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The multiplex revolution and beyond

LiveMint logoLiveMint 06-07-2017 Lata Jha

New Delhi: Nineteen-year-old Shikha Jha is such a film buff that every new release is a source of excitement for her. She doesn’t have a favourite film; she’s interested in absolutely any new release. And yet, the young movie fan has never been to an actual cinema hall.

“I really want to but it’s unaffordable,” says the Delhi University student. For her father employed in the cargo department of the capital’s international airport, Shikha’s education, commute and other daily expenses are already too high to splurge on the latest movie released at any of the multiple cinema halls in Delhi—a city that, like any other metro, is losing its single screens as rapidly as a substantial chunk of its theatre-going population.

The shutdown in April of iconic halls like the 84-year-old Regal Cinema in Connaught Place and the 56-year-old Shiela in Paharganj are reflective of not just the near-extinct single-screen culture in metropolitan cities but also a cinema-viewing generation that’s quite comfortable watching films sans the big-screen experience.

Screen time

According to the Ficci-KPMG Media and Entertainment Industry Report 2017, by the end of 2016, there were around 6,000 single screens and around 2,500 multiplex screens in India. Multiplexes have been adding screens at the rate of 8-9% annually over the past few years (in 2016, multiplexes together added approximately 200 screens across the country and trends indicate that the industry is likely to continue to grow at a similar pace—adding 150-200 screens a year). On the other hand, on an average, 3-4% of single screens have been closing down every year.

Further, as industry experts point out, the multiplex revolution in India has followed an organic trajectory of consumer need evolution. In the 1980s and 1990s, film theatres were not places to be visited with the family. Halls were dingy, dilapidated and ill-ventilated buildings, with uncomfortable seating, unclean, uncarpeted flooring, unhygienic food and toilets.

In 2016, multiplexes together added approximately 200 screens across the country and trends indicate that the industry is likely to continue to grow at a similar pace—adding 150-200 screens a year

“The major driving force behind multiplexes was a demand from consumers for a better movie-watching experience in general,” says Siddharth Jain, director at INOX Group, which owns INOX Leisure. “The average consumer was waiting for an alternative (to single screens), a more hygienic setting, better sound and viewing quality, an overall upgraded experience.”

With economic liberalization in the 1990s, the time was right as well, Jain added, and several state governments acknowledged the need for upgraded services and provided tax exemptions to multiplex chains.

Meanwhile, the central government allowed 100% foreign direct investment in the exhibition business. And some states rationalized their entertainment tax structure. Before this, exhibitors were paying as much as 50% of the ticket price as entertainment tax. Several state governments such as Maharashtra and Uttar Pradesh introduced entertainment tax holidays to encourage the capital-intensive exhibition business.

Apart from consumer awareness, the transition from single screens to multiplexes may also be attributed to the marked rise in the 1990s in the number of Hollywood films being exhibited in the country. Traditional 1,200-seaters were difficult to fill for foreign-language films.

“Earlier they had a rationing system on Hollywood movies. Only select films could come to the country. (But after liberalization), foreign content was allowed in more liberally,” says Utpal Acharya, founder of film production, distribution and marketing company Indian Film Studios.

The average single-screen cinema hall in Delhi seated 800. Rajouri Garden’s Vishal Cineplex could house 1,500, he added. “The irony was that while a horror adventure like Anaconda could fill up a single screen (hall), a new-age romantic comedy or smaller films of that kind could not fit into a Sangam or Priya or Delite (Delhi’s oldest single screens),” says Acharya. “Either they were playing in the morning show or only in the weekends or sometimes in special shows. Great Hollywood movies were not finding an audience because they only fetched 3-4% occupancy. That’s when the need for smaller screens, and not ‘multiplexes’ per se, arose.”

The real turnaround, at least for Hollywood flicks, happened after a multiplex was opened by PVR at Saket in New Delhi with two screens of 150 seats each and two of 260 each. Bollywood was quick to adapt to the change and started experimenting with more urban content, coming up with crossover offerings such as Nagesh Kukunoor’s romantic comedy Hyderabad Blues (1998) and Mira Nair’s Monsoon Wedding (2001).

Regional cinema too made inroads into hitherto alien markets as subtitled Bengali and Marathi films were released in Delhi, and Punjabi films went to Mumbai.

Picture not rosy

Nearly 20 years on, while any independent entity can set up a cinema chain as long as it can comply with the nearly 29 steps to obtain an operating licence, the picture for multiplexes is not entirely rosy. Of the 2,500 multiplex screens in the country, the top three companies, PVR Cinemas, INOX Leisure and Carnival Cinemas, operate 1,500-1,800 screens.

“Multiplexes were profitable probably three years ago until service tax came along,” says Jain of INOX Group.

Currently, multiplex operators pay entertainment tax (which is a state subject and varies from state to state) of 21-22% on their gross box-office collections, on a pan-India basis. They also pay value-added tax of 11-12% on an average on sale of food and beverages.

“The second major hit currently is the cost of real estate across the country. Our ticket prices are not going up at the rate the real estate and property market is going up. With the increasing number of cinema screens across the country, competition is growing. But the biggest problem we face is the lack of availability of good-quality real estate at affordable prices,” says Jain. “Most of the equipment we use inside the cinemas is imported, the same stuff costs 30% less in the US whereas our ticket prices are one-fifth or one-eighth of what they charge. Our equipment cost structure and rentals are higher, and our revenue streams are one-fifth. So it’s getting pretty tough.”

Multiplexes turned watching a film into an experience. That said, a sizeable chunk of the population remains alienated from it—and consequently big-screen movie viewing altogether.

According to the Ficci-KPMG report, the average ticket price (ATP) for PVR Cinemas at the end of 2016 was Rs191.20, while for INOX Leisure the figure was Rs176.20. For a big-ticket film like Baahubali 2: The Conclusion, the tickets can be priced as high as Rs2,400. Even a regular Rs500 ticket can mean an expense of Rs2,000 for a family of four, exclusive of food and beverage costs.

While the chains price tickets in relation to real estate prices in a city, a substantial section of society cannot afford them, particularly in the bigger cities. Film buff Shikha Jha’s acquaintance Aniket Jha has only seen four-five films in a theatre so far in his life.

“I definitely haven’t been to the theatre in the past five-six years,” says Jha. “Films are a great stress buster and you get to learn so much. But a one-time visit will at least cost us Rs500 per person.”

Jha says his cab driver father, homemaker mother and brother catch films on television when they are shown a couple of months after their theatrical release, but films like Baahubali 2: The Conclusion make the usual wait particularly excruciating.

“It’s always tough to wait and sustain interest in a film. My father justifies avoiding the expense by saying it’ll be on TV soon or that if we save up, we can use the same amount to buy something for ourselves,” says Jha. “But in the case of Baahubali, because one has waited two-and-a-half years for it and now you know it’s here, to keep at it another one-and-a-half months seems impossible.”

Multiplexes, on the other hand, emphasize the difference in the movie-viewing experience that they’ve brought—providing the perfect weekend outing. They argue that in a competitive economy, theatres are the cheapest form of entertainment for the entire family. Add to this, differential pricing and special offers depending on days and show timings.

“A multiplex does not fall under the category of a necessity, it’s a luxury segment. That’s how they will be able to sustain,” says Devang Sampat, director (strategic initiatives) at Cinépolis India.

“Within the luxury segment, it’s one of the cheapest forms of entertainment and gives you an opportunity to spend time with the family. If you compare the ATP of our multiplexes with any other economy with the same target audience, we will be one of the lowest given that our investments are the same. It is a luxury form of entertainment, it comes at a price and if the returns on investment are not justified, the experience will not be upgraded,” points out Sampat.

Pocket friendly option

Where does that leave the part of society that remains untouched by the concept of luxury but equally keen to watch films?

“For those who cannot afford (those rates), there is us,” says Manoj Desai, executive director of Mumbai’s G7 multiplexes (the city’s first multiscreen theatre) and Maratha Mandir cinema. “Yes, there are some who want to recoup everything in the first four-five days. But we ask for less rent and keep prices low to attract customers. It’s not about single screens or multiplexes. It’s about how you run the business.”

Multiplexes charge upwards of Rs300 today but G7 has still maintained rates of Rs100 and Rs120. “Rs500 doesn’t work for the daily-wage labourers who are running entire homes and seek some form of entertainment at the end of the day. And unlike earlier, it’s not like the film is going to run for 25-50 weeks in the theatre. It will be on TV within three to four weeks. In that competitive scenario, we keep our rates low, and provide good stereo sound, etc. and manage good collections,” says Desai.

The G7 group that comprises seven single screens within the same complex—Gaiety, Galaxy, Gemini, Glamour, Gems, Gossip and Grace—raised its rates only recently to Rs60 and Rs80 from Rs30 and Rs50, respectively.

“In my school and college days, we’d bunk class and queue up to watch a film. That was the craze because there were no alternatives—video, CDs or DVDs. Today if the film is releasing on a Friday, you can have the film on your phone on Thursday. Plus, you can book the exact show and number of seats you want through BookMyShow. It’s an incredible technological revolution,” says Desai. “This is a challenge and because of which, the ones charging Rs300-400 are footing losses. We run on 60% occupancy. Obviously we’re not happy but where do we go? This is what we’re meant to do.”

Stark difference

For a generation that did not grow watching films in a multiplex, the difference in film viewing is stark.

“I get nostalgic sometimes and miss the noise and ambience of the single screens,” says Pallav Jha, a former schoolteacher and movie buff who grew up in Delhi in the 1970s and watched movies in theatres like Kamal Cinema in Safdarjung Enclave and Raj Talkies on Ring Road.

Theatres were large, well-planned and always had two levels. The waiting area was equally large and had seating of its own, which would quickly get filled during intermissions for longer movies like Mera Naam Joker. The walls were covered with posters depicting scenes from the film, so you’d get an idea of what to expect before watching the film. Some movie theatres such as Rupak and Sangam had special private box-like spaces for families and ladies’ groups. The most expensive tickets were sold at Rs4.50, recalls Jha.

For Jha, going to the movies in the 1970s was an outing. “It was an event and you prepared and dressed up for it. You had fewer entertainment options but today it’s a very casual thing. Initially, when the multiplexes came in, it was a feeling of awe. The seats were better but the halls were smaller. You didn’t have a balcony. But the carpeted floors and the holder to keep your drink, were all new. Slowly, you got used to it all,” she notes.

The cushy multiplex experience may be what most of us associate film viewing with today. But away from the carpeted floors, instant online booking and the big screen, India’s metropolitan cities as well as its small towns and villages retain their passion for movies in unique and striking ways. In a three-part series, Mint looks at the film-viewing experience in India 20 years after the country’s multiplex revolution.

Part 1: Why Rural India does not miss big screens

Part 2: The multiplex story in small-town India

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