Latest Updates

Hrithik to replace Salman in No Entry Mein Entry
Déjà vu for SSR as he gears up for two movies
Saif Ali Khan to play awarrior in a period film
This mega movie is back on the cards, to roll in October

Screen Wars

hi-rise-kamal-gianchandani-president-pvr-pictures-ltdKamal Gianchandani, CEO, PVR Pictures

Currently, India has only seven screens per million people, China stands tall at 23 and is growing at about 4,000-5,000 screens annually. The US, which is the most mature market, is at 123 screens per million people.

India is one of the largest producers of movies, with more than 1,000 films being made annually. However, India is still an under-screened market compared to its counterparts, especially considering the number of films that release every year, including mainstream Hindi cinema as well as regional, Hollywood and speciality cinema. Lately, the market has been driven by content a lot more than it was a few years ago. An upsurge in the popularity of Marathi, Punjabi and even Gujarati films is a clear indicator of the abovementioned phenomena.

The main reason for lack of growth in India is the slow growth of retail infrastructure (especially malls). This is even more apparent in Tier II and Tier III towns. Since the growth rate is slow, the available retail infrastructure becomes very expensive to acquire. The other main reason is a very high entertainment tax structure in our country. The average entertainment tax payout in India for a multiplex operator is about 27 to 28per cent, whereas in China, cinema tickets are taxed at 10 per cent and in the US, it’s 10 to 12 per cent.

Our capital cost structure to develop a multiplex facility and the operating cost structure to run the multiplex and serve our guests tends to be more or less the same (except manpower cost). However, our ability to charge for our services is fairly restricted.

In India, the Average Ticket Price (ATP) is around Rs.87.5 (US$1.25), whereas in China it is US$5.80 and in the US, $8.43 (all figures for CY 2015). In addition, there are artificial restrictions in many states such as restrictions on the number of shows that can be played in a day/screen and the ticket price that can be charged.  Moreover, rampant piracy remains our number one challenge and a staggering amount of revenue and jobs are being lost in India due to this. The part where we score over the other countries is the occupancy rate of our admissions.

Fortunately, we have a strong government at the Centre, with a clear mandate from the citizens, and with a decisive leader at the helm. There is a visible change in the government’s approach towards the film business and with GST becoming a reality in FY 2017-18, we hope a lot of entertainment tax and other tax related issues will subside.

We are regularly following up with the central and state governments for strict laws and committed enforcement with respect to piracy. In addition, many multiplex operators are closely looking at remodelling their economics in order to develop a product that can suit the taste and budget of Tier 2 and 3 towns and which can also be developed independent of malls i.e; on a standalone basis. We do believe that all of these factors will contribute to a much faster pace of growth, going forward.

Cinema is a state subject and heavily regulated by the state governments. While the rules and norms are fairly standardised in all states, the challenge is the red tape due to multiplicity of permissions or NOCs that an operator needs to secure to develop and launch a cinema. Many permissions are also required (on an annual basis) to operate the cinema, which means a lot of resources
need to be allocated for this purpose.

Additional restrictions that states impose (or can impose) on a cinema such as the restriction on the number of shows being played and capping the ticket price that can be charged are our other challenges and risks.

We operate both multiplexes as well as single screens as a part of PVR Cinemas’ chain. I must admit that there is a visible change in consumption pattern, where audiences prefer the choice and convenience of a multiplex vis-à-vis a single screen. This is putting pressure on the economic model of single screen theatres and as a result, there has been a consistent decline in the number of single screens over the last 10 years.

There are many single screens that have invested resources, on a continuing basis, in upgrading their cinemas in terms of projection, sound, screen, seats, lobby ambience, F&B offerings etc, along with improving their service standards in terms of customer safety and security, the cinema team’s training, cleanliness, friendliness and knowledge.

For many people, the experience of watching a wholesome entertainer on a giant screen cinema is still unmatchable. All such single screen operators, who have invested in upgrading their facilities and have improved their service standards, are being suitably rewarded by the cinema-going audiences.

As shared earlier, the biggest bottleneck for cinema exhibitors is the slow overall growth of retail infrastructure. The lack of growth is more apparent in Tier 2 and 3 cities. The other challenge is the high rate of power and high property taxes that cinema operators end up paying.

The main advantage of an acquisition or merger is optimisation of central overheads and other related costs.The other advantage to an operator is the size and scale one gains in the process. The size and scale has long-term advantages in terms of enhanced ability to improve product offerings and service standards, with a lesser per unit incremental cost.

Box Office India
Collection Chart
As on May 20th, 2017
FilmsWeekWeeklyTotal
Sarkar 31
7.82Cr
7.82Cr
Meri Pyaari Bindu
1
7.67Cr
7.67Cr
Chakallaspur1
10K
10K
Alien: Covenant**
1
3.00Cr
3.00Cr
Mantostaan295k7.34L
Mafia Bigg Boss210K30K
More

Featured Video

Most Viewed Articles

Today

Last 7 Days

Last 30 Days

Twitter

Box Office India's Twitter avatar
Box Office India
@boxofficeindia

Watch the trailer of @TubelightKiEid *ing @BeingSalmanKhan & directed by @kabirkhankk @amarbutalat.co/ZSb5Hnii3p

Facebook

Instagram

This Week’s Issue

TRADE GUP

  • Now, Anil Kapoor in Hollywood web series
  • Fanney Khanon track, new studio on board
  • Biopic on shooter Abhinav Bindra on target
  • PeeCee in female-oriented film from Bhansali

IN CONVERSATION

  • Siblings Huma Qureshi and Saqib Saleem get candid about Dobaara
  • The making of biographical docu-drama Sachin: A Billion Dreams

STRAIGHT NEWS

  • BFI acquires Mukti Bhawan for UK
  • Two wins for Cinestaan International Sales at NYIFF