The two major multiplexes - PVR Cinemas and Inox Leisure - posted their best-ever quarterly performance in Q1FY23 driven by a series of theatrical blockbusters from the south and a strong growth in audience footfalls.  

While the country’s largest film exhibitor PVR Cinemas crossed the milestone of ₹1,000 crore in quarterly revenue for the first time, the country’s second largest multiplex chain Inox Leisure also reported its highest ever quarterly revenue of ₹589 crore besides recording highest ever profit after tax (PAT) of ₹74 crore. 

Despite a strong box office business and food & beverage (F&B) revenues, ad revenues - the third biggest revenue source for film exhibitors - is yet to pick up momentum.

Ad revenues of PVR Cinemas in the first quarter stood at ₹62.7 crore, 32 per cent lower than what it posted in the same quarter of pre-Covid FY20. On the other hand, PVR’s net box office collection and F&B revenues grew by 16 per cent and 23 per cent respectively during the corresponding period. 

“We believe that in quarter 2, we should be getting our averages a lot better than the pre-Covid numbers of Q1. Currently, we are in the gap of about 38 per cent which should be reduced to about 20 per cent odd in Q2. By Q3, which is really a festive period and lot of advertisers begin to advertise, we believe that we will be within the pre-COVID levels and by Q4 we will end up sort of exceeding the pre-COVID numbers,” Gautam Dutta, CEO, PVR Ltd, said Q1 earnings call. 

FMCG, telecom ads provide traction

He also added that there is a big churn in the advertisers with FMCG and the multinational brands taking more time while there is a lot of traction with new age advertisers. FMCG contributes about 15-17 per cent of PVR’s ad revenues followed by Telecom and handsets category.

Inox Leisure CEO Alok Tandon, said while advertising revenue will be a bit depressed in the first and second quarters, it will bounce back from the third and fourth quarters due to Diwali and other festivals. Inox’s ad revenue fell to ₹30 crore in the first quarter against ₹47 crore in Q1FY20.

Multiplex operators are also betting on the strong content pipeline in Bollywood as well as regional languages including Lal Singh Chaddha, Brahmastra, Vikram Vedha and Ponniyin Selvan to retain the audience footfall and to shore up the ad revenues. 

“Good content also is very important for a client, because he knows that the good content will have great footfalls and there will be more people seeing his ads. There will be more eyeballs watching his ad. By the third and fourth quarter, we should do well,” Tandon said. 

In its report on Inox Leisure, Emkay Global said ad revenue continued to be the only revenue stream that remained below pre-Covid level for the multiplex chain. “Weak performance of Bollywood content remains worrisome, and its recovery is essential for sustained growth in footfalls and timely recovery of ad revenues,” it added.