By now, the shock waves of the merger between multiplex chains PVR and INOX have started to subside, and it is no longer the news that it was. The impact of the merger will have interesting ramifications.
Having worked on the brand INOX for almost three years, I can first hand tell that the two brands did fight each other tooth and nail, fairly. The beneficiaries of the fight were the movie patrons. This might be the only brand war where the two players never dropped prices or offered discounts - they delivered better experiences. The two brands outdid themselves to improve technology, improve comfort and increase the desire to watch movies. So why is it that the two brands are coming together? Beyond mere cost of doing the business, the answer lies in size of the market.
THE MOVIE MARKET
India had 925 movie halls in 2009, this grew to 3,200 in 2019. India today has 1,400 screens that stream movies and is a $2.7 billion movie market. In comparison, China is at a completely different level. China has grown from 12,000 screens in 2009 to 75,000 screens in 2019, and it is a $7.4 billion market. India is more than a decade behind China in just the infra, and even more in revenue. India is really a much smaller movie market compared to most of Asia. While we are a big producer of movies, our per capita spend on movies is not really very high.
The movie industry, though, feeds two more industries. One is the streaming market, which may or may not have long term sustainability, and two, the endorsement market, where the big stars do make a lot of money. Both these segments of the market do not help the movie screening business, as there is no common ground. Also, the belief that the streaming market will kill the movie market is mistaken, as entertainment-hungry consumers will lap up both with the right business value proposition.
HOW CONSUMERS GAIN
The coming together of PVR and INOX can become the landmark moment and can set the template for how the consumers can benefit from consolidation. Here is what I think can happen:
One, the depth of consumption will increase. Both brands never indulged in a price war; they can now drive the habit of watching movies even more. Movie watching is a weekend habit, imagine if the two brands can drive a weekday viewership. Internationally, theatres have done this successfully
Two, the two brands together can have a greater control on the content. The movie production industry relies heavily on a few stars; the bigger stars now control the content too. Both these brands together can begin to be a true voice of consumers and become a bridge between stars and viewers. The fact is that social media has made the stars more accessible; they are no longer as remote and starry as they used to be. Stars live on phones these days, and fans interact with them every day. The opportunity lies here, with the combined muscle
Three, the brands together can segment the market and offer greater options and choices. The easiest parallel I can draw is from the mobile handset industry - they all deliver similar output, but they do slice the expectations to have multiple price points, choices and market shares.
I am certain that the transformation of the movie industry will get a fillip by the mega brand that PVR+INOX will become.
(The author is Co-founder and CSO, Bang in the Middle)
