4 min read.Updated: 18 Dec 2018, 12:22 PM ISTLata Jha
About 70-75% of the exhibition sector in south India is currently taken up by single screens, as compared to 25% for multiplexes, say industry experts
New Delhi: Earlier this month, Telugu superstar Mahesh Babu made his foray into film exhibition by launching Asian Mahesh Babu Cinemas, a seven-screen superplex in Hyderabad. In October, PVR Ltd started a 10-screen multiplex in Chennai, building on its acquisition of SPI Cinemas Pvt Ltd in August. Around the same time, INOX Leisure Ltd had launched a nine-screen multiplex in Coimbatore. These are only the most recent examples of a slow and gradual move that multiplex chains are making into the south of India, a territory so far dominated by single screens. About 70-75% of the exhibition sector in south India is currently taken up by single screens, as compared to 25% for multiplexes, say industry experts. The multiplex count is expected to double to 50% between 2019 and 2021.
To be sure, the box office success of south Indian language films, particularly this year, and the strong movie-going habit in the south, are responsible for multiplex players looking south.
“South Indian cinema has been doing exceptionally well, if you look at the last couple of years, it has probably been the most consistent in terms of delivering content, particularly Telugu," said Rahul Puri, managing director, Mukta Arts and Mukta A2 Cinemas, that has a joint venture with south Indian distribution company Asian Group. Together, they have launched nine properties in Andhra Pradesh and plan to take it to at least 15 more cities in the next three years. A seven-screen property in Chennai is also on the cards next year.
Recent Telugu blockbusters like Bharat Ane Nenu, Rangasthalam and Aravindha Sametha Veera Raghava, all of which made between ₹ 150-200 crore worldwide may have helped a lot of players who are looking at the south Indian market feel they are assured of content that is enough to get good occupancy rates.
Together, Tamil and Telugu cinema are close to the revenue of Bollywood, Puri said. According to the Ficci-EY media and entertainment industry report, Tamil and Telugu films clocked footfalls of 126 million and 240 million respectively in 2017. Also, the fact that south India is heavy on single screens shows that there is an opportunity to expand the multiplex footprint. Atul Mohan, editor of trade magazine Complete Cinema said single screens currently bring 75-80% of film revenue in the south.
“The south has always been a very fertile market, because people love their movies here. But for a very long time, a lot of these cinemas were being built, retail revolution was on the way. So now there is a sense of newer brands coming in, shopping experiences changing and out-of-home entertainment forming a new segment," said Gautam Dutta, chief executive officer, PVR Cinemas. PVR has signed deals with real estate companies Prestige Group and Brigade Group, and is looking at opening screens in Mysore and Kochi and has projects lined up over the next five years with an investment of Rs. 3-3.5 crore per screen.
Bengaluru and Chennai are PVR’s biggest markets in the country, contributing 38% and 29% of its annual admits. Film viewers in the south are able to consume nearly four or five languages sometimes. Besides, their love for cinema is phenomenal and people consuming three films a week is not unheard of, which presents a great opportunity for multiplex owners.
“When you look at movie-watching, across other segments, the youth is predominantly strong but in the south this intensity stays with much older people as well," Dutta pointed out.
But there are challenges too. PV Sunil, managing director of Carnival Cinemas, said while south India is incomparable in terms of footfalls, there are also inconsistencies when it comes to structure and functioning. Dealing with different GST and local body rates and distributor and exhibitor shares is tough. Carnival leads the multiplex race in Kerala with 52 screens, having opened one in Thiruvananthapuram last month. The plan is to move to Tamil Nadu with 50 screens over the next two years and invest about Rs. 150-175 crore in south India as a whole over the same period with expansion into smaller towns.
Most importantly, states like Tamil Nadu still impose a cap on ticket prices, with maximum rates stuck at Rs. 150-160. “We feel fairly restricted in being able to offer differentiated technologies in Tamil Nadu simply because the market doesn’t allow for that kind of investments to be made," PVR’s Dutta said. “One could also argue that because of the price cap, there was a huge amount of fertility built into the system. But consumerism is on the rise, there are more and more people who are travelling abroad and experiencing new products, this is a bit of a deprived lot that has not been able to experience a differentiated product just because the state doesn’t allow it to happen."
Yet the strengths of the market can’t be ignored: “Any opportunity to grow within the south is something that will always take precedence over growth in any other state of India simply because we find this soil to be the most fertile, the returns here are so much faster than any other market so clearly we’re open to any opportunity which is well evaluated, be it in the smaller towns or the bigger metros," Dutta said.