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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good evening, ladies and gentlemen. I'm Momita, moderator for the conference call. Welcome to Q1 FY '22 Earnings Conference Call of PVR Limited, hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand over the floor to Mr. Ankur Periwal. Thank you, and over to you, sir.
Thank you, Momita. Good afternoon, friends, and welcome to PVR Limited's Q1 FY '22 Earnings Call. The call, as usual, will be initiated with a brief management discussion on the quarter performance, followed by an interactive Q&A session. Management team will be represented by Mr. Ajay Bijli, Chairman and Managing Director; Mr. Sanjeev Kumar, Joint Managing Director; Mr. Gautam Dutta, CEO, PVR Limited; Mr. Kamal Gianchandani, Chief of Business Planning and Strategy and CEO, PVR Pictures; Mr. Pramod Arora, Chief Growth and Strategy Officer, PVR Limited; and Mr. Nitin Sood, CFO, PVR Limited. Over to you, Mr. Ajay, for the initial remarks.
Yes. Thank you very much. Good evening, everyone. I'd like to welcome you all to the earnings call to discuss the unaudited results for Q1 FY '22. I hope you've had an opportunity to review our presentation and results uploaded on our website and the stock exchanges. I want to start this call by expressing my sincere wishes for the wellbeing of all of you and your families in these extremely challenging times. At PVR, our focus during the quarter gone by was vaccination of all our employees. I'm proud to announce that we've achieved 100% vaccination for all our employees who've taken at least one dose of the vaccine as of date and are now ready to welcome back our patrons to enjoy the cinemas in a safe environment. As of date, 15 states and 3 UTs in India and Colombo -- and also Colombo in Sri Lanka, which represents about 526 screens or 63% of our total portfolio, have been permitted cinemas -- have been permitted to open with varying restrictions around capacity and timing by various state governments. Major markets, however, like Tamil Nadu and Kerala continue to remain shut, but we are hopeful these markets will also open very soon. Today marks the reopening of cinemas post second wave. We've reopened about 200-odd screens today, and this number will only increase over the next few weeks. Given the box office response received by tentpoles globally, we are excited and optimistic about the Bollywood and Hollywood releases, which are lined up. Global studios have already announced the release dates of movies like Mortal Kombat, which is today, 30th July; then Suicide Squad 2 on the 5th August and The Conjuring, which is on the 13th of August. The film slate for Bollywood and regional content also looks quite promising. As soon as the key market for Maharashtra and Tamil Nadu are permitted to reopen, although newspaper articles have already announced Maharashtra's partial reopening, we expect even the Hindi films to be released very shortly. On the results, please note that the numbers we'll be sharing are after removing the impact of Ind AS 116 relating to lease accounting and are different from the reported numbers we submitted to the stock exchanges yesterday. So a little bit about the results for the quarter ended 30th June 2021. Total revenues were INR 71 crores, and the EBITDA loss was INR 110 crores and PAT loss was INR 142 crores compared to revenue of INR 13 crores in the same quarter -- same period last year and EBITDA loss of INR 116 crores and the PAT loss, INR 141 crores. As you can see, the business financial performance were impacted due to the lockdown announced by state governments to tackle the aggressive second wave of COVID-19 in the first quarter. During the challenges period, the company continued aggressively controlling costs and maintaining sufficient liquidity. The company is in active discussions with various landlords to seek waivers and discounts during the periods cinemas were shut, and we are confident of that a positive outcome will be achieved once business restarts. During the current financial year, the company also availed additional borrowing of INR 200 crores under the ECGLS (sic) [ ECLGS ] scheme of the government of India. This has further strengthened the liquidity position of the company. As of 30th June 2021, we have a total liquidity of INR 850 crores including the undrawn sanctioned credit lines. In conclusion, I'd like to thank all the stakeholders, including employees, developers, the film fraternity, bankers, investors for their continued belief in the business and the company. I'm confident the company will bounce back strongly as soon as reopening is complete and content flow will become -- and when the content flow becomes normalized. With these opening remarks, we are open now for any Q&A. Thank you very much.
[Operator Instructions] Our first question is from Amrit Sai from Edelweiss.
This is Abneesh here from Edelweiss. My first question is on scheduling of movies. So now a lot of Hollywood movies, I understand, are already there. [Technical Difficulty] and digital movies are also all ready. Of course, there is a lead time of marketing required. But when I see Q1 -- the phase 1 of the pandemic, we did see that in the Q4 the release of movies was well below expectation -- initial expectation. So one is how things will be different this time, given no one can rule out wave three. We are already seeing U.S. 1 lakh cases almost. We are seeing Japan 10,000 cases, for example. So could you take me through the confidence of Hindi producers especially to launch because wave three, again, remains a risk? And, second, problem of plenty. So you have so many Hollywood movies release ready. So taking all this into account, how would the scheduling work in your view? No one can predict, but how will it work, next 3 months, if you could take us through?
Kamal, would you like to answer that because you know mostly about the flow of movies.
Sure. Sure, sir. Abneesh, thanks for the question. We've been in touch with almost all producer partners on Hindi film side as well as regional film side. Hollywood films, you're right. A lot of films have been released and a lot of films are releasing in U.S. and the other Western markets. So those will release on day and date basis on near day and date basis in India as well. In terms of releases, while no one can predict the third wave, what, when and how severe would -- the third wave would be is a matter of conjecture. And a lot of people although are predicting the third wave, but no one is absolutely sure as to which month and if at all it comes then how severe will it be. And will it really lead to localized or city-wise or state-wise lockdowns? It's all up in the air. So producers have been very forthcoming, and they have showed us that the lag that we saw after the first lockdown when we reponed, there was a big gap in terms of Hindi films. We opened in October and Hindi films started flowing in February 2021, whereas we had opened in October 2020. So this time around, Hindi producers are very clear that they want to start releasing even if there is a 50% capacity cap. As long as the major states have permitted reopening, major states being Maharashtra, Delhi, Uttar Pradesh, state of Haryana, essentially, the Hindi films, where they tend to do well. As long as these major states are operational and restrictions are not below 50% capacity cap, they are comfortable to go out and start releasing their films. This is the assurance that we've got from Hindi producers. As far as regional producers are concerned, even after the first lockdown, they were very quick to start releasing their films. This time, it would be no different. Telugu producers -- Telugu -- Telangana, in any case, we have permission to operate at 100% level. So there is no such constraint there, in any case. They will start releasing films quickly in August. Tamil Nadu, we are awaiting opening, but Tamil Nadu also as soon as we get the permission to open, suffice it to say that producers would be hoping to release even if there is a 50% capacity cap. So in short, to answer your question, I think there would be a steady supply of films. And you're right. It could also be a problem of plenty as we get into Q3. But producers are wanting to release films quickly. And wave 3 is not playing on people's mind. Even if it's playing on people's mind, they have decided to go ahead and release their films.
I just wanted to add, Kamal, to your point about, Abneesh, what you said about the U.S. and China and Japan. The results are very, very strong over there. And also, those markets are still pretty -- U.S., U.K., especially are very Hollywood-dependent. The difference between India and these markets is that India, the local content is very strong. Those markets are only there is Hollywood content, but there is some level of lack of content. But yet with the content which has got released, the movies have done exceedingly well. It's only 1 or 2 movies which got released simultaneously on OTT, which have got impacted, Black Widow being one. But other than that, the movies which have released only theatrically, they've done exceedingly well.
Sir, one quick follow-up on what you said. One or 2 states where 100% occupancy is allowed, I wanted to understand, currently, there is no such need because a number of movies and people are not really rushing to go there. So what is driving this 100% allowance by the government? And do you see these other states also do this so quickly? Because in wave 1, we saw 50% limit remain for a very long time. So what has changed this time?
Some of the state governments are being more progressive than the other state governments, and they have taken a conscious decision that economies/business will have to co-exist with the virus. Both will have to be managed efficiently. And that seems to be the thought behind permitting 100% capacity. Our sense is that most other states, which have put in a restriction of 50% capacity cap, with some other restrictions also in some other states, would like to do away with these restrictions as soon as the virus situation permits them to do that. Also states are following a very calibrated approach to reopening. So in any case, cases count is fairly down and they want to open with 50%, but very soon, they want to calibrate and remove these restrictions as we move forward towards October, November, the Diwali period, Dussehra period. That's the sense that we're getting from states.
Sir, last question. When do you see big Hindi movies and big South Indian movies launch? Again, this is based on your view because I understand, unless Mumbai opens, no one is going to commit. But will it be say 1 month down the line? Will it be 2 months down the line? Big movies. I'm not asking on those small INR 5 crores, INR 10 crores movies, but the big ones.
Bell Bottom is a big film with Akshay Kumar in the lead. It's produced by Vashu Bhagnani, who's a prolific producer. That's coming out on 19th of August. So in that sense, the big films have already started planning the releases. Some of the big releases we are expecting would start coming towards the end of September. So we will have film throughout September. But like you said, the big films is something which we are expecting end of September. And once we get into the festival season, Dussehra, Diwali, for sure, we will have massive blockbuster potential films coming out, films like RRR, Rajnikanth's next film, Sanjay Leela Bhansali's next film. For sure, in the festival period, we will have blockbuster potential films releasing.
Next question comes from Mr. Shantanu Basu from SMIFS Limited.
My question is I want to understand the shooting scenario in India across regional and Hindi movies. So what's the shooting scenario like? I mean is it back to normal pre-COVID times? Or how is it happening as well as, I mean, shootings abroad? So how is it shaping up?
It's almost back to near normal. Producers are taking -- producers are permitted to shoot almost across the country anywhere. And producers are taking a lot of safety COVID-related protocols. They're following these protocols. But apart from that, shootings are in progress. Almost every big actor, whether it's Hindi films or regional films, they are all at the shoot. They're all shooting their forthcoming films.
[Operator Instructions] The third question comes from Mr. Urmil Shah from IDBI Capital.
This is Urmil from Haitong Securities. So Mr. Bijli, the question was for you, and it was more structural. We've seen that a few of the movies which went to OTTs versus the planned theater release, the content was really bad. I'm referring to the likes of Laxmii Bomb and if I could also put Gulabo Sitabo into it. We have, in the past, said that from 2,000 movies, we might have to now deal with 1,000, 1,200 or basically a lower number. That would mean that the success rate will have to be even better. So based on your discussion with the producers, is there a change in the mindset towards focusing on a much better content than it has been earlier?
I mean, to be honest with you, there are only 52 weeks in a year. And even as somebody earlier said, problem of plenty. I think 1,200 films are also more than enough. But definitely, if you look at -- India has always had so much variety and there's such a disparate market that movies are being made to cater to everybody's needs and tastes. So I feel that even 1,200 and all movies are very good, and no producer sets out to make a movie which is not good. But having said that, what we've seen in the past few years, pre-pandemic level -- pre-pandemic is that for every big movie, if it doesn't connect with the consumers, it doesn't do well at the box office, there are smaller ones or medium-sized ones which make up for any occupancy loss. So we -- what we call in our parlance, sleeper hits. So I'm actually very -- we are all very happy with the quality of the content that is getting made. And there are so many producers, filmmakers, actors who are there. And I really don't think there's going to be any compromise on the quality. And of course, in all our interactions with our film fraternity, we are always getting the sense that they're all pushing the envelope to make very high quality movies which connect with the consumers because their money is also at stake. Nobody sets out to get bad returns on the money that they invest in content. So they're all very, very careful in making sure that the quality of the content is good and it connects with the consumers. So I think we're going to be seeing great films coming. There are some great filmmakers, and that should -- that doesn't worry me at all, neither the quantity, nor the quality.
And I think what you said about these movies shifting to OTT has really been an anomaly because of the pandemic since the cinemas were shut. So to sort of announce a paradigm shift in release strategy is a bit early. They didn't have a choice but to release them on OTT platforms. And now since the cinemas have opened day 1 itself, Bell Bottom has announced its release in Hindi. A number of English movies have announced its releases. Regional movies have announced its releases. So by and large, producers, actors and all the stakeholders involved in making the film, they want to watch their films on the big screen. So many movies have announced release as soon as the cinemas have opened. So there will be movies coming back to the cinemas in the coming months as and when more and more cinemas open up and more and more confidence of consumers to come back to cinema starts.
Sure. That was helpful. So my second question was on the non-cinema attendees, which we wanted to focus on. Maybe Q1 might not have seen really some limitation of the same. But if you could throw some light as to what is the plan for the next year? And how has the tie-up, et cetera, with executives panned out?
Can I request Gautam to answer that. It's an initiative taken by Gautam Dutta. And Gautam, you are on the call, right?
Yes, yes, yes. So actually, this delivery business will coincide with the cinema opening. We've already mapped out most of our cinemas in North and in South. The West region will start in about a week, 10 days' time once the cinemas open and stabilize. So in all, we will have close to about 90-odd cinemas, delivering food outside. We've also had have a sealed document with Zomato on our contract on home delivery. So all that has shaped up. And we believe that as soon as cinemas stabilize, which is within the next 3 to 4 weeks, this business will also take off. But I must put in place that this is going to be our beta trial and it would take a couple of months for us to go back and forth and see how -- whether the food, the pricing and the consumer response, how is that shaping up, and then we begin to sort of scale that up.
Next question comes from [ Swati Gundu ] from [ Invest Yadani ].
Okay. I just wanted to know like, yes, like from last year, the sales has been drastically improved, but compared to last year, it has not. I just wondered what are your expectations in coming 9 months or 12 months in regards to sales of all the segment, like sales of movie tickets, food or other fixed income things.
[ Swati ], this is Rahul. So our last year was a complete lockdown quarter. We had no operations in Q1 FY '20. But in the month of April of '21, we had some operations. So revenue accordingly are higher. Obviously, they are still significantly lower than our typical quarter. But yes, because we had operations for a certain time frame in the month of April, we -- our revenue is higher. We are not in a position to give any guidance for the future period because as it is we don't give any guidance. But given the uncertainty around the pandemic, it's difficult to give any guidance for the quarter.
Yes. Yes. Can you tell me approximate in best case in cases like there is a really lower impact of the COVID third wave or something, I mean, the best-case or worst-case scenario.
No, [ Swati ]. Sorry. We don't give forward-looking guidance as it is for any future time frame. So unfortunately, we're unable to give you that in number.
Next question from Sanjesh Sri (sic) [ Jain ] from ICICI Securities.
Yes. This is Sanjesh Jain from ICICI. I got 2 questions, first, on the rental side. Can you take us where are we in terms of renegotiating the rental for the quarter gone by, which was almost a complete lockdown? What are the expectation? And where is the discussion today? And what is the expectation or what is the negotiation which are happening -- we are doing for the quarter 2 where, again, it looks like it won't be a full [Technical Difficulty] since a lot of states have given maybe permission for a 50% occupancy. So that's the first one. Second one, again, on renegotiation with the producers. In the initial period, given there is an uncertainty on the movie tax rate collection and a limitation in terms of occupancy, and there could be some urgency from the producers to release that movie, are we renegotiating our terms of 8-week window to release on the OTT platform? Are we even looking that? Are we even there in terms of questions on sales, number one? And number two, any change in the revenue share if there is?
Nitin, do you want to take this question because it covers everything?
Yes. So I'll let Pramod answer the first part of the question. Pramod is sitting with me, and then we'll defer the second question to Kamal.
So Sanjesh, in terms of the negotiations with the development partners, it is work in progress. And we do see that during the lockdown period, where there would be minimal expense towards the rent outgo, in terms of suggesting an outgo for 50%, wherever the territories have 50% occupancy, we are in touch with the developers to see a short-term reset on the minimum guaranteed terms, and we are very hopeful that we would be able to manage that. We are not seeking any long-term resets. We are just seeking short-term resets till such time the governments have given restricted occupancies or restricted seating in the cinemas. During the time, we are seeking some more waivers to come in from the developers, and we are hopeful that we will get a substantial part of that. I hope that answers your query.
Just one follow-up on the rentals. I think it's pretty long. They have been very supportive to us, no? And they have compromised on their IRR as well. Are we orchestrated in the understanding that in the future when things normalize, we will compensate with something in the future date? Is there any understanding or that's completely off the table?
So that is completely off the table. So if you look at the treatment on the balance sheet, it will basically be whatever is the waiver coming in, that waiver is a waiver. It does not mean that there is an extended time line to pay this. This would remain a waiver. And any short-term reset doesn't need to get repaid. So that's how the -- this is a time which we take a time which has gone by, and whatever gets agreed gets finished in this year, this financial year. And post that, there is no treatment to give it back or anything like that.
Sorry. One more bit on this. Last year, we hinted that some of the cinemas may shift to the revenue-sharing model. That could be one of the way to recompensate. Can you give us where are we in the renegotiation or how many cinemas will be on these kind of sharing norm out of the total portfolio we have?
So Sanjesh, how we basically are making a move is that there are releases which have been registered. These registered releases are something wherein we are not keeping any long-term reset. They remain as they were, except for this short-term reset where the pandemic has hit us for the time there was lockdown or for the time there are restricted occupancies. So these contracts otherwise remain valid and normal. For the new contracts or for the new signings that have been done, we are taking -- we are working towards making it a more revenue share sort of an agreement and an asset-light model wherein some sort of fit-out cost is borne by the developer, but that's a work in progress. And as we move forward, we'll be able to see some movement on that.
So if you can take the second part, that would be very helpful.
Yes. So Nitin?
Kamal, can you answer the second question?
Sure, Nitin. Sanjesh, windows have been a long-standing beneficial system in our business, not just in India but globally. We are big supporters of windows. Looking at the practical challenges that our producer partners have been facing because of delayed releases, uncertainty with respect to lockdown, we've, on a short-term basis, decided to concede and agree to a reduction in windows to four week. But I must clarify that this is a short-term agreement where we remain fully confident that soon we will go back to the erstwhile system of windows, which was 8 weeks for subscription and broadcasting platforms and 6 weeks for transaction VOD platforms. We expect to revert back to the old system fairly quickly most likely in the current financial year but latest by the beginning of the next financial year.
Great. And the revenue-sharing with the distributors, that remains unchanged?
Revenue sharing with the distributors, there could be minor fluctuations over the next 2, 3 months. But revenue sharing will revert to normal fairly quickly, would definitely be back to normal within this financial year. It could be as early as over the next 4 to 5 months. But there could be minor fluctuations, not very meaningful, but some minor fluctuations over the next 3 to 4 months.
The next question is from Mr. Praful Kumar from Dymon Asia.
Sir, just one question. Would there any...
Praful, we can't hear you.
Sir, just one small question. Would there be capital days which should be recorded?
We have sufficient liquidity as we updated at the beginning of the call. As on 30th of June, we have INR 850 crores of liquidity in the form of cash in hand and undrawn credit line. So we believe we have sufficient liquidity, and we don't require any kind of a capital raise.
The next question is from Mr. Vikram Ramalingam from Maybank Capital.
My question is like that of the earlier participant. Regarding the exclusive window between the OTT and cinemas, so I did read the report that said that, globally, the exhibition companies are -- I mean, the exhibition industry has come back to -- bounced back to normalcy to a large extent. But it also said that there is a clamor for increasing the exclusive windows. I think that cinema exhibitors want duration with them. How do I read this? Is it because of COVID that the crowd is a little spread out because people don't want more crowding? Or is it the case that this window has revealed too much and cinemas exhibitors are not able to fully milk the content? How do I read this?
Can you repeat the question?
No. I said that I read the report on the global market -- global exhibition market is doing well, given the state of new releases. But the report also carries a bit saying that there is a clamor for increasing the window -- the exclusive window. So like you said, if it is COVID, then they're asking for a longer duration of exclusive window, which is -- the cinema exhibitors are asking that. I'm asking how do I read this? Is it because of COVID, the crowd has been spread out more? Like earlier in the first 2 weeks of the promotion, the people need to watch the movie. Should I read it that way? Or is it the case that the movies are starting to do well and people are coming back and that's why they want to have a bigger share of the content? I mean how do I read this?
I think the best way to read this is that exhibitors feel and a lot of producers, studios also agree, and I'm talking about the Western markets at this point, that when you release a film on another platform quickly after a theatrical release, the other platform tends to cannibalize the theatrical revenue. And sometimes the cannibalization is such that the revenue from the platform on which you released the film after theatrical release is not sufficient. It needs to fulfill that deficit, which has been created because of an early release. So there is cannibalization of revenue and most exhibitors are urging producers to go back to the erstwhile windows, which used to be between 2.5 to 3 months in U.S., which is the most mature market in the world. Currently, Disney and Warner are following a different practice where they have decided to release their films parallelly, simultaneously on their OTT platforms along with the theatrical release. So that's the other extreme end in terms of experimentation with respect to windows, which has been going on in U.S. market. Disney, the film which released last Friday, a film called Jungle Cruise, is a large film which Disney has released on their OTT platform along with the theatrical release. The subsequent films, Shang-Chi and Eternals and Free Guy and a couple of other films that they're releasing, they will follow the -- a window of about 45 days. So exhibitors are urging -- requesting producers to go back to a window because this quick release on other platforms is cannibalizing into their revenue. And producers are also agreeing with contention because they're finding that the revenues from OTT platforms is not sufficient to meet the losses that the deficit in revenue that's being caused to the theatrical platform. So that's the way to read it. That ultimately, both producers and exhibitors want to maximize the revenue, and shorter window is working at cross purposes, and theatrical platform is requesting producers to go back to the erstwhile windows. India is a different situation. All of these that I've shared with you is meant for U.S. market. India is a very different market, and we follow a very different window practice. So I don't want to confuse you, but that's the way you should be reading this.
Okay. Actually, that answers my question very well. My second question and this is just a thought. So now COVID is a reality. And I'm sure in some of the coming years there will be some variant of the other as well. Is there a thought in any of the management discussion to start owning some of the properties because PVR has the ability to raise that kind of capital, whereas the mall owners we can't expect them to do anything about it. So is that a thought that you would start owning some properties, given your liquidity and your ability to raise capital?
No, we are not really thinking about owning any of the properties. We will remain an asset-light model. Some of the newer properties that will come on maybe on a revenue-share model. But we are not really looking or seeking at making investment into these properties.
My only reason was because the idea of going back again and again to property office to renegotiate rent might just be difficult.
And the last question for the call comes from Mr. Jinesh Joshi from Prabhudas Lilladher.
Sir, I have a bookkeeping question. If I look at our CAM charge this quarter, it will be higher than the rent. Is it that we are not making waivers on the CAM front?
On the CAM front, see, CAM is an actual expense, which is incurred by most of the real estate developers to keep and maintain the properties, the cost of the staff that they deploy to manage them all. So while we expect significant reduction in CAM expenses because electricity, air conditioning, et cetera, would be shut, but there is a minimum expense that is still incurred to upkeep, maintain the property even during the time frame that it's shut. Accordingly, as we mentioned in our notes, while we are in discussions with landlords to seek discounts and waivers, but on a conservative basis, we've provided for this expense in our books. On the rent front, like we mentioned, that we are reasonably confident of getting rental waivers for the period that cinemas were shut. We've indicated that in the management commentary that while the discussions are ongoing, the current financials assume that we will be able to get rental waivers for the period the properties were shut.
So in the CAM scenario, whatever are the pass-on expenses, those are something which we would be paying. The pass-on expenditures are connected, low charges or the charges being more in -- the money is being spent to keep the mall running in terms of safety, security or the housekeeping expenses during the time of lockdown. So those are pass-on expenses, which we shall be incurring. Other than that, the CAM may be discounted by a substantial lot during the lockdown phase.
Okay. One -- another question on the bookkeeping front. Can you have that current debt and cash position? I know you mentioned that you have INR 850 crores of liquidity, but that also includes the undrawn sanctioned lines. So I want specifically cash position and debt if you can share.
Yes. So Jinesh, we got a net debt of about INR 750 crores as of June 30.
Okay. Since our SPH seems to be holding off quite well and more or less comparable to the pre-COVID levels, is it because of this outside F&B revenues which we are getting from food aggregators which is getting clubbed over here? Is that the reason why it appears to be higher? Or is it on a like-for-like basis we're seeing an improvement on the SPH side?
See, we are very bullish on the food side. There are a lot of changes that we've been doing. But largely speaking, we believe that our SPH story is intact. But to your point, the food that is being delivered out of the cinemas is being punched in the cinema sales. But that is very small currently. So that has nothing to do with these numbers. So yes, that's what it is.
The next question is from Mr. Ankur Periwal from Axis Capital.
So a couple of questions from my side. First, if you can comment on the simultaneous release that we are seeing, for example, Disney and Warner, as you mentioned. What has been -- if you can share some feedback, the collections on those movies? Had it been meeting the expectations of the respective producers? Or probably it may not be as great an experiment?
Simultaneous release is a concept which is prevalent only in U.S. and some other Western markets. This is not applicable to India as a market, for both Warner as well as for Disney. In fact, Warner, HBO Max, their OTT platform is not even available in India. Disney has Disney+ Hotstar in India, but they have been refraining from doing a D&D release in theaters and OTT platforms -- on their OTT platform in India. As a...
Sir, just a correction. Yes, my question was more specific to U.S. I understand in India, it is not applicable. I was referring to U.S. there.
It's an experiment and very limited information is available on public platforms. I think, broadly, most analyses are pointing out to cannibalization of overall revenue for studios as in the sum of all parts would have been greater than what they are earning by doing a parallel release. So if that follow the window between theaters and OTT platforms, the release -- the revenue would have been more than what they have earned, but that seems to be overall analysis. But like I said, not sufficient data is available on public platforms. But I think what one could infer from the fact that Disney has stopped this experiment with Jungle Cruise, which is their last film to have released on Disney+ in theaters, finally. From their next film, which is going to be Shang-Chi, which will come out in September, they will have a window of 45 days between theaters and their OTT platform. And thereafter, the films which will follow will also continue to have the same window. Warner has also publicly given a statement that this experiment of parallel release will continue till the end of 2022 -- 2021, sorry, calendar year. And in 2022 from the beginning of the calendar year, they will revert back to the window system. So I think that also signals the fact that studios are not entirely happy with the results they've got over the last 1 year. And what has happened in last 1 year should be seen as an aberration and experiment. That's what we have to say.
That's helpful. Second question on the OTT screening here in India. So any feedback or discussion you would have with the producers? How have been their feedback, having these cost plus deals with the OTT players? Was this only a desperate move and people are very unhappy about it or they're happy that their interest, outgo, et cetera, burden has gone away and probably next time onwards, obviously, theatrical remain a preference? Any informal or formal discussions you would have there.
Clearly, a lot of producers sold their films, license their films to the platforms for the direct release because of financial constraints and uncertainty with respect to COVID. In some cases, OTT platforms also went out and bid for films in a very aggressive fashion. But I think the conclusion that one is getting also in India is that none of the stakeholders are happy. The talent is not happy. When I say talent, I mean the actors, directors, the creative force behind the film. They're not happy with these releases because they're finding the experience is not the same. When a film releases in cinemas, it's a different experience. Even an average film, people tend to enjoy more because of the overall experience. There is also a snob value to release a film in theaters. Look at the numbers that you get, compare those numbers to the past films of an actor, past films of the directors. So there is a lot of intangible value that produces get apart from commercial benefit when they do a release in theater. So creative talent is totally unhappy with what's going on. In fact, you would have read Scarlett Johansson, the main lead in Black Widow, has, in fact, filed a case against Disney, objecting to the fact that the film was released simultaneously in theaters and Disney+, which impacted her credentials and her standing as a credible talent within the industry. So talent is clearly not happy. Producers are also finding the commercial benefits are capped when you release it on OTT platform versus when you take it out theatrically. Sky is the limit, right? If a film hits the bull's eye, does well at the box office, you can run it for 6 weeks, 10 weeks. You can make enormous amount of return on your capital. And of course, even the OTT platforms in a very counterintuitive fashion are finding that for a film to register with the consumers, for a film to be well marketed, theatrical release is an important component of the entire value chain. Net-net, I think everyone is moving towards the same conclusion that you need to have windows. Theatrical needs to be the first, platform to be where the film gets exposed and then thereafter you need to follow it up with the other platforms. That seems to be the conclusion which seems to be falling in place.
Great, sir. And just one last question. If I go back maybe 5, 7 years, the movies that we were seeing were largely very concentrated among the big stars or big budget production houses. And over the last, let's say, 3 to 5 years, we had seen a lot of mid-budget, small-budget movies doing pretty good on the box office largely. So the concentration of revenues among the top starers got sort of slightly divided over the last 3, 5 years and -- which was a good news for us in terms of fresh content and variety of content available for the audience at large. With this pandemic being there, are you seeing any changes in that structure? So where I'm coming from is, will we continue to see that diverse sort of content variation of movie rating somewhere INR 10 crores, INR 20 crores, INR 30 crores to as high as INR 100 crores, INR 200 crores even higher in terms of the look and feel and the target audience over there? Or are there any changes happening there?
I mean big, small films -- I mean, you're right, there are films which come with massive production budgets, big actors, and typically were expected to do well at the box office or it is performed at a certain minimum level. Smaller films come with lesser expectation, but our experience has been that ultimately it's the box office which determines whether a film is big or small or medium. While it's difficult to predict future, but our sense looking at what's happening in U.S., what's happening in China, Korea, Japan, the other markets where cinemas have been open for a while, not much has changed. The small, medium budget films, if they are good, if the content is compelling, continue to do well at the box office. In fact, some are exceeding expectations. Our sense is India will not be any different. Also when we opened -- reopened cinemas after the first lockdown, when we looked at the numbers of Tamil films, we got the same response. Whether it's a medium or a small budget, if the content is compelling, if people like the material in terms of trailer, poster, they would come and watch it, irrespective of if it's got a big star or it doesn't have a big star. But definitely having a big star, bigger production value is definitely helpful. But we don't see this balance of small, medium films performing well at the box office if the content is compelling. We don't see that changing as we move forward.
Ladies and gentlemen, we will take the last question now, and it's from Mr. Harit Kapoor from Investec.
I have just 2 questions. Firstly, I just wanted to get a slightly better color on the 4 week near-term window that you guys spoke about. So on this aspect, are we sitting back in negotiations which you're doing with producers to kind of incentivize them to come out? Or is this a kind of tacit understanding with the producer association that we'll look for the next 4 to 5 months. We will assist you to allow you to probably make better returns, overall, given the market, the platform is available. So just wanted to get your sense on that.
All our negotiation are principal to principal. So we deal with producers directly. The commercial terms, all other aspects with respect to -- which are commercial in nature, are discussed with producers and not with any association. So this agreement with respect to windows are short term in nature. They would be film to film depending on when the film is releasing because our goal and our stated goal in all our conversation with the producer is very clear -- is extremely clear that we want to revert back to the erstwhile windows at the earliest possible. So that's what we're doing. We're negotiating with producer on film-to-film basis.
Very clear. The second question is on the cost side. This quarter you actually have done admirably well on the cost side by restricting EBITDA losses to just about INR 110-odd crores. Assuming that you go as per plan over the next 7, 8 months, when you do see reopenings further impact is not as high, and then you do see a gradual pickup in occupancy, et cetera, is it safe to say that June quarter losses could probably be at a peak level and things will only improve from there? I'm not asking for a guidance or anything. Directionally, if things are better from there, they go after what we are thinking as if they did, could this be slightly better every quarter going forward?
Yes. So you're right. I think if things remain the way they are, and we see more unlocking happening and cinema beginning to reopen and film releases beginning to happen, if we don't run into a third wave, clearly, I think we should have the worst behind us. And I think the subsequent quarter incrementally should look significantly better.
So significant subsequent quarter you mean quarter 3 -- or quarter 2, itself?
Quarter 2, I would say we are already beginning August. So the loss is definitely coming down as we reopen and we restart. But yes, I think the real impact would be visible only in Q3.
Yes, I agree because there is an immediate impact when you open up as well, right, in terms of the next quarter.
Yes, that's correct. Yes. There will be a start-up cost as we reopen, and there will be some time lag between when we reopen and the film starts releasing. Real impact would only start getting visible in Q3.
I would now like to hand over the floor to Mr. Ankur Periwal for closing comments.
Thank you, everyone, for being on the conference and helping it to make it more interactive. Gautam or Nitin, would you like to add any closing comments?
Yes. I'd just like to thank everyone for taking out time for the call. And hopefully, by the time we do this next call for the next quarter, I hope all of you have had a chance to visit cinemas and catch some movies at the theaters. So look forward to that. Thank you, once again.
Thank you.
Thank you, sir. Ladies and gentlemen, this concludes the conference call for today. Thank you for your participation and for using Door Sabha's conference call service. You may all disconnect your lines now. Thank you, and have a good evening, everyone.