Coronavirus Impact: As movie theatres look to open shop, all hopes pinned on big-budget films

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Updated: May 21, 2020 9:01 PM

Exhibition industry expects to re-open by mid-July in a new avatar, adhering to the government guidelines

Besides social distancing, cinema theatres have adopted various measures as well as new techniques to maximise footfall as well as increase consumer experience.Besides social distancing, cinema theatres have adopted various measures as well as new techniques to maximise footfall as well as increase consumer experience.

As mid-sized Bollywood movies made their way onto OTT platforms last week, as opposed to a theatrical release on the back of a prolonged lockdown across the country, multiplex operators are now preparing to start operations soon. In fact, exhibition companies claim that it is looking at starting staggered operations from the middle of July. “We have lost nearly Rs 1,200 crore. Of this, 20%-30% of the revenue will remain lost. However, once cinema theatres re-open and big-budget movies are released, audiences will start coming in big numbers,” Mohan Umrotkar, CEO, Carnival Cinemas, told BrandWagon Online.

According to industry estimates, a film generates 60%-70% of its revenue from the theatrical release with the sale of broadcast right and OTT right contributing to the remaining amount. With nearly 1,000 movies releasing in a year, analysts believe that the loss of three or four movies to the OTT platform will not have a big impact on the exhibition industry as big-budget movies will refrain from OTT platforms. “Though it might be the need of the hour for some producers, this will not transform into a trend. Releasing a movie directly on OTT means that producers are not only losing out on box office collection at a domestic level but also on the international theatrical collection,” Taran Adarsh, film critic and trade analyst, said.

Open sesame!!!

Exhibition companies are ready to open theatres with plans to follow all guidelines around maintaining social distancing within the halls. This would mean a reduction of 20%-25% in occupancy as a seat shall be left vacant on either side. This will result in a loss of revenue for the companies, though not by much. “It’s important to remember that besides weekends, theatres see nearly 60% of vacancy rates on weekdays,” Sanjeev Kumar Bijli, joint managing director, PVR Ltd, explained.

Besides social distancing, cinema theatres claimed to have adopted various measures as well as new techniques to maximise footfall besides upping the game on consumer experience. For instance, PVR Ltd plans to adopt a cashless transaction strategy wherein consumers will pay for the ticket via their cards or e-wallets. Moreover, the company has decided to limit its food and beverage to items such as popcorn, Pepsi and nachos. As per Bijli, these three items alone contribute to about 75%-80% of the company’s revenue. Similarly, Inox Leisure intends to promote private screening as a consumer offering, along with providing edutainment content. “We had started scaling up our edutainment initiatives just before this break, where we were offering a unique experience of showcasing National Geographic content to school children, on the giant screen, and that emphasis would continue to remain,” Alok Tandon, CEO, INOX Leisure Ltd, said.

According to industry estimates, the exhibition industry has already lost Rs 800 crore – Rs 1,000 crore, post the implementation of lockdown. This does not include revenue earned from the sale of food and beverage. Moreover, companies continue to incur fixed costs. The exhibition industry has pinned all its hopes in the latter part of the year, especially during Diwali when big-budget movies such as Sooryavanshi and 83, will be released. “Diwali has always been a season of high footfall for the industry, and this year festive season might just be the much-required spur for the industry. The push back of movies due to lockdown has ensured that we will have a good quality of content before, during and after Diwali,” Tandon stated. Despite the current challenges the exhibition industry expects viewers to return to theatres while adhering to safety measures.

Read Also: Coronavirus Impact: Movie producers and multiplex operators fight it out as films take to OTT release

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