Cinema theatre chains are adding more seats each year and they're not regretting it. Viewers seem more than happy to catch a film in these tough times, savouring what they feel is affordable entertainment. Not surprising then that Bollywood's revenues are understood to have nudged closer to Rs 4,000 crore in 2019 with just 170 releases. That's way more than the pickings of some Rs 3,300 crore in 2018 from 180 releases.
The total number of seats with PVR and Inox jumped 33% in the year to March 2019. But thanks to a string of high quality releases-Kabir Singh, Mission Mangal, Super 30, Chhichhore, War, Good News and Mardaani 2-theatres were more full than they have been before. At Inox for instance, occupancies increased to 28% from 26% in FY18 while at PVR they went up a good five percentage points at 36.20%.
The Inox Leisure management told FE footfalls had gone up to 3.63 crore in the six months to September, 2019, about 70 lakh more than in H1FY19. "With an audience of 1.9 crore in the three months to September 2019, we created history with the highest ever footfalls in a single quarter," Alok Tandon, CEO at Inox, says. Together, PVR and Inox control the bulk of theatre capacity in the country and had just over three lakh seats at the end of March 2019.
Experts point out seats are getting filled even though ticket prices did not dip too much post the reduction in the GST. Starting January 2019, the GST on film tickets costing over Rs 100 was reduced to 18% from 28%; the rate on tickets priced below Rs 100 was reduced to 12% from 18%. Atul Mohan, editor, Complete Cinema, believes that while the cut in GST rates may have helped, it is the good content that is driving audiences to theatres.
Indeed, Bollyood's stellar box-office run came in a year when viewers enjoyed plenty of choice; Netflix's popular show Sacred Games returned with a fresh new season, Amazon Prime had Made in Heaven, Family Man and Modern Love , Hotstar streamed Game Of Thrones season 8 while Apple launched its streaming service at a throwaway price of Rs 99 per month.
An analysis of ticket prices of Inox showed that although average ticket prices (ATP) fell to Rs 189 in Q4 FY19 (the first quarter that reflected the benefit of lower GST rates on tickets) from Rs 206 in Q3 FY19, prices went up to Rs 198 in Q1FY20 and remained over Rs 195 in Q2FY20. At PVR, the ATP went up to Rs 209 in Q1FY20 from Rs 201 in Q4FY19.
Ajay Shah, partner at EY, says while differentiated content has been the main draw, exhibitors have also innovated in terms of screen formats such as recliners, Imax, Kids screens and also curated food menus providing more for audiences. They will keep improvising with different formats, megaplexes, loyalty rewards and also go deeper into tier-two and three cities, generating better revenues, Shah says.
Footfalls will continue to increase, Dinkar Ayilavarapu, partner, Bain & Company, says pointing out that spending on leisure as a percentage of incomes in India is less than 2% compared with about 10% in the developed world. Ayilavarapu adds the rising disposable income are driving the movie business and would also drive OTT, travel, and other leisure businesses. Given the improving popularity of Bollywood content, Girish Menon, partner at KPMG, estimates the film industry could grow at a healthy CAGR of 7.3% from FY19-24. And while lower ticket prices might attract audience resulting in more blockbusters, Jehil Thakkar, Partner, Deloitte India, has no doubt that exhibitors are on a sound wicket. "They have priced tickets flexibly and that should pay off," Thakkar predicts.
Consumer expenditure in the leisure sector in China has seen close to 10% y-o-y growth since 2011, more than twice the growth rates seen in other major markets, according to a 2017 report by OC&C Strategy Consultants. A McKinsey China Luxury Report released last year said the country delivered more than half the global growth in luxury spending between 2012–2018, and is expected to deliver 65% of the world's additional spending heading into 2025.