Cinema advertising revives on the back of newer releases; industry estimates a 15% growth in festive season

Cinemas endured a challenging start to the year due to the IPL, ICC Cricket World Cup, and the absence of big-ticket releases. However, their ad revenues are steadily increasing, driven by recent releases performing well at the box office and anticipation for the festive season and upcoming pan-India releases in the latter half of the year.

Industry leaders from major cinema chains are optimistic about the upward trend in advertising revenues. Sectors like e-commerce, ed-tech, electrinics, jewellery and real-estate are driving this growth.

According to a report by Ormax Media, the first half of 2024 closed just above the Rs 5,000 crore gross mark at the Indian box office, with Kalki 2898 AD, a pan-India film, leading significantly for the year. This marks a 3% increase compared to the gross box-office collection in the same period of 2023.

Amit Sharma, managing director of Miraj Cinemas, noted a significant uptick starting from June. "April and May lacked releases, but movies like Kalki and Chandu Champion in June have catalysed a recovery," he said. Sharma emphasised the close tie between corporate ad revenue and major releases, citing the success of Kalki as a momentum builder. He reported a noticeable rise in weekly earnings and expects this trend to continue through July and beyond.

He says advertising has picked up momentum from mid-June and will continue to pick-up with movies like Bad Newz, Deadpool and Indian 2.  

“We are seeing a rise in revenue on a week-to-week basis. Hypothetically, if in April-May we were earning Rs 100 from June onwards we are earning Rs 150. From July onwards we see it trending between Rs 170-180.”

Devang Sampat, managing director of Cinépolis India. states that there has been a shift in the market dynamics. For them, advertising revenue has been growing compared to last year. “For us, the ratio between national and local advertisers is 60:40, and both segments have been growing. We are seeing an 8% increase compared to last year.”

Similarly, Gautam Dutta, CEO of revenue and operations at PVR INOX, highlights a strategic focus on alternative content (shows of older hit movies) that has attracted new brands and boosted advertising interest.

“Despite a less robust lineup in Q1 FY25, we saw an 8% growth over the last corresponding quarter. We observed an 8% increase in advertising compared to the same quarter last year (Q1FY24), despite not having a strong lineup in Q1-FY25. Importantly, our count and trend of all major brands continue as they did last year, and we are delighted to see a surge in many new brands across various categories that were absent in the corresponding quarter last year.”

The FICCI-EY report, released in March 2024, said Rs 750 crore was generated from cinema advertising in 2023, a 50% rise attributed to successful movies and the scarcity of avenues to reach affluent audiences.

Festive boost

According to the Ormax report, there is a strong lineup of films awaiting release in the second half of 2024 across languages, which could potentially match this year’s box office performance with that of 2023.

It must be noted that with movies like Jawan, Pathaan, Gadar 2, Rocky Aur Rani Kii Prem Kahaani, 2023 was the first-ever year when the gross box office in India has crossed the Rs. 12,000 crore mark, surpassing the previous best year, 2019.

Dutta of PVR INOX remains bullish about Q2 of 2024, anticipating a significant boost from the festive season and a strong mix of content and advertiser engagement. “Now the ground is all set for our active discussions and engagement with these brands and many more during the festive months. Our advertising sales outlook remains bullish for Q2 with the mix and fair-play of good content and festivity.”

Sampat of Cinépolis India adds that with the festive season approaching, ad revenues are expected to improve. “We have a mix of long-term and short-term deals, and we anticipate ad revenues to grow significantly. Compared to the last quarter, the second half will see at least a 10%-15% increase.”

Vishnu Telang, CEO of Khushi Advertising, states that the demand for advertising is picking up with the festive season just around the corner. He says that although the last quarter was slow, they anticipate demand to increase this quarter with movies such as Chandu Champion and Munjya already gaining momentum.

Regional boost

Yogesh Kapil, national sales head at Qube Cinema, highlights that the South boasts the largest movie lineup with titles such as Pushpa, Devara, Greatest of All Time, and more, prompting brands to seek longer partnerships.

“If you compare with last year, we have achieved a similar amount in the first half of the year. However, post-elections, as new movies began to release, we have seen a 20% increase. We dominate in the five southern states with 2,000 screens. From a content perspective, we are quite buoyant unlike Bollywood. Hence, we have a lot of regional and local advertising flow that has helped us.”

“We see a rise in our revenues despite a lack of content. 50-55% of our business comes from long-term deals. We have already signed many deals in the past two months, and 50% of our annual revenue is already in. With the slate of movies, we are confident of locking in 15-20% more revenue compared to last year,” adds Kapil.

Evolving audience and advertiser strategies

According to Sampat, there has been a shift in the movie consumption pattern of audiences that is translating into revenues. “Earlier, we used to see that only blockbusters made noise and attracted advertising. What we observe today is that average footfalls have increased post-pandemic, even in the absence of high-ticket blockbusters.”

He says that because of this, advertisers' inventory buying patterns have changed. He mentions that advertisers are purchasing inventory for longer periods compared to previous years.

“Most advertisers used to think that buying cinema inventory for a long time is risky, but nowadays you can't predict which movies will gain traction and make an impact like Munjya. Advertisers and media planners are also releasing the same and now instead of buying movies, they have started to buy eyeballs. Instead of buying 12 weeks inventory they are buying 24 weeks. If one week doesn’t do well, it can pick up the next week,” he explains.