Multiplexes expect 25% rise in operating cost due to Covid-19 SOPs

Multiplex operators expect up to 25 per cent rise in their operating costs on account of the mandatory standard operating procedures as they reopen after being shut since the outbreak of coronavirus pandemic.

Multiplexes in India reopened this Thursday for public screening after nearly seven months, and they are offering incentives along with their channel partners to woo cinema lovers back to the auditoriums.

With the availability of fresh contents becoming a challenge, the operators are planning re-run of old films and film festivals to bring the audiences back.

However, they are taking steps to cut spending across all departments and a freeze on all non-essential expenditures to offset higher operating costs due to the standard operating procedures (SOPs).

"For the entertainment industry, we are forecasting an increase of around 25 per cent in our prevailing operating expenses as per the new SOP," MuktaA2 Cinemas Business Head Sachidanand Shetty told PTI.

This is indeed the need of the hour to ensure and uphold the Indian Public Health Code for the guests, he added.

Terming the increase in operational expenditure (opex) as a "necessary devil", PVR Joint Managing Director Sanjeev Kumar Bijli said it could not be avoided.

The company has incurred capital expenditure as well in procuring certain equipment and other products, including sanitisation machines all over the cinema chain.

"As far as the increase is concerned, we have to cut corners somewhere else. So of course, we are not looking at full staff capacity at the moment because we know that our occupancies may be low, to begin with," Bijli said.

Fewer shows mean lesser power consumption, fewer truncated menu means lesser food costs, he added.

"So, somebody will have to strike a balance and you have to make up for this increase in opex because you cannot simply avoid it," he said.

Expressing similar views, Cinepolis India Chief Executive Officer Devang Sampat said, "Operating costs have gone up substantially following the implementation of SOPs. However, we believe in providing our patrons a world-class movie experience and following the best safety protocols is part of that experience".

He further said, "We have taken a number of measures to mitigate costs, including spending cuts across all departments and a freeze on all non-essential expenditures".

To woo cine-goers even as the pandemic rages, the multiplex operators are offering schemes like cash backs besides reducing prices on the food and beverages.

"We have tied up with our ticketing partners to provide some exciting offers to our patrons. With these offers, we are providing up to 100 per cent cashback on certain bookings," Sampat said.

PVR is also working on a pricing matrix that includes a ticket price of as low as Rs 69 for old and rerun films.

"We are giving special offers for privilege card members. We have over 10 million privilege cardholders now. Our gift cards would be offered at a 30 per cent discount...Considering that we will be playing a lot of older films and re-runs, we will also have festivals, the pricing that we are offering is low," Bijli said.

PVR will run promotions with its channel partners to incentivise customers to come back to the cinemas.

Shetty said MuktaA2 Cinemas will also be ensuring the same.

"We are going to provide our guests e-vouchers with a redemption validity till the end of the fiscal year," he said.

Multiplexes and cinema halls will also face some other challenges as they need to spend additional time on cleaning and sanitisation immediately after shows get over and then have to be ready for the next screening.

Under the new SOPs, the cleaning time of an auditorium has also gone up as it has to be properly sanitised before another show.

Moreover, timing has to be changed as some states have put a time limit in the night for commercial activities and multiplexes cannot run the show after that period.

The central government allowed multiplexes, cinema halls and theatres to reopen from Thursday within the framework of a set of standard operating procedures (SOPs). The Ministry of Home Affairs (MHA) left it to states to take a final call on the matter.

The SOPs mandated by the central government include one seat distance in halls, 50 per cent capacity, masks at all time, proper ventilation and air conditioner temperature settings at above 23 degrees celsius.