BackJailor, Jawan, Tinker, Spy: A tale of market distortion
Media reports suggest that the black market release-day prices of Tamil films Jailer, Varisu and Thunivu were over ten times the official cap placed on theatre ticket prices in Chennai.
PremiumChennai, the city where we live, one price remains the same 365 days a year. It does not matter if demand surges or wanes. It doesn’t matter if the product quality varies widely. No, it is not foodgrain at ration shops. It is the movie ticket price. It is determined not by the market forces of demand and supply, but by the government. The last price revision was in 2017, and before that in 2007.
Jawan, an action thriller starring Shah Rukh Khan, was released on 7 September. Four days before that, for first-day shows and the subsequent weekend, the highest ticket prices across PVR screens (excluding IMax) in Chennai and Hyderabad, two cities with price caps, were ₹203 and ₹350 respectively. In two cities with free pricing, it was nearly 9-10 times: ₹2,400 in Delhi and ₹2,300 in Mumbai.
True, even without price caps, the prices for Jawan tickets would have been lower in India’s southern cities; it is a Hindi movie with no South Indian superstar. The free-market prices in Chennai for the film would perhaps be closer to those in Kochi, Kerala, where the highest priced ticket for the first day was much higher—at ₹700.
Now let us take an example of a South Indian movie. For the 4th weekend of Jailer, a Tamil movie starring superstar Rajinikanth, the top ticket was for ₹1,250 in Bengaluru, ₹600 in Kochi, ₹470 in Mumbai and ₹290 in Delhi. In Chennai, Jawan or Jailer, the maximum price stays the same, around ₹200. If markets are not allowed to adjust prices by demand and supply, black markets inevitably take over, supplying tickets at several multiples of official prices, especially for first-day shows. Ardent fans are willing to pay such premiums. The release of online tickets is also carefully managed. Media reports indicate that the unofficial release-day prices of Tamil films Jailer, Vijay’s Varisu and Ajith’s Thunivu were over ten times the Chennai cap.
At an unreasonably low price cap, the average quality of the experience suffers. Higher quality theatres with the latest audio-visual technology have higher fixed costs. No wonder Chennai does not have a single 4DX movie theatre. Also, the spread of multiplexes has been slower in Chennai and Hyderabad than in Bengaluru, Mumbai and Delhi. In fact, over 60% of all single-screen theatres are in the South.
Would movie prices in Chennai go sky-high if the price cap is removed? In a recent podcast, Ajay Bijli, managing director of PVR Inox (bit.ly/468ahzC), mentions that 12-to-34-year-olds make up most of its customer base. They and their primarily middle-income families decide the fate of films, especially women, who he said tend to make theatre decisions for families. Also, in South India, theatre-going frequency is higher than in Mumbai or Delhi.
It is not only the ticket price, but the cost of the overall experience that matters. Most Indian movie fans go to theatres to escape their harsh daily grind. They want quality seating, air conditioning, clean toilets and bright and cheerful surroundings. They also want good food options during the interval. And then, there is the commute cost and parking fee. If a ticket price cap did not exist, would the family experience become unaffordable, given the high charges on most of the rest? People are best placed to decide what price they are prepared to pay for the overall experience. A recent backlash on Twitter against PVR cinemas for charging very high food prices suggests that people will rebel if the movie hall experience becomes too expensive.
Moviegoers could choose not to buy food or even go to a theatre if the overall cost becomes prohibitive. If enough people decide not to go to theatres but instead wait for a film’s release on online streaming platforms, or watch a pirated version of it, they not only save money, but also time. Then theatre prices would have to fall again to win back viewers who have chosen to boycott expensive theatres.
Who are the biggest losers of a ticket price cap policy? More than theatre owners, it tends to be movie producers. Bijli, in the same podcast, mentions that around 66% of the revenue of movie theatres comes from ticket prices, and, broadly speaking, distributors and producers divide box office collections equally. Producers do not get any share in revenues raised from allied sales, be it interval snacks or parking fees.
Movie producers take high risks. Some movies work, but many flop. Producers must recover the high and rising cost of making movies from blockbuster films. Without that, they cannot risk any experiments with storylines, actors, etc, thereby lowering innovation in films.
As Chennai’s price cap is unlikely to be lifted entirely, the Tamil Movie Association recently requested the state government to increase it to ₹250 in multiplexes. Even if the price had increased just by 5% in each of the last six years since the previous cap hike, movie ticket prices in the city would have been ₹272 at multiplexes.
Price caps on various necessities have been rolled back over the years. Are movie ticket prices more politically sensitive in Tamil Nadu and Telangana than cooking gas and electricity?
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