The Hindu Business Line : Multiplex biz headed for starry times

MULTIPLEXES are offering special rates for morning shows, some are dishing out freebies in the form of popcorn and cola and a few others in Mumbai are running `buy-one-get-one free' schemes. Are these the signs of changing times?

The multiplex business is all set to explode in the next couple of years with over 100 complexes likely to spring up across the country. But the business dynamics seem to be undergoing a change with the novelty factor wearing-off.

According to analysts tracking the sector, with almost 80 per cent of the movies failing at the box office, occupancy levels have taken a hit, dropping to around 42 per cent from the earlier highs of 50 per cent. They claim reduced occupancy and increased competition have extended the payback period from two-and-half years earlier to three/three-and-half years now.

However, those in the multiplex business are optimistic about their future prospects.

Mr Tushar Dhingra, Vice-President, Marketing and Communication, PVR Ltd, said: "India has fewer screens per million compared to the US and Europe. While the US has 110 screens per million, Europe has 76. In India, it is less than 10 screens per million and, hence, the growth potential remains."

He said that price war would break out only if there is an over-crowding of multiplexes in a single location. "Builders must take care not to cluster too many screens in an area leading to supply out-stripping demand... While there may be some rationalisation if tickets are over-priced within a catchment area in a city, but across the board, I see a balance between price and value going forward," Mr Dhingra said.

Moreover, the initial response in metros has now prompted these players to set their sights on untapped markets in relatively smaller towns and cities.

Mr Atul Goel, CEO of E-City (part of Subhash Chandra's Essel Group) had earlier told Business Line that multiplexes have ceased to be just an urban attraction. Small towns are lapping it up. In fact, business could be better in Chandigarh than in Mumbai. His company has been considering smaller towns such as Sangli, Indore, Nashik and Nanded.

But it is ultimately the content that will bring in the audiences to these modern day cinema houses.

Mr Sanjay Bhutiani, CEO, P-9 Integrated (part of Percept Communications), said that last year just 20 per cent of the Bollywood films succeeded at the box office. "Some of the big ones such as Swades, Musafir and even the recent Kisna have not exactly set the cash registers ringing. Hence, multiplexes are now attempting to offer more than just viewing experience. There are shopping arcades for grown-ups and entertainment corners to keep children occupied."

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