Atul Goel, CHIEF EXECUTIVE OFFICER, E-CITY ENTERTAINMENT

For everyone in the value chain — be it the consumers, distributors or the film industry, multiplexes bring tangible and intangible value to the table

26 year old Atul Goel is a graduate from Thames Valley University, London and a Master of International Management with a specialization in Finance from American Graduate School of International Management, Thunderbird.

He has worked with Essel International and Afro Asian Satellite Communications, UK. His experience is mainly in the area of business development, market research. In addition to being CEO, E-City Entertainment, he is also the Director of ACL – A Group Company and Cyquator Technologies.

In present dialogue with Ritu Midha of exchange4media, he discusses the arrival of multiplexes, his future plans, changing dynamics and growth opportunities they offer to other industries.

Q. What are your expansion plans in near future?

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We plan to launch a multiplex in Banglaore by mid 2004, one is Lucknow is also coming up. And a couple in New Delhi as well.

Q. What is the revenue generation model for the multiplexes?

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Typically a Multiplex generates revenue from 3 sources. Revenue from ticket sales 75%, revenue from concession (Food & Beverage) 20%, and revenue from pouring rights / Advertisement: 5%.

Q. Would multiplexes, in your opinion, prove to be a threat to the traditional theatres?

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Movie going is not a planned activity. It is location specific and in most cases spur of the moment. In that sense, I would not really consider them to be a threat.

However, if you look art the industry dynamics, if multiplex gets a movie it is difficult for the single screen theatres to get it. Each print costs around Rs 70,000 and distributors gain a lot more if they opt for a multiplex. As I said earlier, movies run for a longer duration in multiplexes.

Q. Multiplexes, all said and done, are an expensive phenomenon, what makes you believe they would be a hit with the Indian masses?

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Well, the reality is that multiplexes are already a hit with the Indian Masses. A wide choice of movies, ample parking, the add-on’s like restaurants, gaming zones, art galleries, fast food outlets, retail and so on is all available under one roof at one destination. This, along with the latest technology in sound and projection systems, building management systems, security, fire and safety systems all blended together gives Fun republic the best choice to the viewer, not forgetting comfortable cinema seating, good housekeeping and a hygienic environment.

Q. Looking at the broader picture, do you believe that advent of multiplexes has helped the film industry?

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It has definitely grown the market. Distributors are getting a better share now. In multiplexes movies get a longer run. After the initial weeks, depending on a movie’s performance we move it down to a lower capacity theatre. For everyone in the value chain — be it the consumers, distributors or the film industry, multiplexes bring tangible and intangible value to the table. Even the consumers, who would rather see films in the luxury of their homes, are now coming out to watch movies in multiplexes.

And it is not only cinema that is benefiting but also real estate and retail. Multiplexes have brought in a boom in real estate, specially in the North. We have requested the Government to exempt multiplexes from entertainment tax and once the exemption is granted in all states, boom would be even bigger.

Q. What have been the learnings from your multiplex venture so far?

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We are making wiser calls now. We have learnt a lot about retail formats and their fit with multiplexes, allocation of area and design. Most importantly we have learnt about markets and consumer behaviour in various markets. Consumer buying habits and price consciousness differs from market to market. Choice availability and quality of service you provide are the deciding factors as you venture into various markets.

Q. Would the film industry benefit by the introduction of theatres working on DTH technology? To what extent?

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As you would know, the DTH technology is new in India, we are studying the same and at this moment wouldn’t want to make any comments until the chapter is completed

Q. In totally different direction, one has been hearing about digital movie distribution…

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Yes it is direct to theatre movie distribution. You beam the movie digitally through the satellite in the movie theatre. We would be using the similar technology as DTH being planned by Zee.

Q. Last question, are you in a way not competing with other entertainment options being provided by Essel group itself?

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Yes we might be – we are pulling out people to watch movies. Having said that, there is an opportunity and if we do not utilise it, some one else will. It is inevitable. Hence, we decided to invest ourselves. Our aim is to provide best in-house and out of house entertainment.

Q. Is some kind of research conducted before deciding which city you plan to extend your footprint to?

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The call is based on gut feel and research both. However, the research we conduct has not much to do with consumer behaviour. A research in consumer behaviour makes sense if you have a permanent product. In our case the product might change maybe even in a week – and the consumers’ attitude would also change depending on the movie title.

Our research basically focuses on the basic going rates in the market and the current scenario. We specifically focus on competitive scenario and market size.

Q. Are the brands looking at multiplexes closely for advertising and promotions?

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Of course. As stated multiplexes are a hit with the Indian masses, which confirms guaranteed footfalls. It cuts the marketing cost of Brands if associated with a multiplex. So, why wouldn’t a brand want to be associated with a Multiplex?

Q. On what grounds are you asking for entertainment tax exemption?

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First of all, we have multiplex association of India under the aegis of FICCI. Whenever we approach the government we always go as an association and never individually. Coming back to your question, multiplexes not only spruce up the entertainment industry but also retail and city development. In Chandigarh, there has been large real estate investment after the multiplex came up. It spurs real estate activity. In Ahmendabad multiplex there is two million square feet retail area. The entertainment tax, as it is, is not a massive revenue generator for the government and it can forgo it. Boom in retail and real estate has a lot more to offer to the state.

West Bengal, Rajasthan, Maharashtra, UP, MP and Punjab governments have already given multiplexes an entertainment tax exemption.

Q. Moving on, do the retail outlets at these multiplexes really benefit?

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Footfalls increase. As for conversions, it depends on lot many factors including product category, merchandise mix and display. Also, motivational strategies. In a center, which is predominantly about entertainment, impulse buys are the perfect fit. If the focus is on retail with entertainment being also there, serious shopping happens. There is candy store at Fun Republic, Andheri – it is doing sales of around 10,000 every day.

Q. Would a city like Lucknow be able to support a multiplex?

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Lucknow is the second largest market as far as cinema-going populace is concerned. Good theatres in the city are maintaining themselves well, which definitely indicates that they are more than breaking even. Novelty theatre is charging Rs 60. It is expensive as compared to many other cities in the North and our tickets would not be too expensive as compared to the premium theatres in the city.

Q. Are you purchasing real estate in every city?

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We have a mix of models. It depends on real estate market and resources. If the market has potential but we do not have resources, I think it is wiser to rent it out. In Mumbai, Delhi and a few other cities we have resources, so we are building on our own. In South, though the potential is there, we don’t have resources and hence we would be going for the rental places

Q. Why did you decide to name your multiplexes Fun Republic?

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The name was suggested by Cognito after a lot of research. They had tested a number of names in four cities and finally came up with Fun Republic — an interesting name, it also suggests a place where you have freedom to have fun. As you would know Cognito is an expert in suggesting right names. Alok Nanda & Co is a partner in the firm.

Are you happy with how Fun Republic has been performing so far? In Chandigarh and Ahmedabad it is doing exceedingly well. In Andheri (Mumbai) also we are getting 50% occupancy. Which, considering that we launched just a few months back, is pretty good.

Q. Why do you think the consumers come to a multiplex?

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Why do they go to shop at Big Bazaar or other shopping malls? Market dynamics, good quality products and more choices tempt the consumers to opt for multiplexes. There is a change in the lifestyle of the consumer and multiplexes fit in there.

Q. Does the consumer buy the ticket a lesser rate then?

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No, the consumer has to pay to make the project viable. You should look at the ticket prices in light of services multiplexes offer.