What multiplex chains are doing to grow in small towns

The Indian film industry is among the largest in the world in terms of movies released annually. In 2018, 1,776 films were released in India, while only 878 films (including foreign titles) were released in the US. India also outdoes the US in terms of cinema admissions — in 2018, over three billion tickets were sold in India, while the US and Canada together saw only 1.3 billion ticket sales. However, as per a FICCI-EY report, the number of screens in India is a fraction of what the US has — 9,601, as against the 55,623 screens in the US, as of 2018.

India’s low screen count can primarily be attributed to the low penetration of movie theatres in tier II, III and IV markets. Leading multiplex chains like PVR, INOX and Carnival Cinemas, as well as upcoming players, have identified these markets as the next frontier for growth. While working on premium offerings for the urban market, they are attempting to increase their footprint in the smaller markets. The plot

While multiplexes have changed how urban India watches movies, a large part of the country still flocks to the single screens. The 2019 FICCI-EY report states that the top four multiplex chains of India account for 41% of the domestic box office collections; but they account for just 22% of the total screen count. In 2018, only a third of the 9,601 screens were multiplexes.

That’s why multiplex owners are making a beeline for smaller towns. “Our focus is on towns where the population is one lakh or less and which are surrounded by towns with a population of 10,000-15,000,” says Mohan Umrotkar, CEO, Carnival Cinemas, indicating a plan to make the central town an entertainment hub for neighbouring towns.

Carnival Jalsa, Carnival Cinemas’ multiplex model for small towns, will house two or three screens with a maximum capacity of 500, an F&B outlet and a retail store for which the cinema chain is reportedly in talks with Future Group. On the company’s anvil are 30 Carnival Jalsa projects in the next two years. PVR, meanwhile, is experimenting with a low-cost sub-brand titled PVR Talkies in eight markets at the moment, and is likely to open more such outlets soon. INOX is already present in places like Ajmer, Bharuch, Jorhat, Anand, Kurnool, Jalgaon and Belagavi. Alok Tandon, CEO, INOX Leisure, says that the company plans to roll out 80 screens across the country in FY20, which will be “evenly spread between the smaller markets and metros”.

Then there’s Nova Cinemaz, the cinema exhibition network of UFO Moviez which is also investing in rural cinema. And Ajay Devgn too is investing Rs 600 to set up theatres across rural India.

Even though multiplexes form a small part of the overall screen universe, they bring in the big advertising bucks, says Ajay Mehta, MD—interactive television, GroupM India. “Even the single screens are hence transforming to attract more advertisers, because they get a lot of business from local brands.” Advertising inventory in small town cinemas is limited to 15 minutes for now. The hope is that with the increase in footfall, the advertising inventory scope within theatre premises could widen.

Growth, at a steep cost Setting up multiplexes requires deep pockets. An INOX screen, for instance, could entail an investment cost of Rs 2.5-3 crore. Cinema exhibitors are working out ways to bring this cost down to cater to the price-sensitive cinema-goer in small towns. “Our volume of investment is commensurate to the paying propensity of customers in the catchment,” says INOX’s Tandon.

Carnival Jalsa does not plan to spend heavily on infrastructure, but will install basic amenities. “These screens will not have high-end projection systems. We will opt for a basic 5.1 or 7.1 sound system,” Umrotkar informs.

The investments made will also determine the cost of tickets. A modest price point of Rs 100-120, experts say, is appropriate for small towns and non-metros. At the moment, INOX Ajmer has priced one ticket for the movie Kabir Singh at Rs 76. The most expensive ticket, priced at Rs 138, is for its Gold screen that has a seating capacity of 52. In comparison, the ticket price for the same movie in the same multiplex chain in Bengaluru starts at Rs 138 and goes up to Rs 440.