Content from Bollywood, other regional languages in pipeline: Cinepolis MD

Cinepolis, a Mexican multiplex chain, is the only foreign company that ventured into India’s complicated film retail business in 2009. The nearly $2-billion Cinepolis has 6,704 screens across 17 countries. Of these, 390 are in India. These brought in (again an estimated) Rs 1,400 crore in revenue placing the company alongside PVR Cinemas, Inox Leisure and Carnival, India's top multiplex chains. Javier Sotomayor, managing director, Asia and Middle East spoke to Vanita Kohli-Khandekar on how Cinepolis plans to get back on its feet in India. Edited excerpts.
 

How has the coronavirus (Covid-19) pandemic and the lockdown affected Cinepolis?
 

The pandemic (and the subsequent lockdown) is an unprecedented event without a parallel in the last 100 years. The exhibition industry has been one of the worst affected industries globally. In India, cinema theatres were one of the first establishments to be shut down in mid-March and continue to remain closed 6 months later.
 

Coming to Cinepolis, this is the first time in the history of the company where we have had zero revenues for over half a year. No company is prepared for such a scenario. The lockdown was announced suddenly. This brought multiple challenges, like finding a way to keep communication with team members and customers. Over time, we have developed robust processes and discovered that teams can interact remotely and maintain a high level of productivity.
 

Looking ahead, we are optimistic about the fundamentals of our industry and to see how the situation is starting to improve globally. Cinepolis has been able to re-start its operations in some markets including the US, Mexico and Spain.
 

What are the three major challenges brfore the company? 
 

The first challenge is to preserve cash. This lockdown situation is dire because of our inability to generate revenues. Furthermore, we foresee a negative cash flow even when the reopening starts, since it will take time for us to get fresh content from film producers, and people will feel insecure about going back to the cinema. We have taken urgent action to address this challenge, including suspending non-essential operating expenditures, implementing reductions in executive compensation, and negotiating with real estate developers, vendors, and other business partners to manage or defer certain costs. This is essential to ensure that the company survives and can re-open once allowed to do so.
 

The second challenge is to convince both government authorities as well as our patrons that cinemas are safe to re-open and re-visit. We have put in place stringent safety protocols based on global best-practices and WHO guidelines. These are in place to ensure that the safety of patrons is maintained throughout the customer journey, from the time they enter the lobby to the time they exit from the auditorium. There have been numerous studies globally which show that cinemas are safer than other establishments including restaurants, which have been allowed to open. In cinemas, people sit in silence, with their heads pointing towards the same place. Seats could be easily programmed to be booked keeping social distancing restrictions in place.
 

The final challenge lies in securing new movies to be released in cinemas. Many producers have decided to release their movies on digital platforms. Although we regret their decision, we understand this extraordinary situation demands exceptional actions. On the other hand, we have received the support of producers who are holding their films until cinemas reopen.
 

What is Cinepolis's reboot strategy? Is it different for different parts of India?
 

Our overall strategy consists of three phases. The first is the pre-opening phase. In this we will get all equipment and manpower back into operations mode. All safety protocol training and certification of our staff will be completed. This also includes evolving the entire cinema-going experience for our patrons in-line with the new safety protocols.
 

The second is the opening and ramp-up phase lasting 12 weeks from opening. We will communicate the safety protocols as well as the movie line-up to our patrons and continue to scale up our operations as more and more patrons start coming back to cinemas. There may be a staggered opening of cinemas around the country based on state government guidelines or a simultaneous opening pan-India and we are prepared for both the scenarios.
 

Finally, a new normal will be in place from week 13 onwards. We expect certain changes made in the experience will remain permanently including the digital-first approach to ticket booking and ordering food and beverages.
 

How is the on ground situation for Cinépolis in India different from other countries in Asia?
 

If we look at most of the other countries in Asia, the lockdown in India has been significantly more severe. For example, Japan and Singapore had short lockdowns of 8 to 10 weeks and in South Korea, there was never a shutdown of theatres. So, compared to India, the exhibitors in these countries are in a much better position.
 

Moreover, numerous studies abroad have shown that cinema-going should be considered as a medium risk activity, not a high-risk one. According to a study by researchers at the University of Cassino and Southern Lazio (Italy) and Queensland University of Technology (Australia) droplet and fomite transmission in an activity where people are resting without talking (like cinema-going) is lower. It is 14 times lower than say going to a restaurant and 90 times lower than in an activity that involves speaking aloud or singing.
 

Is the availability of new films going to be a problem when theatres open up?
 

India is better placed than other markets. There is a vibrant and active domestic movie production industry which churns out over 1,000 films every year. Most other Asian markets are reliant on Hollywood content which releases 350-400 films in a year globally.
 

While the outlook for new Hollywood content is moderate for 2020, there is a strong pipeline of over 80 titles from Bollywood and other regional languages waiting for release in theatres, in India.
 

However, there will be an initial ramp-up period. We would be opening with national and regional film-festivals showcasing classic and ever-green movie content to pull patrons back to the cinemas.