1) India is largest producers of Film
2) India Is under screened
3) Print Cost is very High
4) Quality of Theatres are deteriorating
5) Piracy is rampant
Why DigiCine is different
”Pay-as-you-go” business model
Some of the key factors of DigiCine business model are as follows:
Conversion to Digital Cinema Mode
DigiCine appoints theatres as exhibition partner wherein it installs the digital system without any cost. Each installation costs around Rs.15 to 16 lacs and comprises of a high-end movie server, digital projector and V-SAT reception systems.
Installation charges for the DigiCine System
Registration & Installation Fee: The theatre pays a non-refundable Registration & Installation fee of Rs. 25,000/- at the time of signing up for the DIGICINE System.
In addition to this the partner theatre pays an interest free refundable security deposit as follows:
For 3S XDS DLP Projectors Rs .2,50,000
For 3S XDS+ DLP Projectors Rs .3,00,000
A requirement projector is determined on the basis of the screen width. A screen width of more than 35 feet requires a 3S XDS+ projector with extra long thro lens.
The balance cost of the system is borne by DIGICINE in tune with its conviction in the system. The market has appreciated DIGICINE's conviction in the business and DIGICINE has already received more than 250 registrations for conversion to digital format. In the phase 1 we will complete 100 installations.
100% Usage Based Revenue model
DigiCine has envisioned a unique business model wherein no single constituent is burdened with the charges of running with the system. DigiCine has divided its revenues from three principal streams, namely:
- Revenue from Distributor/Producer
- Revenue from Exhibitor
- Revenue from Advertisement
Content Change With 100% usage
DigiCine charges are usage-based so no tension to exhibition partner. This essentially means that there is no fixed overhead on the exhibitor or even the distributor. They pay only for the shows used by them. This has given tremendous comfort level to the exhibition and distribution partner. This also addressed the valid apprehension of the exhibition partner that assuming they install the system what happens if content does not come on to DigiCine platform and equipment become obsolete. With usage based revenue, the onus of co-ordinating and successful delivery of the content stays with DigiCine.
From Exhibitor - Exhibition Supplement Charge (ESC)
DigiCine charges Exhibition Supplement Charge - ESC- to the exhibition partner as the rate of Rs.300 per show per theatre. Under our usage based revenue, the exhibitor releases the latest film and increases his box office collections but if the film does not do well he can discontinue its exhibition and mitigate his losses. This ESC is mainly towards recovery of operation cost and equipment cost. Currently we are offering an initial discount on ESC till 31/3/2011 as per the differential rates structure mentioned under marketing strategy.
From Distributor - Content Delivery Charge (CDC)
DigiCine charges Content - CDC - to the Distributor at the rate of Rs.300 per show per theatre. Under our usage based the exhibitor saves on print cost upfront. Additionally if the film does not do well he can discontinue its exhibition and mitigate its losses. This is towards the recovery of Digitizing and delivery costs of the film.
One of the key revenue streams for DigiCine will be from in-cinema advertising. Currently in-cinema advertising is not even 2% of the total advertising spending in the country. Also in global terms the cost per thousand (CPT) rates in the country for cinemas is lowest in the world at $6.28 compared to the global CPT at $59.43. This shows that there is a tremendous potential for growth in in-cinema advertising. Cinemas have largely remained off the media plan radar of the advertisers primarily due to the fragmented nature of the industry, coupled with the absence of an aggregated media solution provider.
DigiCine is in the process of setting up the largest chain of digital cinema network in the world comprising of 2500 cinemas. This will provide us an opportunity to effectively market the advertising opportunity in the theatres in a professional manner. Speaking simplistically a single screen cinema in the interiors of Maharashtra would never have access to the media planners of Hindustan Lever, Cadburys, Godrej or Colgate. However the fact remains that all these manufacturers produce goods which are consumed everywhere in India.
Thus DigiCine shall aggregate these cinemas as one stop advertising solution to the advertisers. Currently these cinemas are getting local ads, at say Rs.500 per 30 seconds per week. Under our aggregate strategy, we shall market these cinemas collectively and combine with the facts that the box office ticket sales shall go up in the future. With the advent of fresh releases, we intend to ramp up the advertising rates to Rs.1500 per 60 seconds per week. We intend to drive the advertising business on the back of the following advantages available to our advertisers.