Indians? famed movie madness has resulted in a mad scramble for multiplex owners. By some estimates, the number of multiplex screens in the next few years is likely to go up to 700-800 from the current 425. Still others peg the figure at over a 1,000 screens. However, these figures are only a fraction of the 12,000 single-screen theatres that dot India cities according to analysts who also aver that the situation is unlikely to change significantly over the next few years. By implication, single-screen theatre owners will continue to dominate the exhibition business in the country. At 11 per million people, India’s multiplex to population ratio is very low. In comparison, US has 117 multiplexes for every million while in France there are 77 multiplexes per million.

Despite the omnipresence of single-screen theatres in India, multiplex operators seem undeterred. Most are fast ramping up operations. Says Sanjay Dalia, senior vice-president, Cinemax, ?There is no denying the scope for multiplexes in the country. Single-screen theatres have a limitation in terms of the films and shows that can run there. Multiplexes do not have these limitations. Also, single-screen theatre owners have to pay a minimum guarantee to the distributor for playing a movie irrespective of its box-office collections. Multiplexes, on the other hand, follow a revenue-share model.

Besides, there is money to be made from in-cinema placements, gaming, branding, food & beverage sales etc at a multiplex, which helps.? The latter, in fact, makes up a sizeable portion of a multiplex’s revenues. Ticket sales, in contrast, make up only 25-30% of the revenues from a multiplex,? says

Smita Jha, principal consultant, PricewaterhouseCoopers.

Given the potential of the business, multiplex operators are looking to take their individual screen numbers from around 40-80-odd to over 100-200 in the next two-three years. All the top chains, be it Adlabs, PVR Cinemas, Pyramid Saimira, Shringar, INOX Leisure, E-City and Cinemax are working overtime. The competition between them is so fierce that lease rentals are going up and space for good properties going down. As Manmohan Shetty, chairman and managing director, Adlabs Films Ltd says, ?All the prime locations in different cities have been blocked.? Some companies such as PVR, E-City, Pyramid, even Adlabs are stepping into small towns either through value cinemas or digitisation and refurbishment of single-screen theatres.

?There’s a huge market out there in the small towns and cities,? says Pramod Arora, president & CEO, exhibition and new business development, PVR Ltd. Atul Goel, CEO, E-City Ventures agrees,? India has the potential to increase prints for a popular movie title from 500-600, which is what is produced now, to about 3,000. This is only possible when markets open up and more people are able to view the film.?

Despite the race to acquire floor space and mind space, it is worth noting that new entities are contemplating entry into the business. Retail/real estate giants such as DLF and Reliance Retail, for instance, have big plans to get into the exhibition business in India. For most part, the entry of these players is a two fold strategy. Reliance Retail, for instance, is keen to drive footfalls into its hypermarkets by adding food courts, multiplexes, etc, to the basic attraction of one-stop shopping. ?That’s where the latter will come in, more as an ancillary,? says a senior Reliance Retail executive.

The company, says the executive, is not likely to handover the task of setting up and managing multiplexes at its properties to a third-party operator?something that even real estate giant DLF is doing. The latter, in fact, has set up DT Cinemas, which manages the group’s multiplex activities. ?This is a separate company,? says Kajal Aijaz, CEO and director, DLF Services. ?The group has malls in prime locations in different cities and it makes sense to take up the multiplex work at these properties,? she says.

Plans include setting up 500 screens in the next 3-4 years. Of these, about 45 screens will be completed by the end of the current fiscal. In a year-and-a-half, some 100 screens will be up and running, says Aijaz. This trend, in fact, of real estate developers taking up multiplex work at their properties is slowly gaining ground. Wave Cinemas, for instance, part of the North-India-based real estate players Chaddha group, was set up recently to handle the multiplex work at their properties. At present, the company has 17 screens in Noida, Delhi, Koshambi and Lucknow. Another 7 screens will be coming up in Ludhiana and Moradabad in the next few months, says Rajiv Gupta, CEO, Wave Cinemas. ?We will continue to expand our cinema business,? he says. ?We are treating it as a separate venture.?

Though it makes sense for players like DLF and Chaddha to step into the exhibition business as they can manage operations in-house rather than participate in the entertainment boom themselves, analysts say that aggregating content for their screens may not be easy. The reason being the lack of domain knowledge and expertise in the area. ?Securing content is a very complex exercise,? says Jha of PricewaterhouseCoopers. ?The business is highly unorganised and relationship-driven. Distributors will be interested only if you have significant size and scale.?

In that sense, DLF, even Reliance Retail, could breathe a sigh of relief that distributors may eventually tie-up with them since they are mass-market players. But more needs to be done to seal the content pipeline, say analysts. Regular multiplex chains, for instance, are responding to this need to secure their content pipelines by getting into distribution themselves. Some of them such as Shringar have been traditional distributors, while Adlabs and INOX forayed into the business a few years ago and PVR has stepped into the arena now. The latter is also getting into production of films? something that Adlabs is also doing?by signing a Rs 20-crore deal with actor Aamir Khan for two movies.

In fact, getting into various aspects of the film value chain is becoming a bit of a trend. Not only are exhibition companies diversifying, but also production & distribution houses. Speculation hold that Yash Raj Films may enter into exhibition. But as industry insiders opine, the business is far from easy. ?In exhibition, you are not only dealing with content, but also managing a physical space/property. That’s not easy,? says Saurabh Varma, vice-president, film programming & distribution, INOX Leisure. So, serious competition will continue to come from players within the exhibition sector as well as retail/real estate majors.