In a 52 weeks window, competition is tough

While film making is more just an art any more, producer, distribution and exhibition outfits have now started to gain prominence in the film production process. Business heads are now very cautious of every penny spent and the returns it promises to the producers.

Also, production houses and other parties involved have moved beyond traditional methods of doing business. Following this sentiment is distribution company Mukta Arts, under its subsidiary Mukta Movies Distributors. Taking the plunge, Mukta Arts Ltd. has created its own brand of multiplex theaters MUKTA A2 CINEMAS by tying up with theater shells for development and management in malls and other complexes.

Adgully caught up with Rahul Puri, Managing Director, Mukta Arts Ltd. to know more about this new vertical of the business, the market scenario and more. Edited excerpts below:

Adgully: You have been associated with Mukta Arts for about a decade now. How would you describe the company’s journey as a movie production and distribution outfit to know movie exhibition outfit as well?

Rahul Puri: I have now been with Mukta for over 10 years and have seen the company grow into where it is today. Then we had just started the programming and distribution business. In these 10 years we have moved into Exhibition and Education. The company has moved slowly but surely into areas that we believe are growth areas in the film business. I think when the need has arisen, Mukta has always been willing to move quickly. We showed that with our foray into education, being the first company to start Digital Distribution of film with our JV with Adlabs and now moving into cinemas with Mukta A2 to grow that business as well.

Adgully: You have recently taken over as the MD of the company. What are your immediate roles and responsibilities? What is on the priority list?

Rahul Puri: Firstly it’s a huge honour. Since inception, Mukta has had only one MD — the founder of the company Subhash Ghai. To follow him is really an honour and a huge responsibility. My immediate role is to continue the work he has started. Prioritise growth areas for the company and move execution teams in that direction. The key priority for me right now is to keep the launches of cinemas on track. We have launched Sangli and Hyderabad and I want to ensure we launch our other properties in a timely manner as well.

Adgully: Give us a sense of the overall market you are in? Also what is Mukta Arts’ share of the total pie in the industry? Also, shed some light on the business model that most companies in the domain follow.

Rahul Puri: The film business is very fragmented as a market. There are lots of players in production however distribution is now becoming more and more consolidated with the big studios. Distribution too is exceptionally fragmented along lines of geography. Again the large studios play the biggest role here but individual distributors also function in different states. Exhibition is perhaps the most consolidated with 4 major players in the multiplex market. The single screens are fragmented but come together through programming relationships with larger companies (like us). Difficult to say what our piece of the pie is, suffice to say that there is enough pie to go around. Different companies follow different models but the studios are now the drivers of the film models in terms of production and distribution and the large exhibitors are the key in terms of retail.

Adgully: The movie distribution and exhibition business is as competitive as movie production. How does the company deal with competition in all three verticals of the umbrella business of films?

Rahul Puri: Competition is part of any business and any industry. To be honest there are 52 weeks in a year so there is a window of opportunity for a lot of players in films. Yes, there are now a lot of films and therefore competition is stiff but the competition is for the release dates and the mindspace of audiences. The only way that a company can deal with all these competitive streams is to constantly be in touch with the audience and produce content and products that appeals to them. The company, now present across these verticals, can use its knowledge and relationships to its advantage.

Adgully: On the exhibition front, we are informed that MUKTA A2 CINEMAS is planning to launch 7 news cinemas in the coming months. With this thought, you have recently launched this property in Hyderabad and Sangli. Tell us a bit more about that.

Rahul Puri: MUKTA A2 CINEMAS is trying to be one of the largest players in the exhibition space. We have plans to be present across the country with almost 100 screens by the middle of 2015. Currently we have 9 properties including Hyderabad and Sangli and will be opening a further 7 properties within the next 6 months. The cinemas are top quality providing patrons all the comforts at reasonable prices and giving an experience that will make customers loyal to the brand. Cinemas is an exhibition business. Its therefore important that we provide them all the facilities to ensure that MUKTA A2 CINEMAS becomes the number 1 choice in the locality.

Adgully: What are the basic criteria that are considered while choosing a location for setting up Mukta A2 Cinema? Which are the geographies that have performed well for the company till date?

Rahul Puri: The basic criteria is that the market has a strong appetite for watching films. There maybe markets where there is more than one cinema and there maybe markets where we are the only multiplex. However our entry will be based on whether there is sufficient demand or not. So far we have chosen well and all our properties are performing well. Specific theatres that are performing well are Jai Hind in Mumbai, Ahmedabad, Baroda and Vizag.

Adgully: Shed some light on the marketing and promotional activities that go into the launch of these cinemas.

Rahul Puri: The marketing required for the launch of a cinema is basically awareness. Patrons need to know that there is a new property opening in their area. Clearly if you can get a big film to come with the launch then its better as there is already an in built demand for the movie. The property then piggie-backs on it. If you can get some film stars to the property for a launch event then that adds to both the brand and the awareness. Typically print ads, brand tie-ups and hoardings are the tools used to carry the communication which would highlight the facilities and perhaps offers of the new property but focus on the content which is what people come for.

Adgully: What are some of the challenges faced by the movie distribution and exhibition industry in India? How would you compare the industry viz-a-viz international counterparts?

Rahul Puri: Distribution struggles from fragmentation and now from the integration of production with the studios distribution. It means that the large films are not available to most distributors. Couple that with high rates of tax and distribution is a tough market. Exhibition on the other hand is about retail demand. Films luckily have a huge demand around the country and we are currently seriously under screened. Therefore there are opportunities ahead. However, Entertainment Tax and rates of admissions which are regulated are issues that need to be dealt with. Exhibition is a struggling industry around the world. This is in country which have large screen numbers but high ticket prices means admissions are on a downward trend. We don’t have that issue here. Distribution around the world is controlled by the Hollywood studios who have a stranglehold on most major markets.

Adgully: While India is the largest producer of feature films in the world, how do business outfits like your tap into (financial) opportunities offered by the Indian film industry?

Rahul Puri: I think opportunities exist because of the inherent demand for films in our country and the fact that we are still a growing economy. Yes, the last few years has seen the economy go off the boil but films are recession proof in many ways and this means that there will continue to be financial reward in this business. The challenge will come when the demand plateau’s and price will become more elastic for these products.

Adgully: If you have to highlight 3 things that Indian movie producers, distributors and exhibitors should learn from global players of the game, what would those be?

Rahul Puri: Best practices in production (which we are learning fast), marketing budgeting and impact in distribution (where we are not learning at all) and how to sell more F&B in exhibition. These are the areas where we still need to learn.

Prior to his appointment as the MD at Mukta Arts, Rahul Puri served as a Vice President of Finance & Strategy at the company. Puri serves as an Executive Director at Mukta Tele Media Ltd. He has been Executive Director of Mukta Arts Ltd. since October 23, 2007. He holds a B.Sc (Hons) in Business Management from Kings College London.