Taking movies to the masses

Ventures such as E-City's Talkie Town are tapping the growing demand for entertainment in small-town India.

Cinema is indeed striving hard to reach the bottom of the pyramid. When Atul Goel, the 31-year old CEO of E-City Ventures, visited Miyapur on the outskirts of Hyderabad sometime back, what struck him was the surging crowd in front of a run-down cinema hall.

Many were disappointed at not being able to get tickets even for a non-descript movie and were willing pay a premium to anybody who had extra tickets to spare.

A few months after his visit "" in November 2007 "" Goel launched Talkie Town, the company's value brand for the masses. Quite predictably, the first such theatre with two screens and a capacity of 1165 each was launched in Miyapur.

In just three months, E-City has opened six more Talkie Town theatres in places like Panipat, Lucknow etc. The company, which is an arm of the Essel Group, plans to roll out 250 such screens in another four years.

"This is not the multiplex crowd in big cities. But the value proposition is still immense. We will focus on single screen refurbishments since 65 to 70 per cent of the movie-going market still exists in the hinterlands," Goel says. And the economics work out fine despite the cheaper tickets (around Rs 50 per ticket).

That's because with ticket sales of three billion in 2006, the film industry raked in box office revenues of over Rs 6,000 crore at an average ticket price of Rs 20. And experiments such as Talkie Town shows there is an opportunity to increase the ticket prices by more than Rs 20.

The cost of roll-out is also not steep. For example, the theatre owners in these small towns charge Rs 2 lakh rental per month for an area which is close to an acre, and E-City spends an average Rs 2 crore for refurbishing the theatres and digitisation. The company expects break-even to happen within three to four years.

Such single-screen cinemas in the hinterland have long suffered from a lack of bargaining power with distributors and big banners as they just don't have the resources to channelise the growing demand for entertainment in small-town India. "That's where E-City comes in with a win-win solution," Goel says.

For the year 2006-2007, the business contributed by non-metros was around 55 per cent of the company's total revenues. And the prospect is huge. As against 117 in the US, India has a cinema screen ratio of only 12 screens for every one million people. With about 13,000 single screen theatres, there still is a scope for an additional 10,000 screens in India, Goel says.

Of course, it's not Talkie Towns alone that E-City is banking on. Apart from the Fun cinemas, the lifestyle (premium) brand that will roll out 300 screens by 2011, the company also has E-City Digital, which presently operates 101 digital screens in Mumbai, Gujarat, Delhi, UP, and the Nizam film circuits. By 2011, the company would have brought 1000 digital screens under its fold by adding West Bengal, Rajasthan, TN & Kerala to its roll out plan.

But the Talkie Town model is set to do what the no-frills airlines did to the aviation business "" grow the market beyond recognition. So it doesn't sound like an exaggeration when Goel says in the coming years, all popular Hindi films would exhibit at least 2,000 prints (with a combination of digital and celluloid prints) from the existing 500 prints.