Now screening: Data analytics in a multiplex near you

One would not normally consider a multiplex business as being at the cutting edge of data analytics, and that assumption would be, for the lager part, right. Whilst ecommerce, telecom, banking and even retail has been quick to harness its customer data, multiplex chains don’t often feature as case studies for data analytics. But that, like many things in the world, is changing rapidly, and right here in India to boot.

Multiplex chains with the foresight to set up systems to capture data and house it are now tapping into it to gain competitive advantage. ICRA estimates show that India currently has around 2200 screens, and is expected to have 3000 of them by FY19 so this move has not only been a long time coming but also a step in the necessary direction given the expected increase in the number of players and the sources of investment such as FDI.

The top areas where data analytics is being put to use include customer analytics, pricing and margin optimization, bundling and offer creation, sales forecasting, and screen analytics.

Customer analytics is where most are putting their weight behind first. Having run loyalty programs and captured mobile numbers and email IDs on online booking systems, they’re now looking at reaching out to customers better. Understanding and predicting who’s going to come this weekend, what movie they’ll watch, how many seats in what kind of pricing, whether they’re going to buy the samosa and coffee or nachos and cola. The opportunities to offer a better experience off the back of the data they have are immense, and that’s exactly why it’s the prime initiative.

A close second is pricing and margin optimization. Ticket pricing is probably the single biggest influencer of revenues and profits, and one that can do with a lot more decision support. Setting prices for the afternoon vs. late night, weekday vs. weekend, Salman Khan starrer vs. arthouse flick is something done basis the experience and instinct of many well-intentioned managers. And it’s often a distributed process, not something centrally dictated. In that scenario to offer up a guideline to follow basis past pricing and its impact on occupancy is a big area for data analytics to step in. Similarly, there’s the area of pricing and bundling FnB as well, an area where a lot of margin rests for the multiplex.

And then there’s the holy grail – predicting sales which, in part, also means predicting how well a movie is likely to do at the box office. This area is one which is the kind that the Quants would want to spend all their time working on, but also one that will be met with some caution by business folks as it’s an area with too many unknowns, and very many risks. However, when it comes to forecasting ticket and online sales the methods will certainly improve predictability, and the business can benefit from knowing relative sales across screens, up and down trends.

Multiplexes abroad and online ticketing start-ups globally have capitalised on such data for pricing and ticket forecasting. Ticket sales forecasting, in fact, not only helps predict overall expected sales, but even for particular periods like weekends, sales made through apps, sales made online etc. F&B sales, occupancy levels and movie-wise collections. We currently work with a Multiplex chain who has identified opportunities where lower ticket prices would have boosted occupancy, and where higher prices would have bolstered margins with any loss in sales. They are also estimating weekly sales by channel and screen and tweaking their strategy accordingly.

We expect that the growth in the use of analytics by and for multiplexes is inevitable. There has been a rapid shift from traditional box-office businesses to online models. As customer engagement increases, the increase in reviews and ratings, feedback, and changes in the quality and delivery of content, the need to use analytics will certainly increase. Currently, the top players in Indian multiplexes are definitely ahead of the curve in adopting analytics to capitalise on the advantages.

There has been news recently that multiplexes are also harnessing the demand in Tier II and Tier III cities in India, and with large-scale smartphone and internet penetration even in semi urban areas, we expect that multiplexes will have no challenges in obtaining data for offering quality experiences to audiences. Regional and niche cinema have also been trending on multiplex screens lately, and while these may not pull the conventional Saturday night crowds, using analytics can help multiplexes understand the best times to screen such movies for crowd and screen optimisation.

The writer is co-founder and MD, Cartesian Consulting