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Film exhibition segment

Industry overview

From single screens, to multiplexes and to the recent emerging trend of megaplexes, the Indian film exhibition segment, which forms the largest component of the country’s filmed entertainment industry in India, has undergone a sea change. In 2010, domestic theatrical film exhibition revenues were estimated to be INR75 billion, contributing 74% of the total revenues of the Indian filmed entertainment industry. In 2015, it is estimated that theatrical revenues in India will increase to INR 101 billion1, driven by the growth of multiplexes across the country and the implementation of digital technology in cinemas, which is expected to facilitate wider release of films and reduce piracy.



The digitization of the Indian M&E industry's distribution channels has helped to increase industry revenues, curb piracy and reduce costs. Indian cinema houses are also increasingly adopting digital technology.


 

The following are some of the recent trends in India's film exhibition industry:

Rise in number of multiplexes:

Over the last few years, the number of multiplexes in India has grown exponentially and become the preferred choice for movie goers, despite ticket prices being higher than those charged by movie halls. Multiplexes provide better service and an enhanced viewing experience as compared to single-screen movie halls in terms of their sound systems, seats, ambience, and food and beverages offered by them. Their growth is driven by rising disposable incomes, the increase in the number of films targeted at niche audiences and entertainment tax benefits granted by various states.

In 2010, there were 1,075 multiplex screens in the country. These comprised around 8% of the total screens in the country, but accounted for 40% of total ticket collections. All major players have been launching an increasing number of multiplexes every year — Cinemax plans to add 45 screens every year as a part of its expansion plan2. By 2015, the number of multiplex screens is estimated to rise to 1,925, growing at a CAGR of 12% between 2010 and 20153. The increase in the number of malls, which are the common choice of location for multiplexes, is a key enabler of the rapid roll out of multiplex screens.

The concept of megaplexes is also emerging in India. Megaplexes have 14–15 screens and more capacity, as compared to to 4–6 screens in multiplexes. A megaplex offers a wider choice to consumers, with several movies, ranging from Hindi, regional and English films, and even special interest films, being screened at the same time. It can also be used to screen events including cricket matches and soccer games as well as movies. It also offers value-added services such as a gaming zone for children and food courts. Mexico-based player Cinepolis is planning to open a 15-screen megaplex in Pune and a 14-screen megaplex in Thane in 20114.


Increasing adoption of digital technology

The digitization of the Indian M&E industry’s distribution channels is a key growth driver, helping to increase industry revenues, curb piracy and reduce costs. Indian cinema houses are also increasingly adopting digital technology.

As of March 2010, it is estimated that there were 2,000 digital screens in India, a figure that is projected to rise to 2,500–3,000 over the next three to four years5. Major cinema chains are launching digital screens, e.g., Cinemax has implemented a phased program to digitize 30 screens in the all-digital mode6. PVR Cinemas has entered an agreement with Imax Corporation, a global premium entertainment brand, to install digital Imax theatre systems in four locations across India, to meet the demand for premium entertainment7.

Digital prints cost 80% less than conventional film prints, and enable producers to reach five times the number of screens at the same cost. This has significantly improved realizations, since 60% of box-office collections are now earned within the first week of a movie’s release8. Digital cinema allows companies to exactly control at which locations and how many times movies will be shown. It also expands the reach of releases, from large cities to remote towns and villages across India9.


Globalization in Indian film exhibition

International players are entering the film exhibition business in India, backed by supportive government policies, which allows 100% FDI for all film-related activities including exhibition. Mexican movie chain Cinepolis has opened multiplexes in Indian cities including Amritsar and Patna and has plans to open another 50 screens in 201110. Major Cineplex Group Plc. of Thailand has acquired a 10% stake in PVR11. Indian players are also going global by opening theaters in other countries. Big Cinemas operates screens in Malaysia and the US markets; Mumbai-based cinema exhibition company Inspire Multiplex has plans of launching multiplexes in Bulgaria and Romania12 and PVR Cinemas is exploring options to expand its operations overseas by operating theaters on management contracts13.


3D films gaining prominence

3D films are becoming popular in India. In 2010, there were around 18 Hollywood movies released in 3D and most of these did well. Avatar grossed INR1.1 billion,, of which 45% was contributed by its 3D version14. Many Indian producers are planning 3D films, encouraged by the very positive response to these movies. Haunted, released in 2011, was India's first stereoscopic 3D film —there are a few more in the pipeline, including Dangerous Ishq and Raaz3. The aspirations of these producers are well supported by technology providers who are in the process of implementing 3D-compliant projection systems in theaters.

3D films contribute around 10% to total multiplex earnings and tickets are priced at a 10%–25% premium15. Satellite-based digital cinema network UFO Moviez India plans to invest close to INR2.5 billion to convert 1,000 screens in the country to 3D over the next two years16. 3D technology has helped theaters generate increased returns by allowing them to charge a premium to audiences, maintaining the exclusivity of technology-enabled theaters and reducing piracy17.


Expansion into lifestyle entertainment

Multiplex owners are diversifying into lifestyle entertainment, leisure and casual dining to house several entertainment formats under a single roof to increase their revenues.

Cinemax has launched Versus, its gaming business in its Delhi multiplex. Versus has a bowling alley and offers third person shooting games, pool tables, air hockey, education-centered programs, and a special area for birthday celebrations and corporate parties18.

PVR has announced its launch of an entertainment city comprising a 15-screen multiplex theater, a bowling alley, a skating rink and food plazas in a shopping center in Noida19. It also plans to expand its Blue-O gaming center business, which it currently operates in Gurgaon20.


Shift of focus of multiplexes from metros to smaller cities

Multiplexes are gaining prominence in tier-II and tier-III cities across India. Companies are making investments to accelerate multiplex penetration in small towns, driven by rising disposable incomes in these locations. Cinepolis will open a 14-screen resource multiplex in Thane and Mukta Cinemas, which has recently ventured into the exhibition business, has launched its first multiplex in Vododhara21.

In addition, Cinemax plans to invest around INR900 million on opening 160 screens in several small cities in the next 14 months; PVR has announced its intention of adding close to 60 screens, with an investment of INR1–1.5 billion by the end of 2011 — 70% of the screens will be added in tier-II and tier-III cities22. South Indian cities offer an attractive opportunity for such expansion, since there is a significant demand for regional films in them.



1 “Update on Media & Entertainment,” Crisil August 2011.

2 “PVR plans to invest Rs 750 mn in FY’12,” Indiantelevision, 8 August 2011, via Dow Jones Factiva © 2011 Indiantelevision.com; “Cinemax to add 40 screens every year,” Business Standard, 2 September 2010, via Dow Jones Factiva © 2010 Business Standard Ltd.

3 “Update on Media & Entertainment,” Crisil August 2011.

4 “Cinepolis to open India’s largest 15 Screen megaplex in Pune,” Screen website, http://www.screenindia.com/news/cinpolis-to-openindias-largest-15screen-megaplex-in-pune/804738/, accessed 12 August 2011.

5 “Update on Media & Entertainment,” Crisil December 2010.

6 Cinemax to add 30 screens in 6-8 months, invest INR45 crore,” BusinessLine, 17 December 2011, via Dow Jones Factiva © 2011 The Hindu Business Line

7 “Imax in deal with PVR for digital theatre systems in India,” Indiantelevision, 31 March 2011, via Dow Jones factiva © 2011 Indiantelevision.com.

8 “M&E newsreel,” EY, April 2011.

9 “Tune in to emerging entertainment markets: spotlight on BRIC,” EY, March 2010.

10 “Corporate,” Cinepolis India website, http://www.cinepolisindia.com/corporate/, accessed 9 August 2011.

11 “PVR to sel 10% to Major Cineplex, Buy DLF’s DT Cinema,” Dow Jones International News, 13 November 2009, via Dow Jones Factiva© 2009 Dow Jones & Company, Inc.

12 “Inspire Multiplex launches ‘My Cinemas’ in Mumbai,” Indiaretailing website, http://www.indiaretailing.com/news.aspx?topic=3&Id=5239, accessed 9 August 2011

13 “PVR Cinemas exploring expansion overseas,” Business Standard, 24 February 2011, via Dow Jones Factiva © 2011 Business Standard Ltd.

14 “Cinema’s born again avatar,” Business Today website, http://businesstoday.intoday.in/story/3d-format-rediscovered-by-hollywoodbollywood/1/17544.html, accessed 12 August 2011.

15 Multiplexes likely to invest Rs 500 cr this fiscal, Business Line, 12 May 2010, via Dow Jones Factiva © 2010.The Hindu Business Line.

16 “UFO Moviez to invest INR250 crore to convert 1,000 screens to 3D,” Economic Times, 2 June 2011, via Dow Jones Factiva © 2011 The Times of India Group.

17 EY analysis.

18 “Cinemax launches “Versus” the Hi-End gaming zone in New Delhi,” Indiantelevision, 28 July 2010, via Dow Jones Factiva © 2010 Indiantelevision.com.

19 “PVR launches entertainment city in Noida,” Indiantelevision, 11 June 2010, via Dow Jones Factiva © 2010 Indiantelevision.com.

20 “PVR plans to spend INR 75 crore on new screens, bowling lanes,” The Financial Express, 22 September 2010, via Dow Jones Factiva ©2010 Indian Express Pty. Ltd.

21 “Mukta Cinemas launches its first multiplex in Baroda,” Indiantelevision, 18 July 2011, via Dow Jones Factiva © 2011 Indiantelevision.com; “Cinemax to launch 5-screen plex at Raipur,” Indiantelevision, 10 February 2011, via Dow Jones Factiva © 2011 Indiantelevision.com; “Corporate,” Cinepolis India website, http://www.cinepolisindia.com/corporate/, accessed 9 August 2011.

22 “Multiplexes revive plans to expand into smaller towns,” Mint, 23 November 2010, via Dow Jones Factiva, © 2010 HT Media Limited.cinepolisindia.com/corporate/, accessed 9 August 2011.

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