Multiplexes see business loss due to producers' strike

Multiplex chains are anticipating a drop of 30-50 per cent business due to the strike called by movie producers. As a result, multiplexes have decided to operate fewer screens per property, reduce advertising and marketing expenses, as well as put fresh recruitment on hold.

According to multiplex chains, multiplexes do a business of Rs 40 lakh to Rs 1 crore on an average per month, depending on the property. However, due to the movie producers’ strike demanding equal revenue sharing with multiplexes, fresh content will not be screened. As a result, multiplexes expect a drop of 30-50 per cent in revenues, and earn in the range of Rs 10-15 lakh per month, as now it is mainly re-running the current movies.

According to Vishal Kapur, COO, Fun Multiplex, “We have to keep our cost of operations low because lack of fresh content will affect our revenues. So, if we used to operate four screens per multiplex, we will now run perhaps two screens per property. We will also freeze recruitment. For instance, if we needed 60-100 staff per property, we would now do with only 35-40 people.”

The biggest areas of expenditure for multiplexes are electricity, rentals and staff salaries. Around 30 per cent of revenues are generated from food and beverages sales, while the remaining from ticket sales.

“Footfalls are anyway down, 15 per cent right now compared to the corresponding previous period,” Kapur pointed out.

According to Shunali Shroff of Shringar Cinemas that runs the Fame multiplex chain, “We will cut down on advertising and marketing spends this year. Also, we will reduce the number of shows because it is essentially re-runs of the same movies that we are resorting to. Lesser number of shows means we will save on electricity also.”

Abhishek Raina, head of marketing of Shringar Cinemas, added, “Overall, we are looking at 30-40 per cent reduction in advertising and marketing spends this year. First, we have stopped advertising the movies that the distributors are also advertising.

On an average, we spend Rs 40-60,000 on two advertisements in two newspapers per week. So we are saving costs there. Also, we are looking at several brand alliances for promotions, so that the advertising costs can be shared.”

Producers are trying to adopt a business model similar to that used in Hollywood, to boost flagging revenues and operate more transparently. Currently, multiplex cinema owners take two-thirds of the box office and say they cannot afford more.

Theatre chains say they are unwilling to pay more because Bollywood, India's vibrant film industry, which generates about $2 billion in revenue annually, has delivered a string of flops in recent months. About 3.7 billion cinema tickets are sold in India every year.

The industry has had a dire 2009 first quarter and is in desperate need of a hit movie. But a number of new releases have already been put on hold. Cinemas could see more empty seats when the Indian Premier League Twenty20 cricket tournament starts next month in South Africa.