Inox turns the spotlight on premium multiplex market

Expansion plan here over 18 months, while keeping the aim of expanding beyond the metros

A solid second in the list of leading national cinema multiplexes, Inox Leisure has its eyes set on expansion in the premium segment over the coming 18 months.

Siddharth Jain, director, Inox Group, firmly believes a combination of technology and luxury offerings is the way to expand its footprint.

At 471 screens across 58 cities, Inox trails sector leader PVR (570 screens). While the Ajay Bijli-led PVR has hit bulls-eye in the metros and premium category, Inox seems to have focused on  the ex-metro markets. Last year, the company said it saw potential in the markets beyond the metros, as these audiences were yet to experience the superior movie viewing experience. 

Also, with real estate becoming increasingly expensive and limited in the metros, the tier-II and tier-III territories are a good idea for any multiplex looking at scale.

Jain believes in the potential of the latter markets but said he also saw huge potential in developing a portfolio of premium ‘7-star’ multiplex properties. 

“The premium properties cater to the section of audience that wants more than the ordinary movie-going experience. We provide what we call 7-star movie watching experience at these properties. It is something that enhances the theatre- going exercise and adds value to the trip, beyond only watching a film,” he said.

Inox recently launched one such property at R-City Mall in Mumbai’s Ghatkopar. It plans to open 10 more over the next 18 months. Each property would have a varying number of screens, depending on the space available. These would have the latest in exhibition technology, with IMAX and 3D screens in some cases. “We aren’t looking at launching these properties at new locations only. Wherever possible, we might renovate an existing property, if the location proves suitable for a premium Inox property,” Jain said.

The expansion will be part of the organic growth Inox sees for itself. “We see no real opportunities for inorganic (through acquisitions) expansion. It just makes more sense to add screens organically now. It also sets well with the targets we have set ourselves for the current fiscal,” says Jain. Inox intends to add 49 screens in this financial year. The investment on this would range between Rs 125 and Rs 225 crore, depending on whether these would be normal or premium screens. 

PVR recently decided on expansion of 4DX and IMAX screens over the next two years. The company will be spending up to Rs 110 crore for this. A premium screen costs Rs 4-5 crore for launch, and takes up to three years to break-even, depending on location. 

Ticket prices for these are higher than the average, while the number of seats per screens are fewer. So, the addition of premium properties brings up the average ticket price (ATP). The multiplex chain’s ATP for FY17 was Rs 178. Premium screens have a mark-up of up to Rs 500 on normal shows in the first weekend and would help increase the ATP over time.

Jain said expansion into tier-II and tier-III territories remains a focus area. The chain has invested in multiple properties in some of these towns and cities, such as Bharuch and Thissur where Inox has up to three multiplexes. 
 

“These are cities that have the potential to adopt the multiplex experience. We don’t see a danger of cannibalism as such, since we are actually converting single-screen audiences to multiplex goers. The ticket prices in these markets are marginally higher than what movie goers are used to paying for single screen tickets but the facilities and the experience is different,” Jain explains. 

The mark-up on tickets in such markets, when compared to single screens, is Rs 20-30. Inox hopes to capitalise on the aspirational value attached to multiplexes in these markets, and provide a service which will eventually create a demand for multiplexes. 

“It’s not always that the consumer knows what he/she wants. Sometimes, one just needs to go ahead and provide a better experience, and the demand increases,” he says. 

Among the metro markets, Inox will continue to focus on north India, specifically Delhi and the surrounding territories, where there is potential for growth of both normal multiplex screens and premium ones. Competitor PVR has a stronghold on this market, with its most exclusive properties, PVR Director’s Cut, in the Delhi region.