Commercial Mall and Multiplex Syndrome - Helping Each Other!

Initially we saw emergence of cinema multiplexes in Indian Metros and now this growth is spreading to Tier 2 and 3 cities like Lucknow, Indore, Nasik, Aurangabad, Kanpur, Amritsar and so on. Top players in this sector are PVR Cinemas, Adlabs Films (where Anil Ambani holds a 51% stake), Inox Leisures, Shringar Cinemas (Fame multiplexes), Fun Multiplex (of Essel group) and Cinemax India etc. All venturing into small towns across India (e.g. Darjeeling, Mangalore, Ghaziabad, Pimpri, Pune, Panipat, Allahabad, Indore, Latur, Agra, Thane, Lucknow, Hyderabad, Nasik, Jaipur, Visakhapatnam, etc.)

Projects are under way in places like Kochi, Bhatinda, Coimbatore, Kota, Madurai & Ambala. Towns and Cities with a population in excess of 10 lakh people is becoming lucrative for them. Some 40 cities in India are qualified for that and given that are there lesser means of entertainment in these towns, there is a huge potential.

The importance of smaller towns can be gauged from the fact that movie stars are now touching down at these places to promote their films. If Aamir Khan was in Thane, for the release of Rang de Basanti, more recently Amrita Rao was in Nasik for the release of Vivaah. After a couple of years, non-metros will clearly be the drivers for film exhibiting firms. Moreover, box office collections from non metros is expected to move up.

Experts believe the 65% of the total box office collections coming from non metros and is expected to change to 70% in 3-5 years. PVR has raised almost Rs 128 crore (Rs 1.28 billion) last December through its IPO, and has also gone for a new brand, PVR Talkies, to enter the smaller cities.

PVR Talkies plans to enter 70 cities -- including Khanna, Jalandhar, Amritsar and Moradabad - over the next 3-5 years. Adlabs would also invest some Rs 200 crore (Rs 2 billion) over the next 3 years, and is eyeing places like Hyderabad, Delhi and NCR, Agra, Jalandhar, Ludhiana, Indore and Allahabad.

Inox, which has entered into a share swap deal to take over Calcutta Cene known for its multiplex brand 89 Cinema -- already has multiplexes in smaller places like Vadodara, Darjeeling, Goa, Indore, Jaipur, Kota, Nagpur and Pune.

Its theatres are coming up at Chennai, Hyderabad, Jodhpur, Raipur, Lucknow, Nagpur, Kharagpur, Borivali, Pune and Vijayawada. Further, the CCPL merger will bring in nine multiplexes in West Bengal and Assam to its fold. Similarly, Shringar -- already operating in Kandivali, Surat, Nasik and Pimpri - is taking its Fame to places like Aurangabad and Thane.

A Different Pricing and Packaging Strategy:

It is the retail boom that's mostly driving the multiplex story. Mall developers all over the country are wooing multiplexes to occupy their top floors as anchor tenants who would ensure footfalls. The arrival of the mall mania has actually accelerated the growth of cineplexes as multiplexes are the anchor tenants in most of malls.

The earning may not the as attractive, but experts feel F&B and ad revenues from non metros would match the metros in the near future. Also, the consumer preferences are different. If hotdogs and popcorn are popular in the metros and semi-metros, in smaller towns, people would rather go for the traditional samosas and vada paavs.

So what if multiplexes constitute just 1% of the total number of cinema halls, and 4-5% of the 12,900 screens, in India, the industry is talking about the end of single screens. Single screens, with their low quality ambience, would find it tough to survive in the long run, it is felt. This because there is a rising demand for quality cinema exhibition infrastructure. Also, before long, digitisation will be the industry standard and exhibitors will have to shift to it.

As per some estimates, India have only 12 screens per million population compared to 117 screens per million in the US and more than 40 screens per million for European countries. The risks involved are rising property prices. But most multiplex owners have tied up properties for at least the next couple of years. Also, being the anchor tenants in a mall, they are always offered special rates by developers.

Again property prices in smaller town are comparatively stable, which makes them bullish on their plans for these cities. So, at least on the surface, there's nothing much to stop the multiplex boom.

The coming of age of DTH services are unlikely to make the millions of movie goers across a country of fanatic fans resist the first day-first show temptation of Bollywood.