Adlabs Cinemas has been spearheaded by Tushar Dhingra as its chief operating officer since 2005. What started as a business three years ago with 17 screens is now India’s largest cinema chain with 176 screens.

In an exclusive interview with Businessofcinema.com Dhingra gives a low down on the company’s operations.
 
Excerpts:

This year has seen Adlabs maintaining the trend of No. 1 position in screen count, opening India’s biggest multiplex in Mumbai and also going international? What plans are brewing and what is the vision hereon?
From the year Reliance has taken over Adlabs, our screen count has grown 300 percent year-on-year. Other multiplex operators concentrate on top 15-18 cities and at an average ticket price, which is not lower than Rs 90. On the other hand, Adlabs is one company, which transcends that price and city barrier. We are already present in 58 cities and will be present across 300 Indian cities in price bands of Rs 10 to Rs 1000.

When and why was the need felt to go international and how did Adlabs zero in on markets like the US, Malaysia, Mauritius and Nepal?
The group’s investments are fairly large from creation to consumption, so this aligns with the managements overall vision. We are transcending various language barriers in the entertainment space, so it a truly global entertainment enterprise. As and when we see an opportunity, we grab it.

Will it be incorrect to say that Adlabs is in the race of being number one in screen count?
We are number one! It may sound clichéd but we are competing with ourselves. In the last fiscal, Adlabs added 101 screens and all other companies put together added 89 screens. So, we have a different DNA and our success parameters are totally different. We are not interested in being leaders in market share only; we also want to be an endearing brand for consumers and for colleagues who work with us. If we achieve this, then this is the number one criteria we work for. We have recruited trained and motivated people and this is Adlabs’ major differentiating power compared to other companies. Moreover, it is also due to the group’s stability to fund and execute large scale projects.

With mushrooming of multiplexes, what are the steps being taken by Adlabs to maintain its supremacy?
We are not just a multiplex company, we are a cinema company! There are two – three strong competitive trading zones (like Andheri west) where there are more screens per kilometer than anywhere else. But these are just exceptions. India is a very large country and 300 cities have a lot of opportunity. We, as a cinema company, will go into any format of cinema viewing experience, be it an Imax, 6D or renovating a single screen into a multiplex and be present across all spectrums.

By when will Adlabs Cinemas be re-branded as Big Cinemas? What kind of promotional activity will this be backed by?
The re-branding exercise will take place before September this year. We have devised a communication strategy for the same but it is premature to disclose that as of now.

Will the branding be same pan India or will there be a separate brand for Tier III cities like Fun Cinemas operates Bioscope, PVR operates PVR Talkies for Tier III cities?
No, it will be same all across India.

There is an industry perception that Adlabs Cinemas has a lot of money to invest in buying and acquiring properties, which in turn is spoiling the market. Comment.
Aggression and passion should not be misconstrued. If the intensity of that passion fluctuates, then that is a point of worry and not otherwise. We started with 17 screens and have grown to become lead entrants now. The environment is very dynamic, success parameters keep changing and there is a strong demand, so if two more big players enter the space everything will change. The GDP share of entertainment in India is very low compared to international standards. The penetration of entertainment economy is growing and we are taking large bets and defining our own success parameters.

As far as we are concerned we believe that we do not pay a penny more than what is right, otherwise we are doing a damn bad job. And typically if you have money doesn’t mean you throw it; it just gives a sense of abundance.

What is Adlabs’ criteria and model for acquiring single screens, especially on lease?
Most of Adlabs’ properties are leased and these last for a minimum period of 15-25 years and the right of refusal for further renovation of the contract lies with the lessee, which in this case is us.

There are certain single screens, which Adlabs Cinemas has acquired and yet not branded as its own. Why?
Yes, we acquired properties to work on and they will be re-furbished and then re-branded. The re-development of any property takes around six – eight months. There are cinemas, which are kept shut for two – three years for re-development, so I think we have done a fabulous job in that sense. There is a very grounded and well spread team looking into it and it is just a matter of time.

With Adlabs holding a fair number of multiplex screens and single screens across India, what are their respective contributions towards a movie’s box office collections?
Adlabs is not just Bollywood oriented; we are adept for playing Tamil, Telugu and Hollywood movies. We have a total of 176 screens, out of which 30 are single screens and 146 multiplex screens. As of today, the ratio of our revenues is 70 percent from multiplexes and 30 percent from single screens and in times to come it will become 60:40.

To what extent is there an alignment between Reliance’s motion picture business and cinema business?
Completely! It is a part of the same group. Today it may work under separate names, but it is the exhibition arm of Reliance Big Entertainment.

Multiplex business has grown tremendously in India and is currently said to be contributing almost 60 percent of a movie’s box office revenue. What factors have contributed to this?
Multiplexes contribute 70 percent to the box office collections now. There are two to three reasons – earlier there were unrecorded revenues, which have now changed due to multiplexes; the average ticket prices are high now and multiplexes are providing an experience, which is in tune to the catchment that gets audiences in theaters to watch movies.

How much do the revenue share issues with producers and distributors pinch the pockets of multiplexes and will there be an ultimate resolution to this? What should be a fair and ideal case scenario?
This scenario has been taking place over the last 10 years. It also happens in the US and the UK. There is a buyer and seller who sit across and negotiate and this is all a part and parcel of the business. Currently, it is working at a level, which is favourable for the exhibition industry and film production. Post Tashan, as of now it has been at a healthy and stable position.

Coming to piracy, to what extent is high ticket pricing a culprit for piracy?
There are three reasons for piracy – non availability of content in an environment where you would like it to be, shortage of time to go to a theatre and price. So, price is not the only factor, availability of content in a theatre is also important. Marketers compete for disposable time and not disposable income, at least not for another 10 years. If Bunty Aur Babli releases in 200 towns does it mean the film is meant for only 200 cities and towns? We are present in Mumbai at ticket prices of Rs 40 and Rs 750, so it depends on which area is easily accessible and affordable.

One will not eat a spurious medicine, but when it comes to clothes, music, art and movies people do not mind doing piracy because that is what they can possibly afford.

Ticket prices at multiplexes have remained unchanged for quite sometime now. Why? Will there be any changes in times to come?
We cannot lower the ticket prices because in Maharashtra there is a barrier on minimum ticket pricing, hence we are not able to price tickets as we would like it to be. Barriers on maximum pricing are still heard of but minimum ticket pricing is unheard of. So this question should be asked to revenue ministers of various states than to cinema owners and management. If a restaurant can have happy hours than why can’t a multiplex? Even I want to sell my tickets at Rs 30, which certain state laws don’t allow me to do. We have made representations and are seeking the minimum pricing to be taken away.

How much do mobile and online ticket booking services contribute to overall bookings? In which areas do these services have maximum response?
Their contribution is minimum but this will be relevant in times to come. These services are good in Hyderabad, Bangalore and Pune, whereas Bombay and Delhi are fairly weak markets for this.

With websites like Bookmyshow.com etc running promotional offers like free movie tickets, how does it affect your profitability? On what basis do such models work?
Bookmyshow.com gives free tickets to consumers but they pay us for all the tickets generated. Selling free tickets is a promotional activity from their end, but they are paying for it.

How is Adlabs looking at the digital cinema market?
We currently have 24 installations. We will roll out another 50 digital cinema screens in this month. We earlier partnered with Mukta Arts for E-Cinema and rolled out 94 screens, but now we have divested that completely and are going whole hog on D Cinema.

Isn’t increase in number of screens also increasing the need for content and hence indirectly becoming a gateway for not-so-good content to be made and released? In retrospect, over the last few years many canned and smallish films like Buddha Mar Gaya, Kaafila, Haal-E-Dil, Mr Black Mr White, Go etc. released, thanks to the multiplex culture, which constantly needs movies to feed on.
Today, every content is released everywhere, which will stop in the future. It is a natural progression that a lot of content will only be played in particular locations and the catchments will redefine themselves.

Marathi and Bengali cinema have evolved over the last five years because there is an economic model for it. The truth is that if one overbids in a trading zone they will be killed.

There is always a proclamation that India is an under screened country and that there is a tremendous potential to build new theatres. But even in most existing multiplexes the average occupancy today is only 30 -35 percent? What do you have to say to this irony?
Somehow the industry has become about Delhi, Mumbai, Hyderabad and Bangalore, but this is not the cinema industry. There are locations, which do about 85-95 per cent occupancy. However, if we overbuild in a trading zone then occupancy levels will obviously not increase.

Let me answer this in three parts: Look at the music, video, magazines, television programming and fashion definitions – all of them are typically the way local cinema industry leads it, so there is a strong DNA for cinema. Secondly, there is under screening for per-million population in India. The consumption is happening but through pirated means or terrestrial TV, DTH etc and one has to cover this gap. And thirdly, the age group of 18 – 35 years, which has the maximum amount of disposal income, will grow by double digits for 10 years.