Day: April 29, 2017

“Hollywood studios know that wider release of their films means better business. So, e-cinema and d-cinema can co-exist in India”


The Digital Challenge

In India, around 23 per cent of about 9,400 digital cin­ema theatres run on the d-cinema format; the rest are all on e-cinema. But d-cinema’s share is expected to rise to 30 per cent and beyond as there are no more an­alogue theatres left for digital makeover. “With more investments, we prefer to install either a mix of d-cin­ema and e-cinema systems or get only d-cinema equip­ment,” says a theatre operator in Bhopal. Compound­ing the problem is the fact that about 3,000 theatres — mostly single-screen ones — have closed down in the past decade or so. Of the 12,000 single-screen the­atres that existed before the multiplex revolution of the late 1990s, around 9,500 are in business, of which bar­ring 100 or so, all have adopted digital cinema. These screens are either new, or ones that have been con­verted by their owners to accommodate new technolo­gies. The rest are either shut or are in the process of converting their single screens to digital cinema, say film distributors.

What’s roiling up the waters further is the steady rise in


Digital Cinema: Resolutions in digital cinema is represented by horizontal pixel count of 2K or 4 K (2.2 megapixels or 8.8 megapixels). It reaches theatres as digital files or digital cinema package (DCP), usually 90 GB to300 GB of data delivered via satellite/f ibre-optic broadband. DCP, an encrypted file, gets copied to internal hard- drives of the server. Decryption keys are separate and time-limited. D-cinema: Adopted in North America. DCI standard requires 2K or 4K resolution projectors: defined minimum contrast ratio, precise brightness level, calibrated minimum colour gamut. Projectors, servers conform to DCI specification. Anti-piracy devices protect copyright. Multiplex chains run mostly on d-cinema. Theatres pay Rs 8,000-40,000 per month on investments of Rs 15-50 lakh. Criticism: Expensive, long recovery horizon, consumes more electricity, not fit for smaller centres.

E-cinema: Adopted in India, Brazil, China. It typically uses 3-chip DLP projectors that produce better quality than 35mm film. Servers are either DCI compliant or MPEG MXF Interop format in order to adopt both standards. Projection systems utilise 1080p resolution (rather than d-cinema’s 2Krequirement). Colour points also are not as per DCI specifications. Most Indian theatres run on e-cinema.

Criticism: Low in quality, fit only for smaller centres (Rs 8-15 lakh investments per theatre; 4-5 years recovery period), long-term, fixed fee deals where theatre pay Rs 3,000-17,000 per month.

“Hollywood studios know that
wider release of their films means
better business. So, e-cinema and
d-cinema can co-exist in India”

KAPIL AGAR WAL joint managing director of UFO Moviez

the number of Hollywood releases in India. Compared to 20-25 films that hit the theatres here in 2009-10, now more than 60 play in cinema houses in a year. The num­ber is expected to climb to 100 in two-three years. Also, revenues from Hollywood films in multiplexes have soared from 5 per cent in 2006 to 21 per cent now and may cross 30 per cent in the next couple of years.

So which format will prevail? Or will they co-exist? Ex­perts are divided on the question. “Growth will come from new screens in smaller towns,” says Agarwal of UFO Mov­iez. “These won’t be the multiplexes but two-screen thea­tres because we have four to five models within e-cinema and five-six models within d-cinema. Not everyone wants bigger investments. The share of d-cinema may margin­ally rise to 27-28 per cent while e-cinema will continue to dominate.”

Cinepolis’s Sampat believes that if you invest in a supe­rior technology, the returns will be more. “We will be on d- cinema in all our current and future screens,” he says. “While there may be more e-cinema screens, a majority of our collections come from d-cinema screens.”

Taking into account the current dominance of e-cinema theatres and, buoyed by the commercial success of Furi­ous 7 due to wider distribution, sources say the next big summer release Jurassic World might open in both e-cin­ema and d-cinema formats.

This points to the snooty Hollywood distribution com­panies falling in line with small-town Indian reality. ED

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IN DEPTH “People come into brown-label ATM outlets as the signage is that of banks. Typically, 60 per cent of all swipes are at banks’ own ATMs” K.R. BIJUMON

Chief general manager, Muthoot Finance in the back-of-the-beyond. In that case, where does it leave the cardholders if the ATM networkbuild-up slows down?

“The ATM network needs to be ramped up to 3,00,000 over the next three years so the masses can benefit from ease of accessing their accounts, cash and remittances,” says Patel ofTPSCL. Now given Mint Road’s insistence that WLATM rollout be 67 per cent in the semi-urban and rural with 23 per cent in urban catchments, it’s anybody’s guess how this math will be squared, especially for the many who already feel the pinch.

Here’s another set of numbers and you know what a qtficksand we are in. In 2013, Axis Bank, HDFC Bank and ICICI Bank added 4,133 ATMs. The SBI Group (SBI and its associate banks) put up 15,000. Punjab National Bank, Union Bank of India, and Bank of Baroda (BoB) together put up 5,000 ATMs. BoB alone added 2,800 to double its ATM network. So a total of24,133ATMs from these banks alone.

In 2014, the system as a whole added only30,855, and the lion’s share is that ofby non-WLATMs (banks).

It goes to prove that the WLATM policy has been turned
on its head. If you go by the strike rate set by the RBI (see The Asking Rate), WLATMs were to sprout all over the place.

In the veiy first year of operations (based on schemes that operators opted for), at least 1,000-25,000ATMs were to be added. So if there were five operators, there would have been between 5,000 and 125,000 ATMs in the debut year alone. Now, not all WLATMs opted for the same scheme, in which case, the cumulative WLATM deployment at just over 6,000 would have been fine. But that was not the case. And we now have a situation wherein TPSCL alone has 66 per cent share of this base!

Patel is of the view that the inter-change has to be a viable one. ‘Why were WLATMs licences issued? To bolster financial inclusion. We then have to be remunerated.” It will not happen soon. The National PaymentCorporation of India (NPCI) that decides on inter-change is split between net- issuers and net-acquirers.

What’s gone below the radar is the fall in inter-change fee over time and a cap on the number of free transactions has come to bite banks. The average ticket-size of ATM cash

withdrawals has inched up to Rs 4,200 (from Rs 4,000) as customers pull-out bigger amounts due to the cap on the number of firee-transactions per month. Again this average ticket-size is misleading; it is much higher in the metros. The result of all this: it now affects banks’ current and savings account deposits — the higher it is, the lower the cost of funds — as it fluctuates more due to higher withdrawals. In turn, it means that ATM’s have to be “fed” more cash (and at shorter intervals), which pushes up operating costs.

That’s another issue. The cost of funds for banks to feed their ATMs is at best at the prime-lending rate (it’s their own money in any case) and this holds true for brown-label ATMs too. In the case ofWLATMs, it is at PLR plus margin as it is in form of working capital. As for moving the cash to an ATM, it costs Rs9,000 a month (24X6; Sundays off). “In this, there is not much difference between banks and WLATMs,” says Aiyer ofWliter’s Safegaurd. Just that for WLATMs, since the bulk of deployments is in the hinterland, costs don’t justify the rollouts.

Bottomline: there’s no money in ATMs (for those in the business that is)! HQ

^ [email protected] 0 @tabonym

For more on financial services, visit


chain Cinepolis. “We plan to scale up from 193 screens to 400 by 2017, with all of them on d-cinema systems.” Gautam Dutta, CEO of PVR, the country’s largest mul­tiplex chain with 471 screens across 106 properties in 44 cities, concurs with this view. “All PVR cinemas run on d- cinema technology as we believe in providing a quality and premium movie-watching experience to our patrons,” he says. “Also, distribution of d- cinema is simpler, faster, cheaper and piracy can be better controlled.”

However, not everyone buys the latter argument. “Both d-cinema and e-cinema technologies are encrypted, so there is no question of piracy in e-cinema,” says Vineeta Dwivedi, CEO of KSS Digital Cinema, which has a net­work of300 e-cinema screens in India.

Tussle For Access

But the debate is not limited to discussing the superiority of one format over the other — it is a very real tussle, and can turn ugly too. In March, Mumbai-based KSS accused DCI-member studios of cartelisation, and demanded ac­cess to the dubbed versions of Hollywood films to cater to audiences in smaller centres. Through legal recourse and, later, by business arrangement, KSS secured the digital distribution rights of Furious 7, but failed to make a simi­lar case for Avengers, for which the legal process is still on.

“The dubbed version of Furious 7was, perhaps, the first Hollywood film distributed by a DCI member that went

“As d-cinema is a superior
technology we don’t mind paying a
premium for it. We plan to scale up
from 193 to400screens by 2017
— all of them on d-cinema”

DEVANG SAMPAT, business head (strategy).Cinepolis 76 I BW I BUSINESSWORLD ! 15June2015


on our network of around 300 e-cinemas,” says KSS’s Dwivedi. ‘When Avengers was released in April, Disney declined us the rights for its dubbed version. It becomes difficult for us to explain to theatre owners and exhibitors why we can provide them one film and not the other.” Emails to DCI-member studios remained unanswered.

Who Will Prevail?

Will d-cinema surpass e-cinema one day? No, say cinema distribution companies UFO Moviez and Real Media Network, among the bigger players which operate in both formats. “India is a diverse market,” says Kapil Agarwal, joint MD of UFO Moviez, India’s largest digital film distri­bution company. “Back in 2005 when we started, the ob­jective was to convert all analogue film theatres to digital screens. Now more than 7,200 digital screens are running on e-cinema. We are perhaps the only country that does not depend on Hollywood films for survival.”

Harsh Rohatgi, president (digital cinema) at Real Me­dia puts a different slant on the matter. “DCI-imposed standards are benchmarks adopted by big Hollywood stu­dios for exhibition of their films,” he says. “There is noth­ing wrong with that. The decision of a theatre or exhibitor to install a DCI-certified projection system is a business decision and one driven purely by returns on that invest­ment.” Real Media has about 650 d-cinema theatres.

However, KSS and other smaller digital players are de­manding access to at least dubbed Hollywood films till in­vestments in d-cinema technology are made. What they cannot ignore is five years ago, d-cinema theatres com­manded less than 5 per cent of the digital cinema uni­verse; today, they have a 23 per cent share

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