The multiplex story in small-town India
The multiplex revolution is spreading to small towns where disposable income is high and malls are still aspirational spaces. But is this shift boosting the prospects of films?
New Delhi: In the 55 years that he’s lived in Allahabad, Ajit Upadhyaya has always seen the town’s movie options being clearly demarcated. Earlier it was the cushier single-screen theatres showing the newest Amitabh Bachchan release at full prices versus the run-down ones the film would gradually make it to. Now, it is a multiplex vs single-screen battle.
“We obviously only had single screens in the 1970s where films received a delayed release. Sholay, for instance, formally arrived in theatres on 15 August 1975, but came to Allahabad by September-end,” the bank manager recalls. “New films would run at full rates in prime theatres, anything between Rs1.25-3, and would gradually go to the less central ones at 75 paise-Rs2.”
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The nearly 15 single-screen theatres that have existed since the 1970s in the town have been eclipsed by the arrival of one multiplex, Upadhyaya says. Operated by PVR Ltd, it opened about 6-7 years ago. Today, barely five of the single-screen halls have survived in a town that still cherishes the big-screen experience and hasn’t taken to mobile or internet platforms in a major way. Some of the erstwhile theatres have either been converted into godowns or remain abandoned.
Others have been taken over by large entertainment conglomerates—like Mutthiganj’s Sangeet Cinema that screened Sholay in 1975 has been acquired by Big Cinemas, a division of Reliance MediaWorks Ltd.
While Hindi films are released at the same time across the single screens and multiplexes, the difference lies in ticket prices—it is Rs140-170 a ticket at the latter versus Rs50 at the former.
“There aren’t too many options overall. People prefer to watch movies in a multiplex; it has the best seating and sound arrangement, plus the prices are slightly high, so a certain class doesn’t go there. The younger generation will not be caught dead around the old cinema halls; only boys straight out of villages or the labour class go there,” Upadhyaya said.
The reluctance among audiences, especially the younger lot, to settle for anything but the best movie experience is not specific to Allahabad.
It has emerged as the single-biggest driver of the multiplex revolution in India over the past 20 years, according to industry experts, and one that has percolated to the smallest towns of the country.
For instance, Bokaro in Jharkhand has one single-screen theatre apart from a multiplex that came up about five years ago. The theatre called Jitendra Talkies finds few takers despite its low rates.
The economics of entertainment
“There is nothing to do in these small towns or cities apart from watching movies. They don’t have the kind of entertainment or social infrastructure that you have in Delhi, Mumbai or the major cities,” says Sanjeev Kumar Bijli , joint managing director of multiplex operator PVR Ltd. “For us, there is opportunity around the entire country and we’ve explored places like Latur, Aurangabad, Malegaon and Ujjain and are opening in Kota this year.”
It takes time and investment to discover a town’s paying capacity though, Bijli says. That, of course, also has to do with how high the entertainment tax is in a specific state. “Some of the small towns are profitable, they surprise us. For instance, Moradabad and Bokaro are doing quite decently. But then, a Panipat doesn’t do that well. You realize these things later and try to work on 18-20% Ebitda margin and tweak costs,” Bijli said.
Ebitda is short for earnings before interest, tax, depreciation and amortization.
Kochi in Kerala has ensured a profitable four-year run for a nine-screen PVR multiplex, besides enabling the company to acquire four more multiplexes, generating, between them, 9.8 million movie-goers so far, Bijli adds.
Last month, PVR Gold Class, an upgraded version of the theatre chain, was launched in the southern city where ticket prices average at Rs150.
The key, clearly, is to keep the ticket price points proportionate to real estate prices and purchasing power in a city. If the catchment and price points are right and the chain has competitive operational screens, there is no reason for it to not make profits, experts say. It works exactly like the economically diverse parts of a metropolitan city—in east Delhi, you can’t ask for rates that a theatre in Greater Kailash or Saket in the south of the city can.
To be sure, the multiplex revolution in small towns is linked inextricably to the mall culture. According to a report in The Economic Times, about 300 malls are expected to come up in non-metro cities over the next 3-5 years. The malls are also growing in size—from about 100,000-150,000 sq. ft, mall developers are now eyeing spaces of 300,000-500,000 sq. ft—clearly indicating a more voracious appetite for cinema halls, food outlets and all kinds of retail activities. The shift to tier-II and -III towns is based not just on a saturated metro market and prohibitive real estate costs in the big cities but higher disposable income in the small towns owing to a lower cost of living and the perception of malls as aspirational spaces.
“PVR has about nine screens and they are drawing huge crowds because the mall culture has picked up here in Kochi. And people don’t mind spending on all these activities clubbed together,” says Jay Krishnan, a 44-year-old entrepreneur based in Ernakulam , the district where Kochi is located. “With multiplexes, the feel is different. In Center Square (that has a Cinepolis multiplex), for example, there is a theatre where you can literally lie down, so, it’s different and relaxed. Other theatres (single screens) are the normal ones for the cash-conscious crowd,” he adds.
As for the single screens, they have managed to survive in Kochi, contributing the biggest chunk to the Malayalam movie industry’s revenue, in marked contrast to the dying single screens of north India.
“In several states in the south, the price points are decided at the government level. In Chennai, for instance, you can’t sell tickets for more than Rs110. Whereas in a city like Mumbai or Delhi, you don’t even get a morning show for Rs110 on a weekday,” says Utpal Acharya, founder of film production, distribution and marketing company Indian Film Studios.
Survival of the single-screen theatres
Moreover, the cinema-going habit in the south is phenomenal, Acharya emphasizes. The repeat value for films is great, based either on the quality of content or the massive fan following of stars, bordering often on frenetic hero worship. Because ticket prices are low, people can keep going back to theatres to watch their favourite films and stars.
In the north, a family of four typically spends a minimum of Rs1,000 on a movie plus travelling costs. In the south, balcony tickets are still priced at Rs40 each and multiplex tickets at Rs110. In Tamil Nadu, tickets for front-row seats in many single-screen theatres are still sold for Rs10 each.
“Multiplexes are coming up in the south and doing great but single screens continue to dominate and bring in 70-80% of the revenue for a film. Whereas in the north, 85% of the business comes from multiplexes,” Acharya points out.
And that, perhaps, accounts for the upkeep and maintenance of the single screens in the south.
“In multiplexes, they provide many more facilities. We can’t promise all of that. But we are doing well. We have a good, regular audience that comes in and our ticket prices are quite low—Rs 90 for the stall and Rs110 for the balcony,” says Leslie Joseph, manager at Zeenath Talkies in Kochi, who converted his single screen into a two-hall miniplex three years ago.
For the last 4-5 years, Zeenath Talkies has tried to upgrade its facilities and come up with initiatives like reservation for family audiences. Joseph says the audience base is increasing by the day with the opening of multiplexes, and they have also introduced audiences to certain kinds of facilities which are sought in other places as well. Theatres like Zeenath Talkies have had to upgrade aspects like seating arrangements and projection quality as a consequence.
“We go to both multiplexes and single screens depending on the availability of tickets,” says Bindu R., an insurance agent based in south Kochi. “There isn’t much difference in ticket prices, both are within the Rs200 range. Every theatre here, single screen or a multiplex, is well-maintained and equipped with all facilities.”
To be sure, renovation and upgrades are key when it comes to survival of small theatres as a whole, but it’s easier said than done in most cases, especially in the north.
“The single screens in small towns were traditionally not air-conditioned. There were no expectations...people would just come and watch a film,” says Sanjay Ghai, chief operating officer of film production company Mukta Arts Ltd, who also runs single-screen theatre Chandra Talkies in Muzaffarnagar. “Now even the viewer in a small town wants an AC. If he doesn’t get it, he goes to the nearest big city.”
It isn’t, however, entirely feasible or possible to make these large investments in small towns.
For one, you don’t know if it will pay off and whether consumers have the necessary purchasing power. Second, it’s not easy working around government regulations—specifications like ceiling height, distance from the screen and space for the projection system prohibit the construction of small and viable theatres in several regions.
Sanjay Singh, manager of single screen Jitendra Talkies in Bokaro, admits to an unfruitful run for the theatre and the need for renovation but says there are regulations to keep in mind apart from the fear that any investment may not be recovered.
“Single screens and multiplexes can co-exist as long as they follow the dynamics and capacity of the concerned city. In small towns, you should at most make 100-120 seaters. But then, rigid government rules and regulations for cinemas will have to be altered. These are factors going against small towns,” says Ghai whose 371-seater works well with a Rs80 and Rs100 ticket price for front and back areas, respectively, of the lower stalls of the hall, and Rs130 for the balcony.
It is also one of only two single screens in all of Uttar Pradesh to have Dolby Atmos, a surround sound technology, a proud Ghai says.
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“You need to have business acumen and be well-versed with the Cinematograph Act to convince lawmakers and local authorities for the benefit of your theatre,” Ghai adds.
It is perhaps because of these reasons that some industry experts feel multiplexes are still to penetrate the heart of India in the true sense. In Uttar Pradesh, for example, they haven’t gone beyond towns like Gorakhpur, Varanasi or Allahabad. In Bihar’s Patna, there is only one multiplex.
“There is inorganic growth but many people are talking of miniplexes in these towns, essentially 100-150 seaters with a maximum of two screens. Several states in the north as well as Chhattisgarh and Kerala are inviting bids from investors for the same,” Indian Film Studios’ Acharya says.
The China factor
All of this boils down to India’s limited screen density, which in turn thwarts its box office potential.
A country like China boasts of 38,000 active screens while, at last count, India had about 8,500. A big-ticket film in the south manages a release in anywhere between 3,500 and 4,000 screens, and the same goes for a high profile Bollywood offering except that the latter is higher on multiplex count. Recent blockbuster, war epic Baahubali 2: The Conclusion, which managed 6,000 screens nationwide across four languages, was quite clearly an aberration.
“Either way we can’t cross the 5,000 count. The reason a film like Fast and Furious 8 manages as big a weekend in China alone as the rest of the world is the 30,000-odd screen count and an average ticket price of $8-10,” Acharya says, adding, “Here in India, footfalls are great but screen count remains one fourth of China, which adds about 8 screens per day and nearly 2,000 per year. India, on the other hand, has not been adding more than 100 screens a year. All of this, despite the fact that we are the largest movie content producers in the world, while China makes films in only one language.”
The cushy multiplex experience may be what most of us associate film viewing with today. But away from the carpeted floors, instant online booking and the big screen, India’s metropolitan cities as well as its small towns and villages retain their passion for movies in unique and striking ways. In a three-part series, Mint looks at the film-viewing experience in India 20 years after the country’s multiplex revolution.
First part: Why Rural India does not miss big screens