It is not that new mall activity has suddenly slowed down; the situation has been the same over the last 18-24 months. In fact, we are opening about 60-65 screens a year – which is about 10 properties – not much for a country of India’s size. But, we expect the pace to pick up soon because it cannot get slower than this. For example, we are opening new projects in Mumbai, Pune, and Delhi in the next two years. Similarly, Bangalore is seeing lot of action.Even Hyderabad is buzzing because of many L&T projects across the metro-rail corridor. There are opportunities in existing cities.
Actually, Delhi and Mumbai saw huge growth – not only in ticket pricing but also in terms of volumes. We have experienced that as the disposable income increases, spending on entertainment moves up. This is going to continue over the next decade at least. People who were earlier watching movies exclusively in multiplexes are now watching content across multiple devices. But this has not stopped them from going to multiplexes, because while earlier entertainment was an aspiration product, now it has become more of an outdoor home entertainment lifestyle product – just like restaurants.It is more of a family experience. Having said that, 4G rates are dropping and broadband speed is increasing, so you will see a lot of promotions around films through channels such as YouTube and this might whet consumers’ appetite to go out and watch the actual film.
We have not had such an experience in the tier-2 markets ever. In fact, these markets continue to do very well, because our key focus is choosing the right location and right shopping mall. That is the biggest differentiator between PVR and most other operators – in fact, this year, we are scheduled to open in Mysore, Baroda, and Muradabad; every year, we are adding 3-4 new cities. However, we will not open just because there is an opportunity – we also look into the fundamentals of the business.
It works out because lower ticket prices are offset by higher occupancy. However, in the long run, it will not work – simply because you cannot keep delivering the product at that price. We are hoping that as the market matures, some of this restriction will go away. We are already seeing the market moving in a positive direction. The government also seems to have matured and realises that it cannot regulate pricing in a discretionary product such as entertainment. We hope that once GST comes into play, the industry would become bigger and more organised, and that some of the political agendas would be set aside – so we are hoping things will only improve.
India makes the most number of movies in the world. But the challenge is – quality of content. Sometimes, filmmakers are aligned with consumer behaviour and taste, but other times they aren’t able to adopt. The problem is that we do not have good quality content, but as more money is available to the industry, hopefully, quality will improve. We see studios losing money and not doing well, but this is a good sign because it will cause the industry to evolve and push filmmakers to make better quality content.
Typically, we have a week-long contract and we have to live with that. After this, we can make changes, but for large screens such as PVR, we work with the distributors and producers actively. If we have a situation like this (where we realize that the film isn’t going to work from day 1) we go back to our raw material supplier and request them for relevant changes – within this, we reduce shows (or increase shows if the film does well). But yes, we carry a one-week risk on the performance of the film, after which we can reprogram the theatre.
As a cinema chain, we are actively working with the Multiplex Association of India and Producers Association of India to make anti-piracy laws far tougher and for increasing the focus on security and awareness. It is a constant struggle and we are actively lobbying with the government.
India is a very under-screened country and currently our presence is in only 48 cities. Observing movie-going habits in India, we believe that we have the potential to reach 100 cities – in the next 5-6 years, we will be expanding our presence. Our second focus will be to increase penetration in some of the existing cities because the screen density there is very low. Our third focus is to open more and more multiplexes in south India, as it provides a similar size and opportunity to the Hindi film industry, but it is still under-penetrated compared to the rest of the country.
One of the biggest reasons for M&As in the exhibition side has been that multiplexes are a fairly new phenomena in India. Since these only developed in the last decade or so, a lot of players entered into this space with no experience in running and managing operations and like many other industries, this led to consolidation in the last 4-5 years. The global cinema space is usually dominated by 3-4 large operators, which control 80% of the market – the rest is with smaller operators. What has happened in India, although quite early, is similar to what happened across other countries over a period. I think some M&As may still happen because there are small fringe operators left; but yes, I don’t see big M&A opportunities remaining.
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