Film exhibition business sees footfall, box office decline

With a drop of 10-15% in box office collections in 2016 compared to 2015, the crisis is grave for the film exhibition business even while producers continue to make money


Net box office collections last year ranged around Rs2,800 crore as compared to the nearly Rs3,000 crore the industry made in 2015. Photo: Beenu Arora/Mint
Net box office collections last year ranged around Rs2,800 crore as compared to the nearly Rs3,000 crore the industry made in 2015. Photo: Beenu Arora/Mint

New Delhi: The fiercely underwhelming performance of some of last year’s biggest movies hasn’t truly been the last nail in the coffin for Bollywood itself. With a drop of 10-15 % in box office collections in 2016 compared to 2015, the crisis, at least at the moment, trade experts say, is grave for the film exhibition business even while producers continue to make money. Net box office collections last year ranged around Rs2,800 crore as compared to the nearly Rs3,000 crore the industry made in 2015, according to Atul Mohan, editor of trade magazine Complete Cinema.

To be sure though, multiplex chains, on their part, continue to report increase in revenue year-on-year. “Big films not working or small films giving results beyond their perceived size are part of our business,” said Kamal Gianchandani, chief executive officer, PVR Pictures. “Different people will give you different answers to how 2016 has been but as far as we’re concerned, we’ve done well but could’ve done better. We achieved high same store growth at the end of 2015 but have remained stagnant since then.”

In fact the overall growth in revenue for theatre chains may be attributed not to increased footfalls or box office but to addition of screens, increase in food and beverage as well as advertising income. For example, PVR Cinemas opened 52 screens in FY 2015-16 and acquired another 32. INOX has gone from 1,075 screens in 2010 to 2,225 screens in October 2016.

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In case of INOX, F&B has gone from contributing 18% to total revenue in FY 2012 to 20% in FY 2016. In case of PVR, this figure has gone up from 25.1% in FY 2014-15 to 26.4% in FY 2015-16.

Plus, advertising has emerged as a priority with theatres dedicating nearly 15 minutes of a movie show’s running time to ads as well as setting individual ad revenue targets for each employee. UFO Moviez made about Rs250 crore from advertising in 2016, PVR Rs350 crore, Cinepolis Rs50 crore and INOX Rs100-150 crore.

Box office records, on the other hand, have consistently fallen. In FY 2015-16, net box office contributed 57.4% to PVR’s overall revenue as compared to 59.3% in FY 2014-15. In Q2 FY16, it contributed 62% to INOX’s revenue as compared to 60.3% in Q2 FY17. INOX’s footfalls have come down by 13%- from 291 lakh in H1 FY16 to 282 lakh in H1 FY17.

“The overall numbers, purely in terms of Bollywood, may be on the lower side but Hollywood and regional cinema have helped some recovery,” said Rajendar Singh, vice-president, programming and distribution, INOX Leisure Ltd. “It’s not really a challenge if other avenues provide some margin.”

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To be sure, the numbers don’t come as a surprise considering big-ticket releases like Fan and Mohenjo Daro in 2016 ended up with collections of Rs84 crore and Rs58 crore respectively. Even the Diwali weekend brought in combined returns of less than Rs200 crore from the much-hyped clash between Karan Johar’s Ae Dil Hai Mushkil and Ajay Devgn’s Shivaay.

“Producers and studios have various other options to bank on—from music and satellite rights to overseas and digital sales,” Mohan said. “But the exhibition business is dependent entirely on the success (or the lack of it) of films at the box office. Several big films haven’t met expectations last year while exhibitors have consistently had to shell out whatever the distributor demands.”

To be sure though, underwhelming content is not the only reason people do not flock to theatres anymore. Besides the threat from piracy, the window between theatrical and satellite TV release of films has shrunk to less than three months, eating into the business especially of small, content-driven films. Sanjay Bhandari, bank loan consultant to the industry emphasizes that even critically acclaimed movies like Piku do not demand a big screen experience, the days of spectacles like Mughal-e-Azam are long gone and there aren’t more than four big canvas movies a year. That accounts for the looming threat posed by digital entertainment options that may not have taken over the theatrical business entirely but would certainly impact 20-30% of the business of a film.

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Unreasonable ticket prices are equally responsible. In an already under-screened market like India, the common man can hardly afford to go to the theatre today.

“Multiplexes in India need to urgently look at their price points,” said Utpal Acahrya, founder of film production, distribution and marketing company Indian Film Studios. “A family of four will need at least Rs1,500-2,000 to be able to watch a film, that’s like 10-15% of the monthly salary for many. Ticket rates are killing movie watching habits in a country that has no other entertainment options.”

And while the going may be smooth now, there is much to fear.

“In the long run, additional income will also be affected,” Mohan pointed out. “When people are not coming to theatres, why would anyone pay for advertising? You pay expecting footfalls. Else everyone will shy away.”

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