However, the CEO of the country’s largest multiplex chain argues otherwise.
“When you look at the numbers, they tell you a different story. Last year was a record-breaking year. The best we’ve seen in the last decade in terms of revenue earned, admissions, average ticket price, on all parameters,” Kamal Gianchandani, CEO of PVR Pictures, told Quartz. “That, while OTT players are spending on content and marketing to acquire customers.”
In the year ended March 2019, PVR’s revenue from operations grew 32% to Rs3,118.70 crore ($437 million). As of March, footfall at PVR’s cinema halls, too, was up 25% compared with a year ago, while F&B revenue rose 38%, the Print reported.
Clearly, there’s no dearth in demand from movie-goers. If anything, the problem is on the supply side.
India is a terribly under-screened nation. In 2018, China had over 60,000 screens. In comparison, India doesn’t even have 10,000. There are only eight screens per million people, with two-thirds of Indians lacking access to movies when they are released.
“The habit of movie-going has been part of our social fabric but because of multiple factors—high taxation, government regulation, expensive retail infrastructure—our country has struggled to add cinemas at a fast pace,” said Gianchandani. “In spite of that, as an industry, we’ve managed to add about 3,000 multiplex screens in the last 20 years. We’ve come a long way.”
Gianchandani believes the industry is now adding about 300 to 400 multiplex screens every year.
In April, multiplex chain INOX Leisure said it would add 850 screens in the next few years to expand its presence in tier 2 and tier 3 cities. Bollywood actor Ajay Devgn’s theatre chain, NY Cinemas, too, aims to set up 250 screens across India in the next five years.
Along with the increasing screen count, the theatre-going experience has also been enhanced over time.
Next to ticket sales, food and beverages (F&B) comprise the biggest, and growing, share of the revenue pie for multiplexes. This is good news considering that margins on F&B can be huge. For example, in financial year 2017-18, Inox’s F&B operating profit margin touched around 400%.
PVR, which earns over a quarter of its revenue from F&B, has made its food offerings local, serving south Indian dishes in southern India, and launching exclusive in-house food brands such as Simply Sushi.
Other revenue streams include convenience fees from online ticket sales, which quadrupled to Rs130 crore in 2018-19 from Rs33 crore in 2015-16 for PVR. At Inox, the category grew to Rs50 crore from Rs8 crore during the same period.
The biggest share of revenues, though, is box office sales and this can go up only if footfall rises. And the Indian government has tried to make that happen. In December last year, it brought down the goods and services tax (GST) on cinema tickets costing up to Rs100 to 12% from18%, while tickets above Rs100 would attract 18% GST against 28% earlier.
For those who think PVR’s average ticket price of Rs210 is pricey, “we have a practice of variable ticket pricing for weekdays, certain showtimes of the day. You have to price your product differently on days when the demand peaks,” Gianchandani said. “It’s like surge pricing you have on (cab aggregators) Uber and Ola.”
Another big trend in wooing users, Gianchandani noted, was the rise of regional language films dubbed in Hindi. Take for instance, Baahubali. The 2017 blockbuster from the south became the highest-grossing Indian film ever thanks to its release in multiple languages, including Hindi. This year, the Hindi version of Saaho, starring Baahubali-fame Prabhas, also raked in more revenues than its original Telugu version.
Following the birthplace of the content that’s all the rage these days, multiplexes may double in south India by 2012.
The only viable threat, then, is online viewing.
Streaming services, albeit popular, are still no match for the entire cinema-going experience.
“The elevated escapism that you get within the cinemas remains at the core of our business. And that is getting better every year because cinemas are investing so much money in upgrading infrastructure, making people feel more safe within the cinema, training staff to make them much more knowledgable and service-oriented,” said Gianchandani. Personalised service and gourmet food are the cherries on the cake.
But perks aside, the biggest novelty theatres offer is the freshness of content.
“The minimum window between a theatrical release and something coming out on Netflix is eight weeks,” said Gianchandani. “If you want to watch a brand new film, the theatre is the place to go to.”
But what if people just wait out the eight weeks, a devil’s advocate may reason. “There will always be all sorts of people and creators have always competed with technologies. Television, a case in point. DVD, another example. All of these mediums are ways to watch the same content over and over again in different setups,” explains Gianchandani. “But that is against the grain of this businesses. People want to watch it so they can talk about it with their friends, their colleagues and so on.”
Moreover, the OTT industry has become an incremental revenue stream for producers, who are using that money to make bigger and better films for cinemas, he added.
Plus there’s no real formula for success in today’s age. The popular notion was that big-event films like potboilers or large-scale action films did well on screen, whereas the more content-oriented, smaller projects performed better on streaming sites.
Over the last year, though, that claim has been turned on its head. Just ask Bollywood star Ayushmann Khurrana. All his so-called smaller films like Article 15, Bala and Dream Girl, outperformed expectations. In a similar vein, horror comedy Stree, a low-budget project starring Rajkummar Rao, was a massive hit.
Meanwhile, a masala entertainer like the Karan Johar-produced Kalank bombed at the box office despite a stellar star cast and expensive sets, among other things.
Basically, the rules of the game may be changing but one thing is for sure: It’s not curtains for cinemas yet.