PVR Case Study
They offer superior ambiance and high hygiene standards for viewers in Tier 2 cities.
For example, the rate for a morning show in PAR Privy at Delhi is RSI. 75 as it largely caters to a student crowd. PAR Premiere, the premium multiplexes, cater to evolved premium urban viewers and the Gold Class sub segment, and PAR Heritage caters to the high end audiences. This segregated manner of catering to audiences’ needs has ensured the inclusion of higher number of people as part of the audience.
Technique 2: Revenue Sharing with the Developers The cinema exhibition company also earns revenue from multiplex properties that it runs under a revenue share arrangement with the developers. The developer is the one who develops and owns the other parts of the multiplex.
The revenue from ticket ales at these cinemas is paid in lieu of the rent on the basis off revenue share with the developer. Multiplex properties at Gabbed, Mulled-Iambi, Locknut, Lithuania and Indore are examples of this arrangement.
In the case of halls at other locations either the company owns the place or pays regular rent for the place they are operating in. Technique 3: Convenience fee Convenience fee is the amount that the customers are charged for booking tickets through means which are largely telecommunications enabled such as internet, mobile etc which helps the audience avoid the hassle of waiting in a queue. Revenues from Convenience fee for the year ended March 2009 increased to RSI. 21.
7 million from RSI 14. Multimillionaire’s a growth of 46%.
It suggests an increase in tickets sales online and allied channels like, Mobile Ticketing etc. This surge can be understood in terms of the growing penetration of facilities like the internet to the public. Technique 3: Food and Beverages revenue Revenue from sale of food and beverages is the total amount paid by patrons at in- cinema concession stands for food and beverages and is net of sales tax / value added tax. This revenue source is planned very carefully to increase the number of transactions Walton ten Eliminate time announce nave I.
, prior to ten sat root a Tall Ana during intervals. This is done by increasing the options available like providing service at the seat, adequate number of sale counters, attracting customers through offers like meal combos and tying up with well branded franchisees to provide food items not available under Par’s candy bar model through direct rent or profit share models that yield well in a non-cannibalizing way. This helps to cater to local tastes ND preferences in different ways, while keeping the core PAR candy bar model intact.
Techniques 4 & 5: Advertisement and royalty income Advertisement revenue includes revenue from onscreen advertisements, off-screen advertisements and cinema association. The increase in the number of halls will lead to a rise in the number of eyeballs that the location would guarantee. This in turn would be attractive for the advertisers.
A look at the data of years from 2005-2009 also shows that the growth rate had been steadily on the rise till 2008. The year 2008-09 registered a slump in this growth.
Table 3: Advertisement and Royalty Income of the PAR Group (2005-2009) Years Income (in million) Rate of growth 106. 1 196. 9 293.
4 382. 5 Royalty income is the sum paid by certain suppliers so that PAR agrees not to sell directly competing products. For example, Pepsi pays a huge sum as Royalty Income aka Pouring rights to PAR for not selling any other soft drinks. Technique 6: Management fee Management fee includes Basic revenue share fee/ management fee for services provided by the company generally to the property developer in relation to the multiplex, which is usually a percentage of turnovers. Incentive fee calculated as a percentage of gross operating profit (before interest, depreciation and management fee).
Other income earned, include rent from spaces that are leased out to third parties, returns from different investments, etc. Cosmonaut Place, where PAR Plaza and PAR Ravioli are located, sits right in the heart of New Delhi. It is one of the prominent landmarks in the city, especially with the colonial buildings that surround the place. PAR Plaza is located in the inner circle whereas PAR Ravioli is located in the outer circle with a distance of barely 500 meters between the two.
Since the two halls are so closely located, it is interesting to observe how they respond to competition with each other and with other cinema halls as well. PAR has rented heritage buildings situated in CAP for both the halls where a monthly rent of RSI.
2 million and 1. 5 million is paid for Plaza and Ravioli respectively. The pricing of tickets also reflects this difference between the two halls. While the former has a two tiered pricing with a segregation of RSI. 275 and RSI. 225, Ravioli has a three tiered pricing with a segregation of RSI.
250, RSI. 225 and RSI. 180.
As the statistics earlier mentioned, both the halls, in line with the revenue pattern of the PAR Group, earn the maximum through sale of tickets and food and beverages. Also Plaza with its location in the inner circle is more attractive to the advertisers.
It would be useful to understand how PAR responds to competition to get a perspective on the significance of the proximity of the two halls. This was most visible in the case of Indian Premier League  (PILL) screenings. According to some internal sources, PAR has entered into an agreement with PILL where they had agreed to screen PILL matches in specific umber of halls.
Therefore in spite of the low revenue generation from PILL it had to be screened. In 2007-08 the PILL screenings were held in Plaza but in the year 2008-09 this was shifted to Ravioli to offset the losses that were caused due to the fall in the footfall in the hall. Therefore in this case, the two halls Plaza and Ravioli functioned in tandem where the PILL screenings were conducted in the latter while the regular movie screenings were held in the former.
Such a revenue strategy to offset its losses was not available to Done Big Cinemas, also situated in Cosmonaut Place.
A Joint venture of the Done Theatre (opened in 1939) and Nail Diarrhea Mambas Group (ADAGE)-owned the Big Cinemas, Done Big Cinemas is the nearest competitor multiplex of the PAR Group in Cosmonaut Place. It had to continue its PILL screenings despite the losses it incurred as it too like the PAR Group had an agreement with the PILL to show its matches. REFERENCES  http://www. PWS.
Com/en_IN/in/assets/PDF/PWS-Indian-Entertainment-and-Media- Outlook-2009. PDF  PILL is a cricket league for the Twenty- Twenty format of cricket that has gained much popularity with the audience.