'Its a myth that people in small towns wont pay more for films'

Written by Sudipta Datta | Updated: Nov 9 2011, 07:56am hrs
When the top players of the multiplex industry were building up business in the metros and tier-1 cities, Sumant Bhargava, MD, Stargaze Entertainment, looked elsewhere. He saw potential in tier-2 and tier-3 cities or the emerging cities as he calls them. In 2008, Stargaze Entertainment began offering better infrastructure to these cities and has now grown to 5,200 seats per show and has reached 2.5 million-plus captive customers. In a chat with FEs Sudipta Datta, Bhargava explains that there is a huge market out there and a big demand-supply gap for quality cinema theatres. He also shatters the myth that small towns are not willing to pay for tickets. If you give them better infrastructure, people are willing to spend more on tickets, he tells us. Excerpts:

Most players in the exhibition industry has concentrated on the metros and big cities, what made you want to dig deeper

I have been associated with the film exhibition industry since 2003, and early on, even before we set up Stargaze in 2008, I realised that the potential for growth lay in cities where there was no existing cinema infrastructure. So, we decided to go to places like Ajmer, Kurukshetra or Raipur and Ranchi and built infrastructure for a large captive audience, for whom cinema was the only form of entertainment.

But there are pricing issues, your ticket prices cant be high, so how do you ensure return on investment

We operate on a low capital expenditure model. But having said that, our halls, Glitz Cinemas, are artfully built and the auditorium quality is at par with the ones at big cities. There is no compromise on quality, and people are willing to pay if you give them better infrastructure. Its a myth that people in small towns are not willing to pay more for entertainment, but you have to give them infrastructure comparable to the big cities. At our Glitz Loungepeople pay R400 for the best seats on the weekendthe first seats to be occupied are the most expensive ones. Typically, our average ticket prices range from R70-140.

Are you happy with the content that is coming out of Bollywood Do they work in small towns

Well, if you take a film like Zindagi Na Milegi Dobara, it will work in six of the eight cities we are in; but Bodyguard will work across all the towns we are present in. Ticket prices are high and so people choose their films carefully.

In three years, you have built 19 screens. What are your expansion plans

We are going to build 40 screens over the next 18 months. We will fund it in a mix of debt and equity.

So, how much does it cost to build one screen

We are currently packing about R1 crore per screen.

Has the exhibition industry seen a change post-meltdown

Before, we would have needed R1.5 crore to build a screen. Now, we get a whole lot of capital expenditure done for investments made by real estate players. This has reduced our investments. While building a multiplex, we are now only doing the soft part of itthe auditorim, sound, lights, etc.