Multiplexes feed on blockbusters

Multiplexes are having a silver-jubilee day as business is booming and revenues may see growth of 25% in the coming year

Virtually every weekend since the beginning of this year, a new movie has seen the cash registers ring; some have grossed record collections at the box office and the trend is true across genres. Six films released this year have grossed more than Rs 50 crore at the box-office. Among them are Yeh Jawani Hai Diwani (Rs 182 crore), Race 2 (Rs 96 crore) and Ashiqui 2 (Rs 78 crore).

Buoyed by these high grossers, multiplexes are having a silver-jubilee day as business is booming and revenues are likely to see growth of around 25 per cent in the coming year. In the last two years, film industry registered 17 per cent growth.

So far this year, net box office collections from film exhibitions increased 30 per cent, according to a report by Anand Rathi, a brokerage firm. For the coming year, if the spate of good runs in film continues, multiplexes should see sound revenue growth.

In 2012 (calendar year), the film industry grew by 21 per cent as per a report by FICCI KPMG, and the trend is expected to be buoyant for the next two years as the industry is expected to grow to Rs 13,800 crore by 2014. None are happier than the multiplexes that are riding piggyback on these new releases. Says Alok Tandon, CEO of Inox Leisure: “People want to watch a movie with a great storyline and the last few months have seen various genres do very well.”

As the film industry booms thanks to a larger number of film-goers and a rising young population, multiplex chains have also been pushing special discounts and promotional offers that are geared towards increasing the number of patrons at theatres. However, average ticket prices of multiplex operators are increasing only by around two to four per cent, while ticket sales have been rising by around 15 per cent. This, in turn, is seeing an increase of 15-20 per cent in food and beverage sales across cities. Also, as the number of multiplexes is increasing rapidly, average ticket prices have largely held steady.

However, multiplex revenues are expected to increase from rising ticket prices in Tier-I and -III cities, where the ticket prices are much lower. Says Archana Shivane, research analyst at KR Choksey Securities: “Ticket prices could rise by around five to seven per cent largely driven by price increases in Tier-II towns. Multiplexes are targeting more patrons through enhanced cinematic experience, rather than increase ticket prices aggressively. Says Sanjay Kumar Bijli, joint managing director of PVR Cinemas, one of India’s largest multiplex chains: “There are more patrons though ticket pricing is variable and differ across towns and shows. However, average ticket prices may have gone up a little.”

In the next two years, the number of screens is expected to increase to around 1,400 (from the current 1,000), according to industry estimates. At the same time, standalone theatres have seen a dip in number of screens – from around 12,000 to 10,500 in the past two years.

Occupancies at most multiplexes have been steady, at 34-36 per cent, and can shoot up for very good movies. Multiplexes are also garnering a higher share of exhibition revenues from films, compared to standalone theatres. In 2010, multiplexes accounted for 21 per cent of film exhibition revenues; in 2011, they accounted for more than 30 per cent. In a few urban-centric genres, films have grossed more than 55 per cent of their collections from multiplexes.  Last year’s blockbuster film Vicky Donor grossed 57 per cent of its revenues from multiplexes. The deeper penetration of multiplexes across smaller towns and the rising young population have been driving revenue growth of over 25 per cent. The movie exhibition business is expected to rise to Rs 10,800 crore by 2016, increasing 9.5 per cent in the last five years.