 "cinema, theatre, multiplex")
Despite being a cinema-loving country, screen penetration in India is among the lowest in the world, with an average of six screens per million people (KPMG in India's media and entertainment report, 2019). Compare that to 46 screens per million people in China and 23 per million in the US.
Smells like opportunity for growth, right? Throw in events, product launches and kids' birthday parties and you have the perfect recipe to make the most of the opportunity.
Last year was probably the best for the multiplex industry for more ways than one. The box office collections in financial year 2018-19, according to the recent KPMG media and entertainment report, grew by 14.7 per cent to stand at Rs 12,940 crore domestically, while the collections from the overseas markets rose by 16.1 per cent.
What also helped was the growth in advertising revenues — which jumped to 10 per cent from the earlier 6 per cent in FY19. The duration of cinema advertising hasn't increased — it remains at 15-20 minutes per show — but in-cinema advertising has become more innovation-heavy. Inox, for instance, has used the walls of its multiplexes to display ads and deployed other interactive tools over and above on-screen communication. Plus advertisers are coming around to cutting long-term deals with theatre owners — they have access to a captive audience without a remote control to skip ads. If the trend earlier was weekly or fortnightly deals, now advertisers are open to sewing up deals that run up to three months.
The reasons are not far to seek. In terms of the sheer investments required, cinema advertising is cheaper. If it is Rs 400-500 per show at a theatre, a 10-second ad spot on a leading Hindi general entertainment channel would run into lakhs. Take this one example. Last year, Hindi entertainment channel Star Plus increased its effective ad rates by introducing a new category at the premium end and pricing it at Rs 5.10 lakh per 10 seconds. The most expensive ad spot on the channel was earlier priced at Rs 4 lakh per 10 second.
What has also given this business an impetus to the business is the new tax regime. The goods and services tax (implemented in mid-2017), has been a blessing, says Mohan Umrotkar, CEO, Carnival Cinemas. "India remains a price-sensitive market. But earlier, the movie industry had to pay a sin tax of 40 per cent. The government has brought it down to 12-18 per cent,” he adds.
India has over 9,000 screens currently, of which around 2,950 are multiplex screens, with 195 added in FY19.
Now look at the typical revenue mix of an average multiplex. It would derive most of its revenues from three sources — box office collections, food and beverages (F&B), and advertisements. These account for more than 90 per cent of the revenue, with box office collections contributing the lion's share. Analysts say the shift towards F&B was inevitable because dependence on box office collections alone would be risky. It seems the focus on non-box office, non-F&B revenues will grow going forward.
So now is the time to improve footprint and add to the screen count, say industry players. Real estate is in a slowdown and mall operators are finding new homes in smaller cities. PVR Cinemas CEO Gautam Dutta says, “The number of malls coming up across India is phenomenal. We are on course to open the largest number of screens in 2020. Some developers are under stress, but a large number of single-screen operators have shown interest to convert themselves to PVR,” he says. India's largest multiplex chain, PVR last year unveiled a 70,000 sq ft property in Delhi that can seat 1,833 people and boasts of the latest technologies. PVR Superplex comprises one IMAX screen, one 4DX screen, two ultra-premium auditoriums, seven mainstream and a PVR Playhouse, a dedicated auditorium for children with toys and accessories.
Smells like opportunity for growth, right? Throw in events, product launches and kids' birthday parties and you have the perfect recipe to make the most of the opportunity.
Last year was probably the best for the multiplex industry for more ways than one. The box office collections in financial year 2018-19, according to the recent KPMG media and entertainment report, grew by 14.7 per cent to stand at Rs 12,940 crore domestically, while the collections from the overseas markets rose by 16.1 per cent.
What also helped was the growth in advertising revenues — which jumped to 10 per cent from the earlier 6 per cent in FY19. The duration of cinema advertising hasn't increased — it remains at 15-20 minutes per show — but in-cinema advertising has become more innovation-heavy. Inox, for instance, has used the walls of its multiplexes to display ads and deployed other interactive tools over and above on-screen communication. Plus advertisers are coming around to cutting long-term deals with theatre owners — they have access to a captive audience without a remote control to skip ads. If the trend earlier was weekly or fortnightly deals, now advertisers are open to sewing up deals that run up to three months.
The reasons are not far to seek. In terms of the sheer investments required, cinema advertising is cheaper. If it is Rs 400-500 per show at a theatre, a 10-second ad spot on a leading Hindi general entertainment channel would run into lakhs. Take this one example. Last year, Hindi entertainment channel Star Plus increased its effective ad rates by introducing a new category at the premium end and pricing it at Rs 5.10 lakh per 10 seconds. The most expensive ad spot on the channel was earlier priced at Rs 4 lakh per 10 second.
What has also given this business an impetus to the business is the new tax regime. The goods and services tax (implemented in mid-2017), has been a blessing, says Mohan Umrotkar, CEO, Carnival Cinemas. "India remains a price-sensitive market. But earlier, the movie industry had to pay a sin tax of 40 per cent. The government has brought it down to 12-18 per cent,” he adds.
India has over 9,000 screens currently, of which around 2,950 are multiplex screens, with 195 added in FY19.
Now look at the typical revenue mix of an average multiplex. It would derive most of its revenues from three sources — box office collections, food and beverages (F&B), and advertisements. These account for more than 90 per cent of the revenue, with box office collections contributing the lion's share. Analysts say the shift towards F&B was inevitable because dependence on box office collections alone would be risky. It seems the focus on non-box office, non-F&B revenues will grow going forward.
So now is the time to improve footprint and add to the screen count, say industry players. Real estate is in a slowdown and mall operators are finding new homes in smaller cities. PVR Cinemas CEO Gautam Dutta says, “The number of malls coming up across India is phenomenal. We are on course to open the largest number of screens in 2020. Some developers are under stress, but a large number of single-screen operators have shown interest to convert themselves to PVR,” he says. India's largest multiplex chain, PVR last year unveiled a 70,000 sq ft property in Delhi that can seat 1,833 people and boasts of the latest technologies. PVR Superplex comprises one IMAX screen, one 4DX screen, two ultra-premium auditoriums, seven mainstream and a PVR Playhouse, a dedicated auditorium for children with toys and accessories.
