Multiplexes game for diversion

As the dispute with film producers drags on, cinema chains are eyeing gaming zones in a bigger way to expand revenues.

Ever since PVR Ltd opened ‘Blu-O’, a 24-lane bowling centre next to its multiplex at Ambience Mall in Gurgaon, it’s been a smash hit. At least 40 people wait outside before the alley opens at 11.30 every morning.

Last week, the crowds outside Blu-O grew bigger as PVR inaugurated the Microsoft ‘Xbox Lounge’, a gaming zone that was added to the glitzy bowling alley. Xbox is Microsoft’s online gaming and entertainment service.

“The waiting time at the 24-lane bowling centre is about an hour and a half,” said a beaming Gautam Dutta, CEO of PVR. This, despite the fact that bowling is steeply priced. On weekends, a round (12 throws) costs Rs 200; on weekdays it is Rs 125.

With Bollywood producers and multiplex promoters unable to come to a mutually-acceptable revenue-sharing agreement, it’s not easy to find cinema chain owners smiling — revenues have dropped significantly as a result of the two-month dispute. Most multiplex owners are running old films to fill theatre capacities as best they can.

But Dutta is happy with the response to the company’s first gaming zone and he’s focused on tapping the new revenue stream to add to PVR’s cinema exhibition and distribution business. PVR launched the bowling alley as a joint venture with Thailand’s Major Cineplex, which owns the premier Blu-O brand. PVR is now looking for a suitable location to launch Sub Zero in India, the Thai company’s ice skating rink brand.

Like PVR, Cinemax, another multiplex chain with 75 screens at 25 locations, is also scouting for an international lifestyle entertainment partner. The company’s Senior Vice President Devang Sampat said though the company operates gaming zones — mostly offering video games — branded Giggles at four locations, “we will now open gaming zones wherever we have space.”

Currently, Giggles is present in Rajkot, Nagpur, Thane and Ahmedabad, where Cinemax has also opened a bowling alley.

“The gaming business is minuscule today. It barely contributes Rs 3 crore to the company’s Rs 155 crore turnover,” said Sampat.

“But the potential is big. At least, we will not have to share our revenue,” he sighed, referring to the seemingly unending spat between multiplex owners and film producers.

It’s not difficult to see why multiplex owners are keen to either enter or expand their retail entertainment businesses. Back-of-the-envelope calculations suggest multiplex chains earn 70 per cent of their revenue from ticket sales, their core film exhibition business. “Another 18 per cent comes from food and beverage, 8 per cent from advertising and the remaining 4 per cent from parking and retail entertainment. The last one is miscellaneous and has a huge potential,” Sampat explained.

According to Jehil Thakkar, head of Media & Entertainment at KPMG, retail entertainment zones owned by cinema chain owners help diversify their revenue stream, increase revenue per square foot and gain higher revenue per customer.

“Entertainment zones also drive footfalls when volumes for the main cinema business may be low. Besides, they allow the multiplex to diversify its target demographic consumer and increase sales from food and beverage as well,” added Thakkar.

Atul Goel, CEO, E-City Ventures, which owns the Fun Cinemas brand of multiplexes, said the retail entertainment business has potential to capture consumers’ changing entertainment habits.

“We have no clear plan yet, but I think it is time to look at the business seriously,” he added. Fun Cinemas already operates gaming zones called ‘Fun Gaming’ at Mumbai, Chandigarh, Lucknow and Ahmedabad.

Meanwhile, PVR has already chalked out its Blu-O business blueprint. It will launch 500 bowling lanes in the next three years. To be launched soon, Blu-O in Bangalore will be a 29-lane alley.

“Going forward, the lifestyle entertainment zones will contribute 15 to 20 per cent to the total group turnover,” said Dutta.

However, he’s quick to clarify that cinema exhibition will remain PVR’s core business.

Diversifying, of course, always comes with risks attached. “Although there are clear benefits in revenue diversification and attracting a bigger consumer segment to your location, there is also additional cost and management bandwidth that’s required. All exhibition companies may not have the management bandwidth to run gaming centres and restaurants,” Jehil Thakkar warned.

At the moment, though, gaming looks like a risk worth taking.