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Box office collections: Hrithik Roshan's 'Krrish 3' adds to Diwali bang

Nov 04 2013, 09:40 IST
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Sources indicate informally, box office collection by Hrithik Roshan's Krrish 3 have crossed 25 crore mark, demolishing all records. (AP) Sources indicate informally, box office collection by Hrithik Roshan's Krrish 3 have crossed 25 crore mark, demolishing all records. (AP)
SummaryBox office collections trends indicate, Hrithik Roshan's Krrish 3 is set to break all records.

The box office is back with a bang, and the Diwali fervour is only adding to its sparkle in recent years. Sample this: Box office collections have been growing 20% in the past two years, with Diwali weekend collections alone crossing the bumper Rs 100-crore mark in the past four years. This Diwali’s cracker of an offering, Krrish 3, has raked in about Rs 21 crore on Friday, two days before the festival of lights.

So much is the importance given to a Diwali release that last year the producers of Jab Tak Hai Jaan and Son of Sardaar (both released during Diwali) were engaged in a tussle over screens. It’s another matter that both films grossed over R100 crore in the first weekend itself. But backed by better content and digitisation, cinema multiplex chains are sustaining better pricing power in recent years, with or without Diwali.

As per KPMG India estimates, the domestic box office collections, valued at Rs 8,000 crore in 2012, have been growing over 20% the past two years and could yield Rs 14,200 crore value potential by 2017. Though still heavily under-screened, the domestic theatrical market is paused for major expansion as cinema chains look at scaling up presence. The overall film industry revenues also grew from Rs 9,290 crore in 2011 to Rs 11,240 crore in 2012, representing a y-o-y increase of about 20%, and are expected to touch Rs 20,000 crore revenues by 2017.

“Box office revenues have been climbing more than steadily over the past year on the back of attractive content. With footfalls returning to the big screen, the occupancy rates are also holding up at 30-35%. One can expect most players to have much better numbers going forward,” said Smita Jha, leader, media and entertainment, PricewaterhouseCoopers India.

This is being reflected in the profits of multiplex chains like PVR and Inox, which together control over 50% of the total multiplex screens.

PVR’s Q2 numbers delivered a robust 89.7% year-on-year topline growth to R365.7 crore, mainly on account of consolidation of Cinemax. Even on a standalone basis, the cinema chain reported 32% y-o-y growth in top line to R237 crore, and 46% y-o-y growth in net profit to R22 crore on the back of good performance in the movie exhibition business. On the operating front, the company’s Ebitda margin expanded by 110 bp y-o-y to 19.9%. Consequently, consolidated profit grew by 71.4% y-o-y to R28 crore.

The country’s second-largest multiplex chain, Inox, which has 288 screens, saw its Q2 FY14 revenues surge 14% to R236.8 crore compared to the same period last year. “There has been a steady growth in our business. We’ve delivered robust revenues and improved the Ebitda margin,” Inox Leisure CEO Alok Tandon said. “Overall, the multiplex business is on a healthy track. The only area of concern is the absence of good real estate options and a slowdown in realty as it stalls or delays the sector’s expansion plans.”

In the next one year, PVR, which has 398 screens along with Cinemax, plans to add about 130 screens, while Mexican chain Cinepolis has an ambitious target to add 400 screens by 2016.

It currently operates 65 screens across the country. Inox Leisure aims to add 75-100 screens to its current 288 screens by 2014. Reliance Mediaworks’ Big Cinema, the multiplex chain which recently widened its losses, has been looking for a buyer for a while. The company was in talks with Cinepolis for a possible acquisition, though the talks fell through.

Sources say Big Cinemas is close to putting together a plan to scale up and return to profitablity.

India churns the highest number of films per year. According to recent Central Board of Film Certification (CBFC) estimates, the annual film count went up from 1,255 in 2011 to 1,602 films in 2012 and this number is set to grow further.

Yet, there are just 10 screens per million people here compared to the United States, where there are 120 screens per million.

With digitisation, big-budget movies are now released across as many as 3,500 screens as compared to 1,000 three years ago. Even if cinema hall owners charge a premium of 15-30% during weekends, there will be buyers. As of now, at least 77% screens have been digitised.

“Multiplexes are growing their non-ticket revenues, chiefly from food and beverages and advertising which become critical for profitability to improve. While F&B’s revenue contribution is about 50% in this business, in India it is still at 18-20% levels,” said Ashish Shukla, country head, Cinepolis India.

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