CINEMA EXHIBITION – WHAT NEXT ?
Cinema is the beacon of hope in society. Cinema so often shows us the very best of what we can be and that is why it is such a powerful and popular medium. Nowhere is this power and popularity more visible than India and across the states, our cinema tradition is growing strongly with more and more new movies every year and a larger and larger media following for our stars and all the movies that they make.
The film industry is one of India’s brightest lights and despite some setbacks, overall the industry continues to be a sought after place to work, invest in and attract capital into. Production with plenty of glamour and obvious fame and fortune attached, is the most well known of the segments. Distribution continues to be a place for people to dabble in and the large US studios are present, signifying that this is a market with huge potential. Finally, the Exhibition space or the actual operation of the last mile of the industry. The theatres, where the content meets its audience and the fate of films are ultimately decided. More and more films are finding a diverse and accepting audience due to the changes in exhibition over the past two decades.
But what of the stresses on the theatres themselves? The establishments that house where people have these memorable cinema experiences? What about their health and growth? It’s true that the exhibition sector has flourished over the past 20 years and alot of what were terribly decrepit theatres have now been converted to plush and premium multiplexes. This has fuelled the clamour for films by making their viewing a more wholesome and comfortable experience. Single screens have seen a tremendous decline in number and influence and the rise of the multiplex has pushed the Indian film industry to heights unseen and has genuinely made the entire sector something to be rivalled overall. Today such is the influence of multiplexes that no film can do without them. This has made multiplex operators into the engine room of growth for entertainment industry and has seen huge businesses grow over a relatively short period of time.
So where does the bubble burst? The obvious comparison between India and China is made time and time again when it comes to cinema infrastructure and there is a growing concern that this engine room is beginning to show signs of wear and tear. China has seen its cinemas strength grow to over 30,000 in the last ten years. In the same period, India has added more multiplex screens but as more and more single screens have closed, the actual screen count has declined. A lower screen count means that even though ARPU (Average Revenue Per User) is going up (higher tickets of the multiplexes), there is a ceiling attached due to the lowering of total occupancy. Couple this with the lack of screen count at the Tier 2 and Tier 3 levels and there is a niche of cine-goers being priced out of the seeing films which is also affecting the volume overall.
The multiplex boom was also directly linked to the real estate boom in the country. There is now a huge shortfall of mall space and real estate space across most large citiess. This will adversely affect new multiplexes opening as the logic behind the spearheading of a new multiplex was the ‘floating population’ needed to drive footfalls. Where will this new injection of real estate space come from? Or do the multiplex owners need to move away from this time and tested idea?
Regulation in many States is also a deterrent. Maharashtra is one of the most difficult places to open a new multiplex with of dozens of licenses needed for many different ministries and agencies. It delays projects and adds to financing cost and overruns. Other States too suffer from this paralysis. Down South, there is ticket regulation which restricts theprice that can be charged at a multiplex. It also restricts the number of shows. This lack of a free market system cannot help fuel growth.
Add to this content that is at times ineffective and unoriginal and growing competition from TV, live events, sporting events and the internet and theatre watching is fighting an extremely tough battle. Traffic conditions and an overall increase in the effort needed to get to multiplexes is another factor weighing against communal viewing. In addition we frequently have madness where our big films have potential bans being threatened or the potential of violence against theatres exhibiting films that have to upset a certain community or political party. Theatres and filmsare a soft and easy target and usually the government is not as helpful as hoped.
There are of course some causes for great optimism. Entertainment Tax has long been a sore point with the exhibition industry and the film business as a whole. The likely abolishment of this and the introduction of GST next year should bring a benefit of almost 10%to multiplex operators which can then be passed on down the line. This will make the industry more profitable overall and though it will not lead to a rationalisation of pricing, it will mean a more comfortable experience and higher investment in infrastructure. This will help bolster the industry considerably.
The expertise of the multiplex operators is also getting better and better every year. More and more data about audiences is being collected and studied and price points and schemes are being introduced to best take advantage of high periods of demand and tempt in slow periods where content may not have the best traction. The reliance on malls is also beginning to wane as more and more operators are looking for strong local niches to build a loyal consumer for their theatres.
Last but not least the ability of our amazing film professionals to constantly come up with wonderful films to entice audiences and drive footfalls is almost never ending. I am constantly in awe of some many new trailers with great new ideas and love going to the cinema with my family to see such a great variety of breath-taking films for a whole host of different audiences. It’s what makes India the largest cinema market in the world in terms of tickets and what ultimately makes the industry thrive. Add to this a viewership that is loyal and loves to go to the movies, all the clouds of doom and gloom in recent months can happily be swept away as one thing is increasingly clear – India and Indians love films and the theatres will always be a place to make wonderful new memories every single year.
From all of us at Mukta Arts and Mukta Cinemas, I wish you a very Happy Diwali!
(Rahul is the Managing Director, Mukta Arts Limited)