Mexico-based film exhibitor Cinépolis plans to increase its screen presence in India from the current 360 to 600 by 2022. Javier Sotomayor talks to Sonam Saini about entering the hinterlands, rising ticket prices, and the threat from OTT players. Edited excerpts:
Cinépolis has launched megaplexes and kids theatres, has premium offerings, and is also tapping opportunities in the tier III markets. What is the positioning you are aiming for?
Since the time we came to India, the objective has been the same: to become the leader in the cinema exhibition market. Currently, we are the third-largest player in terms of box office collection and fourth-largest in terms of screens. We believe that India has great potential. Here, for 1.3 billion people, there are around 2,500 multiplex screens; whereas in China, which has roughly the same population, there are 50,000 screens. We plan to have 600 screens by 2022.
Furthermore, we have been investing in technology such as 4DX, IMAX, and have launched Cinépolis Junior screens.
Cinema is still the cheapest form of paid entertainment and we are seeing a favourable response from tier III markets. We are growing in all the cities alike. We acquired Fun Cinemas five years back. In tier III cities, we are present through the Fun Cinemas brand as it has a low screen count, whereas Cinépolis caters to the metros and tier II markets.
Has the exhibition-cum-hospitality experience, through luxury and kids-focussed screens, increased ARPUs?
Globally, we have around 500 VIP-only screens. This is complementary to our core offering. Yes, ARPUs are expected to increase, conditioned on higher investment in the VIP segment. In India, we have seven VIP-only screens in metro cities which target a niche audience looking for a premium experience. This is not necessarily done to replace traditional experiences, but rather to enhance and offer different products to different people with varied needs.
How much does F&B contribute to your overall revenue? Has the rise in food and ticket prices impacted footfall?
No. Cinema is an affordable entertainment option for the whole family. In 2017, we got impacted by the highest tax slab of GST being fixed at 28%, and in spite of that, we kept the prices competitive. Recently, when the highest slab got revised to 18%, we reduced the ticket prices accordingly.
Our F&B vertical contributes higher than the industry average of 35% to the business. We have two main food concepts at Cinépolis — first is the usual confectionery comprising typical cinema food items like popcorn and nachos; and second, our sub-brand Coffee Tree for which we have hired chef Saransh Goila to develop Indianised versions of snacks.
How is in-cinema advertising evolving in India and how big is it for Cinépolis?
In-cinema advertising has become a significant revenue stream for our businesses in all parts of the world. I think clients have understood the kind of audiences we attract. When it comes to cinema, the audience is highly segmented, which gives clients and brands the ability to target effectively; this has gained a certain momentum in recent times. It is indeed significant for us.
Do you see OTT as competition, with films now available on these platforms within days of their theatrical release?
There has been no reduction in the number of movie-goers. In the past eight years, the number of people coming to watch films has consistently grown, not only in India but in the western markets as well.
Yes, we see OTT as competition. People have limited time to spend on leisure, so just like we see OTT as a competitor, we also see going to a mall or going out for dinner as competition. OTT has changed people’s habit of consuming content; we see that the time people spend watching OTT content has increased drastically. Having said that, 2019 has started quite strongly for the exhibition industry. We are optimistic about business this year.
