Senior Director – Marketing | 21 Jun 2005
Now, digital cinema service providers have decided to seed the market. They sign agreements with theatres on revenue share or monthly payment terms.
K Krishna has been working with Hughes in various capacities since 1994. His initial stint was in network design for customers, after which he handled the network operations of the company. Subsequently, he moved to marketing. Presently, he heads the satellite business for the company, which includes satellite-based education and e-Cinema.
In conversation with Gokul Krishnamurthy of exchange4media, K Krishna, Senior Director, Marketing, Hughes Escorts Communications Limited, shares his views on cinema distribution through satellite. Excerpts.
Q. Why hasn’t cinema distribution through satellite taken off in India?
The cost of upgradation was a major factor. People weren’t sure of whether the system would take off in India. There was an inertia factor. Now, digital cinema service providers have decided to seed the market. They are signing agreements with theatres on revenue share or monthly payment terms. The cost of installing the reception and projection systems would be in the range of Rs 8 to Rs 9 lakh. There is no need to replace the existing systems. So it is taking off now.
Q. What are the advantages?
The metros get movies on day one. It takes two to three weeks for some movies to reach class B and C towns. This distribution mode will enable a movie to be screened at any number of theaters at the same time. And multiple prints cost a lot of money. Each print costs around Rs 60,000 upwards, depending on the length of the movie. Cinema via satellite will drastically reduce the cost of distribution. The piracy threat is also rampant in India, and this new mode of distribution can provide the solution.
Q. What will be the cost of distribution via satellite?
There is the fixed cost model, where it will cost Rs 3,00,000 to multicast a movie. This is irrespective of the number of locations where it is to be screened. The higher the number of theatres, the lower the cost per theatre.
Q. Besides movies, what will cinema via satellite offer?
Advertising and pre-shows will grow with the advent of cinema via satellite. You can host an ATM machine, gaming systems, and digital signages. Movie theatres are trying to accept credit cards as a system of payment. This will be facilitated. The cost per swipe will also reduce drastically. It’s about leveraging the numerous possibilities. You can even download content on CDs and sell right there.
Q. Is India following the US model?
In the US, it started the other way, and moved from pre-shows to digital cinema. In India, the real explosion will happen through video parlours, although this will be in the long term.
Q. How will the logistics of satellite transmitted play-lists work for a diverse audience?
Traditionally, one theatre plays one movie. This is not true at some class A city multiplexes, but largely this is the case for most halls. And this can change with the new distribution system. Play-lists can be dynamically adjusted with respect to markets. The frequency of adverts can be changed to suit weekdays / weeknights/ weekends and so on.
Q. Does Hughes cater to the international market?
For the bandwidth services, we can cater in adherence to regulations to the Indian market. For system integration and other services, we service clients globally.
Q. Are you facing resistance from distributors of film?
So far, we haven’t witnessed any resistance. Distributors are jumping on the bandwagon realising the possibilities and the obvious advantages in it for them too.
Q. What will be the impact on television?
Satellite distribution will affect television in a positive way, especially with the advent of broadband services. It doesn’t matter whether a movie is seen in a theatre or in the living room as the revenue is going to reach anyways with multicasting.
Q. What is the growth potential for your e-learning business?
In India, the business is slated to grow by over 100 per cent. Our present tie-ups include XLRI, IIMs, NMIMS and many more institutions. The business has grown in such a manner that 50 to 60 per cent of the revenues of some of these institutions are from e-learning. Today, as an estimate, only two per cent of the actual market is served by the brick and mortar system. There is a very big market here, which is underserved.
Q. Where do your revenue come from?
Our enterprise business is the flagship. It contributes around 70 per cent of our revenues. Education brings in 23 to 25 per cent and the rest comes from Fusion, our retail Internet business.
Q. Do you expect Fusion to pick up?
Currently, we have only about 100 Fusion outlets. On revenues, we’ve already met the targets for March 31, 2005 and for June 30, 2005. The objective was never the number of franchisees but the returns envisaged for them. By March 31, 2006, the target is to establish 2000 Fusion outlets, without compromising on the returns for franchisees.