How multiplexes can thrive in the age of OTTs

Image: Reuters

Nothing can replace a shared cinematic event. The unique communal experience where people can gather together to share laughter, gasps, flutters, and tears as a community cannot be replicated at home.

However, the numbers of how multiplexes have been performing tell a different story.

In India, single screens dropped from 8,500 in 2018-2019 to 6,200 in 2022, according to Financial Express.

In a recent investor update, multiplex chain PVR-Inox announced the shutting down of 50 screens over the next six months. With a consolidated net loss of Rs 333.99 crore in the March 2023 quarter, the decision was inevitable.

However, with technology on their side, multiplexes can come out victorious with a little planning. Here are the four strategies multiplexes need to use to increase their profit margins in the age of OTTs.

1) Strategic alliances with OTT platforms

Remember Amazon’s ‘The Lord of the Rings: The Rings of Power’? For a moment, the larger-than-life cinematography didn’t feel like it was made for smartphone viewing. There was a refinement in it that, like me, many other people would have wished to experience on the big screen. And the lack of that possibility felt unnatural.

The alliances between multiplexes and over-the-top (OTT) platforms present a promising opportunity to create synergies and enhance the overall content-viewing experience for all audiences. By leveraging the strengths of both platforms, multiplexes can tap into the growing popularity of OTT platforms and adapt to changing consumer preferences. Simultaneous releases of movies in theaters and on OTT platforms offer consumers the flexibility to choose their preferred viewing experience. And organising special screening events for popular series released on OTT platforms can also enhance the content experience. Imagine ‘Squid Games 2’ powered by IMAX. The strategy is slightly more nuanced than if you can’t beat them, join them.

Amazon's The Lord of the Rings: The Rings of Power 2022

While some moviegoers would still prefer the convenience of streaming platforms, others will happily opt for the immersive theatre experience. Think about this akin to dine-in versus delivery for restaurants. The restaurants aren’t losing revenue because now they have a bonus channel that didn’t exist earlier. So would you rather only limit yourself to dine-in’s X profit or add the X+45 percent of dine-in plus delivery?

PVR-INOX, for example, can become the Zomato for successful OTT shows. It’s a win-win, creating a mutually beneficial ecosystem. Multiplexes gain access to a wider range of content, including popular series and movies, thus offering viewers more choices. Simultaneously, OTT platforms benefit from increased visibility among the masses. This symbiotic relationship can help drive traffic to theatres, can generate additional revenue for both parties and strengthen the overall movie industry.

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2) Diversification of content before industries

Yes, that popcorn brand will become big at some point but first try content diversification. That’s still where the goldmine is. While major blockbusters draw audiences to theatres, multiplexes should also actively cater to niche markets.

This strategy can help attract a broader audience and cater to different tastes.

Forget the duality of mainstream and parallel cinema. Think multi-genre content—foreign movies, documentaries, anime, live theater, and other specialised content buckets that still haven’t got entry into the big screens in a big way yet, but will have decent sustainable takers across the board.

The success of films such as ‘Parasite’ (Korean) and ‘Suzume’ (Japanese) in India or ‘RRR’ in Japan demonstrates the potential of foreign films to attract audiences from a variety of demographics. Don’t wait for them to win big awards. Habituate people and they will always come for good content. In a metro city like Mumbai or New Delhi, if just one of the screens with 200 seats is playing an anime classic bought at less than a quarter of an average Hindi movie’s distribution cost, it’s pretty plausible that the ROI [return on investment] of the former would be much more.

Cowboy Bebop 1998, Japan

Just look at the Korean ‘Hallyu’ wave here across content types. By constantly showcasing such content, multiplexes can tap into a new Gen Y-liked and Gen Z-approved market segment and brand imagery that values unique storytelling and diverse perspectives. One way to start doing this is by collaborating with unique film festivals, both regional and international, to create a distinctly loyal fan following.

3) Exclusive partnerships and events

By forging strategic alliances with distributors and production companies, multiplexes can host premieres, special screenings, or engage in Q&A sessions with filmmakers and actors. These events will provide a unique experience for moviegoers, thereby increasing footfall to theatres. These partnerships and events enable multiplexes to offer moviegoers an exclusive opportunity to interact with industry professionals and the joy of physical meet-and- greet. Movies release every Friday, right? Imagine an ongoing ComicCon of sorts.

Super League Gaming, US

Another great partnership possibility is the gaming industry which is expected to touch $396.20 billion globally this year, according to Statista. The future of video entertainment is definitely immersive and gamified. E-sports  as  an event  cinema  concept  has  already  started  to  gather steam  in  the  West and  would  soon enter the continent as a well-paying tribe. It’s time Indian multiplexes lead the way.

4) Engaging cinematic experiences

There is a breathtaking underwater sequence in Avatar 2 which demands the sky as the screen. The detailing and delight of a million colours would fade on a TV, a laptop, or the smartphone. At IMAX 3D, it was magically immersive and that’s the future, not the regular screens. Immersive cinematic experience (ICE), 4DX, IMAX, Dolby Atmos, THX, is what needs to be taken to the smallest of Indian cities. Currently more than 75 percent of PVR-INOX screens are in metros and tier-1 cities.

U2 Experience + Innocence tour 2018

These high-quality projection systems and state-of-the-art sound technology elevate the overall exclusive enjoyment and deliver an unparalleled movie-watching experience that surpasses what can be replicated at home. Multiplex brands who are also movie producers today should start working on exclusive augmented reality (AR) enhancements, for instance, audiences could use their smartphones or AR glasses to access supplementary content like behind-the-scenes footage, character backstories, or interactive 3D models related to the film. Music shows have already been doing this for a while and the technology is better than ever. This integration of AR can provide a more captivating and educational experience for viewers that the average OTT or TV can’t provide.

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And for those of us who believe post-Covid-19, a majority of us would rather watch content alone, there is the option of virtual screening rooms. These companies could collaborate with Dolby, Bose, or B&O to get their capital investment down by half. That will allow viewers to enjoy films together, even if they are physically distant. Like co-streaming by utilising VR, audiences can gather virtually, interact with each other, and share reactions in real-time while watching the movie on the big screens. This concept provides that social component to the movie-watching experience making it the best of both worlds.

In short, multiplexes need to give a visually alluring experience that's inimitable, especially now because at the present price point, each ticket is worth more than a month’s subscription of any OTT in the country.

The writer is the chief strategist and founder, Salt and Paper Consulting.

The thoughts and opinions shared here are of the author.