India is a land of diversity. And, as they say, diversity holds the key to unity. Apart from cricket, cinema is the only other thread that binds India. Proof of this are the thousand-odd movies produced annually and 3 billion tickets sold to a cinema-hungry audience, every year. With as many as eight films on the list of highest-grossing Bollywood films in 2011, and four films including Salman Khan’s Bodyguard and three others individually crossing the ` 100-crore milestone, the appetite of India’s movie-goers only seems to be expanding. Much of this success can be attributed to multiplex cinemas that have changed the face of the exhibition industry.
There is no doubt that the future is bright for the cinema industry, and more specifically, for the multiplex players, who account for just eight per cent of the total screens in the country but generate 60 per cent of box office collections. While a FICCI-KPMG report has projected the number of multiplex screens to double over the next five years, the existing number of 11,500 screens (12 screens per million) pales in comparison to 36,000 screens (117 screens per million) in the US or 65,000 in China. This only points to the ample headroom that exists for the industry.
With our brand present in non-metros, including Tier II and III cities, our experience tells us that even these places are coming of age and offering an excellent market for multiplexes. Thanks to a swelling population with high disposable income and aspirations for a trendy lifestyle and exclusivity, there is a huge opportunity for market-savvy brands.
However, one needs to understand the differences in four major aspects in Tier I, II and III cities, in terms of the cinema exhibition business, pricing, technology, infrastructure and
Ticket prices play an important role in attracting the right profile of movie-goer to a multiplex. While the audience in a Tier-I location may find ` 250-350 acceptable if the viewing experience matches the price, it will certainly not be viewed as the right price by the audience in most Tier-III cities and even a few Tier-II locations. Here, the maximum price viewers are willing to pay would be an average ` 150. The audience in Tier-I locations tends to appreciate good movies as content quality matters to them. Investing in top-of-the-line 3D projection systems and luxury viewing offer players in Tier-I locations a chance to build on exclusivity as well as earn higher margins. Upmarket and Hollywood movies work better in these locations while mass movies sell better in other locations. As far as Hollywood movies are concerned, only blockbusters, like Superman, are exhibited in Tier-II or Tier-III locations. Further, these movies are better received if they are dubbed in Hindi or regional languages.
Second, the technology that creates the viewing experience also varies with the location. Viewers in Tier-I locations generally have a cosmopolitan outlook, are widely travelled and well-educated. They expect quality that is at par with international standards and are willing to pay a premium for it. Thus, the latest technological advances like 3D have to be introduced at the earliest in Tier-I locations and projection quality of at least 2-4K and sound quality of 7.1 Dolby Digital or DTS. This is not the case in most Tier-II and Tier-III locations, where customers are generally happy with projection quality below 2K or UFO and sound quality of 5.1 Dolby Digital.
Third, consumers in Tier-I locations are able to appreciate nuances like wall-to-wall carpeting and plush seats. For these consumers, nothing less than good air-conditioning will work. Whereas, in smaller towns and cities, much less will suffice as patrons prefer to save on ticket prices.
Finally, Tier-I viewers want wholesome entertainment and club movies with eating out and even shopping. These consumers are the darlings of every marketeer and advertiser. They create additional revenue opportunities for exhibitors in terms of food and beverages and advertising, and third-party promotional campaigns in the multiplex complex itself. These are higher margin options compared to ticket sales, and globally, multiplex brands earn as much as 48 per cent of their revenues through these options.
Basically, as the consumer’s profile grows more sophisticated as one progresses from Tier III to Tier II and Tier I cities, expectations from the brand also increase.
In the final analysis, true to Bollywood’s style, a star-studded future awaits smart players who plan for quality content, superior services, increased digitisation and well-thought out expansions.