R. Srinivasan

R. Srinivasan, also known as Ravi Srinivasan, is cursed with a magpie brain, which compels him to peck at anything shiny which catches his eye. Some of the bits turn out to be useful!

R Srinivasan

Multiplex monopoly

R Srinivasan | Updated on March 09, 2018

I don’t think the honourable members of the Competition Commission of India (CCI) are movie buffs. Because if they were, and had gone to see a movie or two at a multiplex recently, I am certain their regulatory instincts would have kicked in, and they would have taken a long, hard look at what is happening in the movie exhibition business in the national capital.

In fact, given that we have a fairly decent Competition Act, and that the CCI has not a few teeth, it is surprising that the near monopoly situation which prevails in the Delhi market, and the consequent price paid by customers left without adequate competitive choice, hasn’t managed to grab their August attention already, particularly since multiplex owners and film producers and distributors have been separately wrangling over other issues in front of the CCI, and accusing each other of being cartels, in the process.

There will be howls of protests from multiplex owners at charges of monopoly. They will point out the many players who are present in the multiplex business in the National Capital Region (NCR). And in aggregate, their numbers would support them.

But any marketplace needs to be looked at in terms of its own dynamics, and not just geographic or balance sheet aggregations. The NCR is a vast urban agglomeration, stretching nearly a 100 kilometeres in either direction, across three states. Lumping them all together as a single movie marketplace is illogical. Nobody is going to drive a 100 kilometres to watch a movie.

If you break it up into zones, the concentration becomes obvious. Leading player PVR has a dominant 70% share through its PVR and DT Star brands. In the premium South Delhi area, it is almost 100%. Likewise, the other players like Fun Cinemas, Wave or Cinemax, are concentrated around East, West or North Delhi and the respective adjoining areas of the NCR region.

And how has this played out for customers? Badly. Multiplex ticket prices in Delhi are the highest in the country, by a considerable margin. Ticket prices range from Rs 300 to Rs 390 on weekends in standard multiplexes, with some ‘premium’ screens, which offer special seating and meals, going up to over Rs 900. In contrast, the average ticket price in Bangalore is Rs 200, in Mumbai Rs 250, and in Chennai and Hyderabad, under Rs 200.

All these are metros or mini metros, with comparable real estate, electricity and other overhead costs. There appears to be a good enough case to at least argue monopolistic pricing.

In terms of viewer choice too, the near monopoly is bad news. Whenever one of the periodic fights erupts between producers/distributors and multiplexes, one or the other movie is simply not shown, depriving audiences of choice.

It’s time the multiplex owners stopped being so greedy!

Published on June 01, 2013

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