being, Hindi content is not back on track. The pricing that happens in the Hindi speaking circuits are at a hefty premium. The content has not been consistently doing well. The next reason is that a lot of the larger advertisers have moved away from traditional mediums in general and are moving towards digital. It is not just cinema; on the whole, OOH, print, radio are witnessing a severe impact. Third is footfall – it has recovered only 70 pc of the pre-Covid levels, which is also impacting the medium.”
But he denies that OTT is a beneficiary of cinema ad revenues. “I don’t think that ad spends have gone from cinema to OTT. As mentioned, ad spends are low because of the content, decrease in footfalls, shift of advertisers from traditional to digital. Digital doesn’t necessarily mean OTT, it could be e-commerce, social search etc. Video is also witnessing a traction but not at all at the cost of cinema. Cinema advertising is not expected to keep up with the projections because of the above mentioned reasons. The growth will be 10 to 15 pc y-o-y on Rs 665 crore as the base.“
While acknowledging that movies released on OTT have gained increased audiences, Vivek Lakhwara, President – LIO, Rapport India (OOH arm of IPG Mediabrands), notes that cinema still holds a unique allure for many moviegoers.
“The cinema experience, complete with special effects and grandeur, remains a significant draw. Furthermore, the segment of the audience that can afford OTT platforms often has the means to enjoy cinema visits as well. The cinema-going audience, driven by the promise of a good movie experience, will continue to be attracted to cinemas, and this will likely sustain cinema ad revenue,” he explains.
He refers to the line up of movies and PVR Inox’s plans to open more screens in FY 24.
“Both PVR Inox and the industry, in general, remain positive, as the pandemic is over, and people are returning to cinemas with good movie releases. This positive trend is expected to have a favourable impact on the entire cinema business, including advertising,” he surmises.