Multiplex Mutliplier

PVR announces plans for 82 screens this year.

When PVR's initial public offering (IPO) raised almost Rs 128 crore from the Indian capital markets, it knew it had a promise to fulfill. It had to expand fast, even while operating 47 cinema screens in India.

Now PVR has announced a blueprint for 82 new screens within this financial year. This would be a force multiplier for blockbusters. Multiplexes are in demand.

Elaborates Sanjay Malhotra, CFO, PVR: "We see pent up demand within the consumer base, and also, state governments are awakening to the benefits of having a multiplex in their region."

The Haryana state government recently slashed its entertainment tax to 30 per cent from 50 per cent, giving cinema exhibitors that much more space to turn a profit.

"This is bound to herald a conducive environment for multiplex players in Haryana," says Malhotra. Adds a trade analyst, "We can expect an onslaught of both premium and low cost multiplexes."

As for Delhi-based PVR, the game gets more exciting as it enters Mumbai, which means taking on its biggest competitors head on. PVR's proposed multiplexes at Juhu, Mulund and Ghatkopar will be pitted against Shringar and Adlabs, located within a 5 km radius.

And Adlabs, now part of Reliance's entertainment venture, has huge ambitions of its own. If this worries Ajjay Bijli, he conceals it well.

"But the density of population in Mumbai can probably accommodate two or three multiplexes in the same catchment area," says the managing director of PVR group. The plan is to have a national footprint, but he is counting heavily on expansion into Uttar Pradesh, Lucknow and Punjab to strengthen his North Indian bastion.

Would such a scaling up of volumes lead to a lowering of the exorbitant ticket prices?

"Tell me, what is 'exorbitant ticket prices'?" asks Bijli. His point: the high cost of construction in a metropolis pushes prices upwards. It is only in tier II cities that tickets are priced at Rs 90 or less per seat.

"We do not foresee undercutting on the ticket price front," he adds, "though PVR has initiated flexible ticket pricing, and sells tickets at lower prices from Monday to Thursday. Flexible pricing and lower ticket prices have helped PVR's occupancy rates (that average around 35-40 per cent)."

In the final analysis, however, pricing is secondary. All cinema halls depend on the appeal of the very films themselves to draw in the crowds. The large chains get the first choice of film prints, and as multiplexes multiply, film distributors may gain some power. Insiders are predicting pressure on exhibitor margins.

However, this phase may be shortlived if digital projectors (under test) enter the exhibition arena. After all, the two factors that count for most are high-quality viewing ambience and high-quality cinema content.