The multiplex sector is set for troubled times ahead owing to multiple headwinds.

With a strike in place, IPL in flow, and zero content from Bollywood, multiplexes are either renting out space, increasing Hollywood shows wherever possible, or shutting down screens to save on costs. ?One or two screens have already been shut in most of the multiplexes which have more than three screens,? says an insider.

PVR, which has 26 properties and 108 screens across the country, is renting out space for conferences and increasing number of shows of Hollywood films, according to sources. Inox is holding world cinema retrospectives at some of their screens or increasing shows of regional films.

Others are simply shutting screens to save on high electricity costs. Many are using the lean period to carry out maintenance work at some of the screens.

Says Anand Shah, analyst with Angel Broking, ?With footfalls dropping, multiplexes will have to look at alternative sources of revenue as also go in for cost rationalisation, and shutting screens is one of the options. Their power bills are quite staggering.?

While the slowdown is a factor impacting footfalls, poor content is also keeping audiences away from the multiplexes. The top grossers in calander year 2008 collectively earned Rs 435 crore, almost 40% less than that earned in calander year 2007 (Rs 692 crore).

Most of the multiplexes are also hoping that towards the end of IPL season 2, they will be able to screen the cricket matches because ?cricket is a crowd-puller?, says a multiplex owner. That-falling occupancy-has been a great cause for concern at the multiplexes.

Over the past few months, Ghajini and Rab Ne Bana Di Jodi apart, occupancy has been 25-30% at an average. Multiplex owners have blamed it on poor content coming from Bollywood, and with IPL on till May 24, it’s unlikely that a single Hindi film will release during that period. Yash Raj Films’ New York was postponed. But even if films were to release, multiplex owners are locked in a spat with producers and distributors over revenue sharing, and hence the strike from April 4.

Producers and distributors have been asking for a 50:50 share of revenues, but multiplex owners have refused, saying they will shell out more when a film does well and less when it doesn’t.

In the near term while the exhibitor-producer tiff and upcoming IPL season have emerged as the biggest challenges for the industry, the funds crisis and slowdown in the real estate market are likely to hamper industry growth, say analysts.

Over the past one month, multiplex stocks have witnessed a rally in the range of 35% to 50% despite looming concerns including lower occupancies and possible delays in handover of properties. There is no near-term catalysts for the sector, sources added.

According to an analyst with a leading stock broking house, with multiplex operators are facing a funds crunch on the one hand and a slowdown in the real estate sector on the other, the expansion plans of the multiplexes in terms of property roll outs are likely to suffer. The scenario will only worsen in fiscal 2010.

Television is also keeping audiences away from theatres. According to analysts, with a wide choice of 500+ channels spanning across genres like general entertainment, regional, movies, music, news and sports at an average revenue per user per month equivalent to the entry fee for a single patron at a multiplex, television emerged as a key option for entertainment for the entire family. Direct-to-home (DTH) viewing has only lent that additional impetus to the television industry. Over the past three years, DTH has witnessed a sharp increase in its penetration levels-from a mere 1% to 12.5%, encompassing an estimated 11 million subscribers in fiscal 2009.

Multiplexes believed to have also lost a good business opportunity in telecasting the IPL matches, being played in South Africa. While a handful showed interest initially, last minute glitches have forced the IPL management to refrain from selling rights to multiplex players. IPL has been looking at a minimum guarantee of Rs 35 crore to Rs 45 crore with rights to distribution only for a year which is not feasible for multiplex players, analysts added.

?A detailed report on how multiplex players are coping with the turmoil is recounted in today?s BrandWagon, ?Lights, camera, where?s the action?