The Outsider Posted June 20, 2012 Posted June 20, 2012 Just in case - Great businesses never do business to earn money. Their main motive is the company's mission. Sure, they make moneys along the way but that's not their aim. This includes companies like Apple, Facebook and HP. Here's a quote from Walt Disney This is not to say business don't make profits, sure they do. But, it's what they do with such profits defines who they are. Oh please! And is that why Disney charges $5 to ship your tickets domestically when the USPS shipping charges are less than a dollar?
Crookbond Posted June 20, 2012 Posted June 20, 2012 Forget about everything else and just take the credit card transaction costs they have to pay as vendors - I am not sure of the exact number in India but my guess would be it's around the 2% range. A person buying in person is highly unlikely to pay for a Rs. 200 ticket by credit card whereas the theater owner has to pay 2% of that for every credit card transaction online. Rs.8000-10000 would just be the server cost I guess. We aren't talking normal credit card swipes and the assumption here is that these costs haven't been accounted for in the normal ticket price. I don't think that assumption is valid.
Crookbond Posted June 20, 2012 Posted June 20, 2012 Oh please! And is that why Disney charges $5 to ship your tickets domestically when the USPS shipping charges are less than a dollar? Walt Disney is no longer around. :--D
The Outsider Posted June 20, 2012 Posted June 20, 2012 Bookmyshow.com is the leading entertainment ticketing portal in the country, with a 90% market share. It is also one of the top five transacted websites in the country, with sales peaking over 1 million tickets, and customer spends of over Rs.100 million, on an average every month. Bookmyshow.com has ticketed for over 750 screens across 86 cities and has partnerships with all major Indian production houses and studios with real time ticketing for most major cinema chains. 1,000,000 tickets across 750 screens is around 40 tickets per screen per day - that's a very small fraction of the total volume.
akshayxyz Posted June 20, 2012 Author Posted June 20, 2012 I don't think they are saving any costs by getting rid of one or two persons with a salary of Rs. 8000-10000 per month. That would just be their server costs and there are so many other costs involved in running an online payment system. Of course, one can't say for sure without looking at their detailed accounts but prima facie it doesn't appear to me that they are saving any costs. What I meant - in other words, from whatever little I know of selling/business/practices/. Their product is movie tickets, and not online ticketing. So, they better share the cost of a 'feature' with whole customer base, and do whatever it can to popularize that cost-saving feature. As for the cost of manual labor vs server - it is not that for every 1 person they remove from the counter, they have to bring one server online. PVR has about 20-30+ cinema halls all over India even if they remove just one person from each location - that saves about 25*8000 = 200,0000 Rs per month. Which should be more than enough to maintain a server that can cater many more txns per month than those 20-25 guys would have. As for the initial cost, someone can do exact RoI, but I would guess it wont take more than 1-2 years to recover. They (PVR, irctc) are able to survive, because either there are no competitors or even they are following same practice. And this movie hall business is very difficult and slow to enter, so they are not going to face any 'good' competitor any time soon.
The Outsider Posted June 20, 2012 Posted June 20, 2012 We aren't talking normal credit card swipes and the assumption here is that these costs haven't been accounted for in the normal ticket price. I don't think that assumption is valid. Even if it is somehow incorporated in the ticket price beforehand, it still remains something extra that they have to pay for the online service.
Crookbond Posted June 20, 2012 Posted June 20, 2012 1' date='000,000 tickets across 750 screens is around 40 tickets per screen per day - that's a very small fraction of the total volume.[/quote'] It is still is much more than they have to maintain their e-commerce websites. Check the costs it takes to manage websites it's peanuts to every Rs. 30/- per ticket charged as a convenience fee. That's an exorbitant amount by any stretch of imagination.
Lurker Posted June 20, 2012 Posted June 20, 2012 'Customer Experience' is the keyword here. Companies like Apple are successful because they create such a great 'experience' to users. It is not as cut and dry when it comes to Customer experience really. You can walk to a vegetable market in India, say, purchase your potatoes, spinach and some green leafy veggies and after you have done the payments, ask the vendor to throw in the green chillies and lemon, and you know what he will do that too. Try that at your nearby Safeway, Frys, Meijers and see what the Supermarket Manager tells you :winky: Or purchase a TV/fridge/AC etc in India. Chances are the salesman would be readily eager to sell you stuff, often to the point where he would throw in free delivery. Or work with his owner to get you that. If you are outside India you can kiss goodbye any chance of free delivery. Please make sure you pay for fridge, rent a U-haul and then haul it home, and once you have it over there feel free to hook it up too. I get the point you are trying to make about customer experience but in many, if not most, cases customer experience in India is inherently better. Ever tried getting your darji to make your trousers, try that too..and thank heavens it is India..:winky:
Crookbond Posted June 20, 2012 Posted June 20, 2012 Even if it is somehow incorporated in the ticket price beforehand' date=' it still remains something extra that they have to pay for the online service.[/quote'] NO - The 2% charge is already incorporated in a ticket. If you pay by a credit card, it goes to the companies ; if not to the cinemas. It's not the same in online. You pay an additional surcharge over the 2% already incorporated into the ticket. Even for website maintenance costs, it has no justifications.
Crookbond Posted June 20, 2012 Posted June 20, 2012 It is not as cut and dry when it comes to Customer experience really. You can walk to a vegetable market in India, say, purchase your potatoes, spinach and some green leafy veggies and after you have done the payments, ask the vendor to throw in the green chillies and lemon, and you know what he will do that too. Try that at your nearby Safeway, Frys, Meijers and see what the Supermarket Manager tells you :winky: Or purchase a TV/fridge/AC etc in India. Chances are the salesman would be readily eager to sell you stuff, often to the point where he would throw in free delivery. Or work with his owner to get you that. If you are outside India you can kiss goodbye any chance of free delivery. Please make sure you pay for fridge, rent a U-haul and then haul it home, and once you have it over there feel free to hook it up too. I get the point you are trying to make about customer experience but in many, if not most, cases customer experience in India is inherently better. Ever tried getting your darji to make your trousers, try that too..and thank heavens it is India..:winky: I think the hospitality industry in India is the best in the world - agreed. Also, lets remember the difference in business cultures here. In the US, you own more profits on the "service" than on the product. In India, it's the other way round. The TV/Fridge/AC cost prices are better deals in the US than in India. I don't want to compare the markets but FWIW the movie cinemas IMHO are swindling good money by charging these "convenience" fees.
The Outsider Posted June 20, 2012 Posted June 20, 2012 What I meant - in other words, from whatever little I know of selling/business/practices/. Their product is movie tickets, and not online ticketing. So, they better share the cost of a 'feature' with whole customer base, and do whatever it can to popularize that cost-saving feature. As for the cost of manual labor vs server - it is not that for every 1 person they remove from the counter, they have to bring one server online. PVR has about 20-30+ cinema halls all over India even if they remove just one person from each location - that saves about 25*8000 = 200,0000 Rs per month. Which should be more than enough to maintain a server that can cater many more txns per month than those 20-25 guys would have. As for the initial cost, someone can do exact RoI, but I would guess it wont take more than 1-2 years to recover. They (PVR, irctc) are able to survive, because either there are no competitors or even they are following same practice. And this movie hall business is very difficult and slow to enter, so they are not going to face any 'good' competitor any time soon. I am not sure they can remove even one person because tickets still have to be picked up, but let's assume that to be the case. At this point PVR has two options - it can set up it's own server and payment channel something they are unlikely to do because it's like entering a new business or they can outsource it to some online booking vendor, which I assume is what they are doing now. In which case there will always be recurrent monthly charges and fees. Going by the numbers above, 40 people book their tickets online per day at a PVR - that does not seem a large enough number for them to tweak their model. If it becomes 400, yeah, they would need to rethink.
akshayxyz Posted June 20, 2012 Author Posted June 20, 2012 1' date='000,000 tickets across 750 screens is around 40 tickets per screen per day - that's a very small fraction of the total volume.[/quote'] Look at it this way - how many man-hours at the counter to you need to serve 1,000,000 tickets? For the computer part I know the answer, it can't be more than couple of servers ( including fail-over). Let me attempt the manual cost also. For simplicity - assuming 0.5 minute per ticket ( some tickets would be bought in pair, bullk, but sometimes 2 tickets would take 2-3 minutes of deliberation with the counter guy. So, about 500,000 minutes ~ 8000 man hours. (rounded to lower 1000) Assuming a salary of about Rs 40 per man-hour (8000 per month - 24 days in a month 8 hours a day) 8000*40 ~ 300,000 Rs per month. Maintaining a server to support that much volume is definitely not that much ( which is why BookmyShow is able to pay salaries to its staff!!) So, you do not even need to do calculation - if 1,000,000 sales of BookMyShow would have been replaceable by providing cheaper manual labor - some one would have done by now - in the land of baniyas and gujjus.
Lurker Posted June 20, 2012 Posted June 20, 2012 I think the hospitality industry in India is the best in the world - agreed. Also, lets remember the difference in business cultures here.In the US, you own more profits on the "service" than on the product. In India, it's the other way round. The TV/Fridge/AC cost prices are better deals in the US than in India. I don't want to compare the markets but FWIW the movie cinemas IMHO are swindling good money by charging these "convenience" fees. And thats the key is it not? TV/fridge were just example. You are easily expand that to say medicines. Your neighbourhood drug shop would deliver it at home when you are sick. No such pleasure when you are abroad. Everybody from your halwai to kasai delivers mithai and meat. Almost to the point where an average Joe is too lazy to go outside his house to buy daily purchases. I concede I dont have much idea about this convinience fee so would probably quiet, my point was more to do with overall customer experience, which personally I find much better in India often
The Outsider Posted June 20, 2012 Posted June 20, 2012 NO - The 2% charge is already incorporated in a ticket. If you pay by a credit card' date= it goes to the companies ; if not to the cinemas. It's not the same in online. You pay an additional surcharge over the 2% already incorporated into the ticket. Even for website maintenance costs, it has no justifications. I don't know how you can be so sure - in fact, when cinemas did start accepting cards or when they started online booking I don't remember any specific announcement saying we are increasing our cost because we are now allowing credit card transactions.
akshayxyz Posted June 20, 2012 Author Posted June 20, 2012 Addendum to #92 - for 750 screens you need at least 750 folks at the counter = 750 *8000 = 60,00,000 :omg: Even if you consider only 10% of them would need additional guy - still 75*8000 = 600,000 is double of my conservative estimate above.
Crookbond Posted June 20, 2012 Posted June 20, 2012 I am not sure they can remove even one person because tickets still have to be picked up, but let's assume that to be the case. At this point PVR has two options - it can set up it's own server and payment channel something they are unlikely to do because it's like entering a new business or they can outsource it to some online booking vendor, which I assume is what they are doing now. In which case there will always be recurrent monthly charges and fees. Going by the numbers above, 40 people book their tickets online per day at a PVR - that does not seem a large enough number for them to tweak their model. If it becomes 400, yeah, they would need to rethink. Btw - the numbers I posted of BMS were of 2009 and are approximate. The number of screens have also increased to more than a 1000 as of mid-2011. I think the number of tickets per day is pretty huge now.
Crookbond Posted June 20, 2012 Posted June 20, 2012 And thats the key is it not? TV/fridge were just example. You are easily expand that to say medicines. Your neighbourhood drug shop would deliver it at home when you are sick. No such pleasure when you are abroad. Everybody from your halwai to kasai delivers mithai and meat. Almost to the point where an average Joe is too lazy to go outside his house to buy daily purchases. I concede I dont have much idea about this convinience fee so would probably quiet, my point was more to do with overall customer experience, which personally I find much better in India often I get your point and hence my comment on the hospitality industry but that's because there's a difference in business cultures across these countries.
The Outsider Posted June 20, 2012 Posted June 20, 2012 Look at it this way - how many man-hours at the counter to you need to serve 1,000,000 tickets? For the computer part I know the answer, it can't be more than couple of servers ( including fail-over). Let me attempt the manual cost also. For simplicity - assuming 0.5 minute per ticket ( some tickets would be bought in pair, bullk, but sometimes 2 tickets would take 2-3 minutes of deliberation with the counter guy. So, about 500,000 minutes ~ 8000 man hours. (rounded to lower 1000) Assuming a salary of about Rs 40 per man-hour (8000 per month - 24 days in a month 8 hours a day) 8000*40 ~ 300,000 Rs per month. Maintaining a server to support that much volume is definitely not that much ( which is why BookmyShow is able to pay salaries to its staff!!) So, you do not even need to do calculation - if 1,000,000 sales of BookMyShow would have been replaceable by providing cheaper manual labor - some one would have done by now - in the land of baniyas and gujjus. BookMyShow is able to do it because it is running a consolidated business for many movie theaters. If individual movie theaters or even a chain like PVR was running their own set up, they would not have been able to sustain it. For running this consolidated business, BookMyShow charges the theater owners who pass some of it on to the customer because ultimately it's the customer who is benefiting immensely from this service.
ganeshran Posted June 20, 2012 Posted June 20, 2012 There woud no reason for them to charge is a weak argument. They "are" charging that's the point. Flawed logic again. My point is that they are charging extra for offsetting the costs they have to pay for servers and transaction costs. These convenience charges comes close to 10% of the ticket fee. Transaction charges itself are in the range of 4-5% of each financial transaction and the remaining costs are for maintaining the servers and developing the website which is another 4%. The no reason point was to highlight that they are charging because there no net savings in the online model currently, something which you asserted there are just a few posts back. You are making a speculative position on the "online customers". So here's some data for you - Now, you do the math and tell me that the cost of the servers & websites are more than the "convenience" they benefit. The less "online customers" is a pure fallacy of the modern India. Bookmyshow which is the leading site in India sells 1 million tickets a month which is spread across 750 screens. This comes to 44 tickets per day, out of a total capacity of atleast 1200 (4 shows a day). This is just 3% of the total movie goers, not a large percentage at all. Add to that a 5% transaction charge to each of the million transactions, salary paid to employees, bookmyshow's own commission that it collects from the theater, infrastructure costs and the convenience charge becomes a necessity for theaters. The alternative would be to bundle it in the ticket itself, but that would increase the prices for the majority who buy tickets at their counter.
akshayxyz Posted June 20, 2012 Author Posted June 20, 2012 BookMyShow is able to do it because it is running a consolidated business for many movie theaters. If individual movie theaters or even a chain like PVR was running their own set up' date= they would not have been able to sustain it. For running this consolidated business, BookMyShow charges the theater owners who pass some of it on to the customer because ultimately it's the customer who is benefiting immensely from this service.http://en.wikipedia.org/wiki/PVR_Cinemas Not that small chain. 40 locations, 40 less guys at counters - should be enough to cover the cost of server, which can easily be scaled to service 100s of more screens they might be planning to come up with. Fair point. As for PVR:
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