India Economy

A picture of opportunity

Maulik Madhu | Updated on January 16, 2018 Published on October 23, 2016

JAVIER SOTOMAYOR, Managing Director, Cinépolis India

Cinépolis India is a wholly-owned subsidiary of the Mexico-headquartered Cinépolis, which is among the world’s largest cinema networks. The company debuted in India in 2009. It operates 269 screens across 40 Indian cities and plans to roll out 400 screens by 2017. We spoke with Javier Sotomayor, Managing Director, Cinépolis India, on the multiplex industry and the company’s India strategy.

What is Cinépolis India’s strategy on creating a place for itself in the Indian market which has big players such as PVR Cinemas and INOX Leisure?

The biggest player in India has 500+ screens. In China, there are 30,000 screens. I don’t think there are many very big players in the Indian market, which has 2,000 multiplexes. We have been consistently gaining market share in India — three years back, we had 6 per cent share, today we have 16 per cent.

We are the third largest operator in the country in terms of number of tickets sold and have been growing much faster than any of our competitors over the last five years. We acquired Fun Cinemas in 2013. Recently, we acquired seven screens of DT Cinemas. I think the potential in India is huge — 20,000 multiplex screens over the next 10 years. I believe a lot of history needs to be re-written looking at the potential of this country over the next decade. This is just the beginning.

Do you think the smaller cities and towns offer better opportunity to multiplex operators? What is your strategy in smaller cities?

We are going both into the metros and the tier I and II cities. I don’t agree that we have enough number of cinemas in the metros. The potential is huge in both the metros and smaller cities. The pace at which shopping centres are growing in India is slower than what Cinépolis India would have liked.

We have made a list of the top 60 cities where we want to be present. Whenever we have opportunities in these 60 cities, we will go for it. In Chennai, the average ticket prices (ATP) are controlled by the government. In locations such as Delhi and Mumbai, we have the opportunity to charge higher ATPs such as ₹300. Property rentals and various other factors too affect the average ticket prices in a city.

Do you expect further consolidation in the Indian multiplex industry? Will this push up the average ticket prices?

I believe more consolidation will keep on happening. There are small chains or existing weak players that may be acquired. I do not see the big players wanting to exit soon and they will be here for a long time. I don’t see us getting into a situation of increases in ticket prices beyond what they should be because cinema is still the cheapest form of paid entertainment. We do not compete amongst ourselves; we compete with other modes of entertainment.

The ATP has grown at a rate lower than inflation. So, actual ticket prices have decreased over the years. This has happened in times of consolidation. Hence, I don’t see ATPs increasing with growing consolidation. In the US, the ATP is $10 and in China, it is about $7. In India, ATPs are still one of the lowest.

Has digital distribution of movies brought piracy under control? What more needs to be done?

I think digital distribution has helped but piracy still prevails not only in India but also in other parts of the world. Digitisation of movie distribution is one thing. On the other side, digital technology has given the consumer the ability to easily share and access content online and indulge in piracy.

A lot has to be done and we all — the producers, distributors and exhibitors — have to work together. We need to convince the government to create regulations for piracy to be considered a crime. We also need to educate people that piracy is not a positive thing. They think downloading a movie is okay (culturally) and do not understand the consequences.

Is piracy more prevalent in India than in other countries?

From my personal experience, India would be above the average but it’s not the worst that I have seen. The challenges are the same in other countries as well.

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Published on October 23, 2016
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