December 16, 2006

 

PVR vs Yash Raj Films

The marketing machine of Yash Raj films started humming almost two months back promoting "Dhoom 2". Life-sized teasers were all there to see at PVR multiplex. But, when the movie released in November end, it was not showing at PVR. Reason? Negotiations between distributor (Yash Raj) and exhibitor (PVR) failed to come to revenue share figure. To quote, Ashish Saxena, COO, PVR,
"They were demanding a 50% share in the first week, as against the 48%, which is the norm"
This revenue share arguments between multiplex owners and distributors popped up its head with "Fanaa", another Yash Raj movie. But somehow, they managed to release it on Friday. Then, same devil came haunting for "Lage Raho Munnabhai". PVR lost first two days and finally screened it from Sunday. But, no such respite for "Dhoom 2".

If a difference of 2% in the first week decides the deal, serious amount of money must be involved. Here is some math I came up with for PVR.

From Annual report of PVR:

Revenue from Ticket sales : Rs. 65.57 Crores (Without entertainment tax)
# Tickets Sold : 87.84 Lacs
Avg Price of Ticket : Rs 75
Occupancy ratio : 46% (let's round up to 50% for convenience)

From the company profile

Number of Screens : 70
Total seats : 17,270
Seats per screen: 250 (approx)

Ambush Marketing. It all started with Mangal Pandey. When a big budget movie releases, there is no way you can watch any other movie. The big movies occupies 50-60% of available screens. 2 shows per day per screen (50%) would be a fair assumption for "Dhoom".

# Shows of "Dhoom" = 70 (screens) * 2 (shows per day) * 7 (days) = 980 shows

Revenue: 980 (shows) * 0.5 (occupancy ratio) * 250 (seats per show) * 75 (price per ticket) = Rs 91.8 Lacs

2% of 91.8 Lacs 1.83 Lac.

So, there we are. The deal was called off for Rs 1.83 Lacs. Undoubtedly, not a small sum. But, take into account that the movie is running good in 3rd week. That is more than Rs 2 Crores in revenue PVR has kissed goodbye.

That is not all. Today, "Kabul Express", a niche "multiplex movie", by Yash Raj is again not available at PVR. This indicates, the acrimony in relationship still exists.

Here are prominent money spinners distributed by Yash Raj in last 3 years - "Dhoom:2" (2006), "Fanaa" (2006), "Kabhi Alvida Naa Kehna" (2006), "Krrish" (2006), "Black" (2005), "Bunty Aur Babli" (2005), "Mangal Pandey - The Rising" (2005), "Veer-Zaara" (2004), "Dhoom" (2004), "Hum Tum" (2004). Given such an impeccable record, one should really hate money to get into an argument with them on 2% margin.

Oh, I forgot. Doesn't PVR itself use flexi-pricing to decide the ticket prices?

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