UFO Moviez, the digital cinema network launched by Valuable Media Pvt Ltd, plans to create the largest chain of digital cinema houses worldwide in India by 2007. UFO Moviez plans to invest 500 digital movie halls by mid-2006 at an investment of Rs 80 crore and scale it progressively to 2,000 cinema halls across India at a total investment of Rs 300 crore.
Announcing the launch, Onkar S Kanwar, Chairman and MD, Apollo Group and FICCI President said, “Earlier business were driving technological applications, but now these applications are driving business models. The time is ripe for the Indian entertainment sector to reap the benefits of technology, as has been the case in the past for sectors such as travel, communication, infrastructure, medical research and capital market trading. Digital cinema is a prime example of how Indian technology whiz kids have adopted technology to deliver the best of content even to the remote Indian towns and villages.”
Valuable Media is a subsidiary of Apollo International Ltd. The initiative, spearheaded by founder directors Raaja Kanwar, Sanjay Gaikwad and Usman Fayaz, has already installed more than 100 digital cinema halls all over India.
“Using digital cinema, for the first time in Indian film history, distributors and cinema owners will be able to offer ‘First Day First Show’ in as many as 2,000 halls to movie viewers. UFO Moviez delivers digitally mastered high quality movie images through satellite directly to cinema halls facilitating saturated widespread release of any film without any additional cost in prints for content owners and unprecedented viewing experience and pleasure to movie goers alike. In fact, digital cinema can increase box office collections by more than 96 per cent above the current levels,” explained Sanjay Gaikwad, CEO and Executive Director, UFO Moviez.
UFO Moviez plans to enter into franchisee agreements with theatres on a revenue share basis as pure service providers, without disturbing the existing business models operating in the Industry between producers, distributors and exhibitors. UFO Moviez will have a nationwide chain of regional dealers to provide maintenance and other services to the theatre owners.
Raaja Kanwar, Vice-Chairman of the Apollo Group, added, “Worldwide there is tremendous excitement about this technology, which is being hailed as the next great leap in the film distribution and exhibition. We have already received business enquiries from Europe, Russia, Mauritius, UAE and the Far East countries. Indian films have a big presence in these markets and we intend to tap these opportunities in an aggressive manner.”
In the traditional system, the cost of the print (Rs 60,000 plus) is prohibitive and restrictive in terms of ensuring the penetration of the films into the hinterland (Class B and C towns).
“Digital cinema has a lower cost per print. Through satellite technology, it can penetrate 100 cities and towns without additional incremental costs. It offers savings in handling and transportation. It can also factor in last minute exhibition orders. It has a longer virtual shelf life as physical prints wear out. It can curb piracy. It can help film marketers factor in bigger promotional budgets due to these reduced costs. It has a lower breakeven point. And more importantly, it can affect savings in the running costs — 25 per cent less,” added Kanwar.
Through UFO Moviez, each theatre can also schedule any film out of a possible eight to ten films at any point of time to cater to individual target audiences, without stocking multiple celluloid prints. The early availability of films at zero investment combined with high quality images and scheduling flexibility has helped early migrants to UFO Moviez to register around 96 per cent increase in revenue collection.
Usman Fayaz, who is an investor in digital cinema companies, said, “More than 60 per cent of the film exhibition market is in south India. Andhra Pradesh has more than 2,800 cinema halls compared to 900 in Maharashtra and 1,100 in Uttar Pradesh. In 2004, there were around 250 Hindi films but 485 south Indian films. In south India, film is a religion and film stars have temples built to idolise them. The entertainment taxes in south India are amongst the lowest with Karnataka having reduced it to less than 15 per cent. Tamil Nadu has made the ‘Goonda’ Act applicable to piracy. I believe that 50 per cent of the conversion rate in digital cinema will come from the south and it will have the highest screen density.”