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Mall developers rethinking multiplex spaces as OTT gains and footfall dips

Mall developers are downsizing multiplex spaces in new projects as declining footfall, competition from OTT platforms, and rising demand for experiential retail reshape the industry

Photo: Pexels

Photo: Pexels

Rimjhim Singh New Delhi

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Large mall developers are re-evaluating the space allocated to multiplexes in upcoming projects as cinema halls struggle to attract consistent footfall and generate year-round revenue. Industry experts note that the share of mall visitors attributed to multiplexes has dropped from around 10 per cent to 6-7 per cent, prompting developers to reconsider their strategies, according to a report by The Economic Times.

Revenue struggles

Multiplexes typically operate under a revenue-sharing model, paying a minimum guarantee to mall operators each month. While cinemas managed to exceed the minimum guarantee in 8-9 months of 2023, they have only achieved this in 4-5 months this year, signalling a decline in profitability, the report said.
   
Cinemas in southern India have shown greater resilience, supported by a strong lineup of films in four regional languages.
 
The report quoted Muhammad Ali, CEO of Prestige Group’s retail division, as saying that growing competition from over-the-top (OTT) platforms has led to lower occupancy rates in multiplexes. Segments such as “food and beverages (F&B), entertainment, and gaming” are gaining traction as consumers increasingly seek experiential retail and physical activities, he added.
 
Traditionally, cinemas occupied about 10 per cent of a mall’s space, with an additional 10 per cent dedicated to F&B and 5-6 per cent to entertainment and gaming. However, developers are now shifting focus for future projects, the report mentioned.
 
The report also quoted Harsh Vardhan Bansal, co-founder of Unity Group, which operates multiple malls in Delhi and Punjab. He stated that in his company’s upcoming malls, they are reducing the space allocated to cinemas and reallocating it to more lucrative categories.
 
“The main issue is a lack of compelling content, which has reduced cinemas’ ability to draw crowds as they once did,” Bansal said.

Rising demand for experiential retail

As consumer preferences evolve, mall developers are capitalising on the increasing demand for entertainment zones and F&B outlets, which offer unique experiences that online platforms cannot replicate. This shift highlights a broader trend of malls transforming into lifestyle destinations, catering to a diverse range of customer needs, the report said.

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First Published: Nov 28 2024 | 10:08 AM IST

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