Indiantelevision dot com's Interview with Mukta Arts CEO Pankaj Sethi

Interview with Mukta Arts CEO Pankaj Sethi

"Now audiences are coming back to theatres with Digital Cinema releases"

Posted on 30 July 2003

Mukta Arts Limited, the leading entertainment company has decided to intensify its focus on their various business initiatives in the feature film and television business. On 11 July, the Subhash Ghai promoted Mukta Arts entered into a joint venture with the Manmohan Shetty promoted Adlabs to form a new company called Mukta Adlabs Digital Exhibition that would seek to upgrade 400 "B" class theatres across India within the next year.

In his role as CEO and group president, Pankaj Sethi is spearhead the various business initiatives of Mukta Arts, covering films and television content, film distribution and media education - the Whistling Woods Project.

Pankaj Sethi, an alumni of IIM Ahmedabad, (1979) brings with him a wealth of professional experience in media and consumer goods companies such as Nimbus Communications, Microland, Brooke Bond (Levers), Johnson & Johnson and RHL- P&G. He also has experience in media - spanning television marketing, content development, production, creative execution, new media and the Internet.

As executive director of Nimbus Communications, Sethi claims to be instrumental in its rapid growth as an organisation and as a television powerhouse. Later as CEO of Microland's Media2India, he pioneered the group's early entry into Internet advertising. Here Sethi offers his views about his company's recent JV arrangement with Adlabs. Excerpts:

Why did Mukta and Adlabs tie up? Was there was need or a gap in the existing distribution system?
Yes, there was a gap and an opportunity that this gap created. With the high costs of prints, Hindi films are being released with a limited 300-400 prints at best. This is a small number as opposed to the 8,000 odd cinemas that regularly cater to films. At present, films reach the B and C class theatres and town after their initial run of 4-5 weeks in the main theatres (mostly in metros).

The Mukta-Adlabs tie up (Mukta Adlabs Digital Exhibition) provides a way of releasing films simultaneously in a much larger number of theatres, with a small marginal cost of Rs 3,000 per digital print. The release is safe, encrypted and delivers excellent film viewing value.

We manage the Digital Projection equipment in the theatres; book and schedule the films for release; create secured digitised prints for release and manage the collection fund chain.

What are the advantages of offering digital cinema systems to theatre owners in B and C class towns?
The Digital Cinema system allows for new films to be released immediately, rather than a delay of 4-5 weeks. Due to such delays, audience interest wanes; and potential revenues are destroyed by piracy.

Collections at B and C class theatres have been dwindling. At the same time, the theatre owner has little profits to plough back and the poor upkeep of theatres creates a vicious cycle.

Now, audiences are coming back to theatres with Digital Cinema releases. Collections have been shown to more than double. In recent films such as Qayamat, normal weekly collections have been realised within only two days of the commencement of the screening.

What kind of investments will the theatre owner have to make?
For now, the system is being set up by Mukta -Adlabs Digital at a cost of Rs 20 lakhs (Rs 2 million) per theatre. This is our long term investment in the system, with a nominal investment by the theatre.

Of course, we are entering into long term contracts with the theatre owners, to ensure that the machine cost is recovered. The beauty is that it is a complete win-win situation, being managed by Mukta -Adlabs, where everyone in the film distribution-exhibition chain benefits and prospers.

"The benefits to exhibitors are from increased theatre revenues and associate revenues of retail canteen sales"

What are the advantages of exhibitors and distributors investing in upgrading theatres?
The benefits to exhibitors are from increased theatre revenues and associate revenues of retail canteen sales. The exhibitor that we select also becomes the leading player in his town /area. His theatre is perceived by the viewers as the premier one with the best movies.

Distributors benefit directly by the increase in the revenues that flow to them from increased theatre collections. By releasing the film digitally, they get their true share of genuine revenues, before piracy eats into them.

How much investments will the JV make in upgrading the 400 theatres? What is the time frame?
Well, we will be investing at Rs 16 lakhs (Rs 1.6 million) initially for the first 100 theatres and then working out various funding models. The JV is looking at a total initial fund basket of Rs 25 crores (Rs 250 million) comprised of equity and debt financing.

How will the issue of piracy be tackled?
Right now, with the 4-5 week gap between releases in main centres and in B class theatres/towns, pirated copies of the film in VCD form have had all that time to circulate and drill into potential theatrical revenues. With a simultaneous release as in main centres, now made possible with digital cinema, the damage of piracy can minimised.

Has the Indian cinema industry overcome the recession phase? Are prospects good for the rest of the year too?
There has been a resurgence in the last two months, with films like Bhoot, Andaaz, Ishq Vishq and some others doing well.
While it is early to say, but the signs are surely positive. Producers are getting attuned with audience needs. There is a distinct positive feeling in the trade and deals are once again hotting up.

"The primary reason seems to be a revival in the ability of producers/directors to connect with their audiences at segmented levels"

What are the reasons for the spate of recent hits in H1 2003?
The primary reason seems to be a revival in the ability of producers/directors of connecting with their audiences at segmented levels. Bhoot for instance is catering to a distinctive audience taste, backed by good marketing. Ishq Vishq has touched a chord with young audiences as has Jhankar Beats. Jism portrayed a bold sensuality. But then what of Andaz? Any frank opinion will tell you that its success took most by surprise.

What are the advantages and benefits of the Mukta-Adlab projector systems?
Our projection systems deliver excellent resolution of 1920 x 1080 on screens of 50 to 60 feet in width.

The servers that feed these projection systems are tuned with a high picture delivery at 65 Mbps in a 4:2:2 colour space.
That in effect is a bandwidth with a quality of upto 15 times of a DVD player.

What the viewer gets to see is inderminate from film quality to the normal eye (except maybe for the scratches and pin holes that are missing!).

The Mukta-Adlabs Digital projection systems will bring audiences back to the B class theatres. Thats good news for all in the film industry.

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