PVR Inox reduces ad time on non-luxury screens: Here's why
What's the story
PVR Inox, India's leading multiplex chain, has strategically decided to reduce the duration of advertisements, shown on its non-luxury screens. This decision follows the company's earlier implementation of a no-ad policy on seven of its high-end screens. The aim is to boost audience numbers which have recently been in decline. This move will result in a 20% reduction in ad time across mainstream cinemas, accounting for 85% of PVR Inox's total screen circuit.
Price adjustment
Plans to offset revenue loss from ads
To counterbalance any potential loss in revenue due to the reduction in ad time, PVR Inox is planning a strategic price adjustment on its rate card. This was confirmed by Gautam Dutta, CEO of Revenue and Operations at PVR Inox. However, this move has raised concerns among industry experts who question the effectiveness of this strategy, and highlight potential financial risks for the multiplex chain.
Opinions
Industry experts express doubts over PVR Inox's strategy
Karan Taurani, senior Vice President of Elara Capital, voiced his skepticism about PVR Inox's approach. He stated that "reducing ads is not a favorable strategy" and predicted it could have negative consequences. Taurani argued that a 20% reduction in ad time would only equate to roughly four minutes less of ads, an amount he believes won't significantly impact consumers. He also pointed out potential financial risks for the company due to these changes.
Financial risks
Ad reduction strategy may impact revenues
Taurani highlighted that advertising revenue has not returned to pre-COVID-19 levels, despite filled inventories. He also noted that pricing has not recovered to pre-pandemic times. Shorter breaks might give audiences less time to move around, and could decrease brand visibility, he suggested. Jinesh Joshi, a research analyst at Prabhudas Lilladher, predicted that PVR-Inox is likely to report lower advertisement revenue in FY24, compared to the pre-COVID base of ₹554 crore.