Revisiting the Multiplex ecosystem – What will it take to revive the ent juggernaut?

The multiplex ecosystem in India has undergone a remarkable transformation over the past few years, reflecting changes in consumer behaviour, technological advancements, and industry dynamics. From single screen theatres to becoming integral to the Indian entertainment landscape, multiplexes have played a pivotal role in shaping how Indians experience cinema.

The evolution of multiplexes in India

The Indian film industry is the largest in the world. With more than 1,000 films produced every year in more than 20 languages and 3.3 billion tickets sold annually, India also has the highest number of theatre admissions

The evolution in the multiplex ecosystem has been driven by various factors, including changing consumer preferences, advancements in technology, and shifts in urban demographics.

The era of Single Screen Theaters: In the early days of Indian cinema, single-screen theaters were the primary mode of film exhibition. These theaters, often characterized by their grand architecture and ornate interiors, served as cultural hubs within their communities. From the 1950s through the 1980s, single screens dominated the film exhibition landscape, attracting audiences from diverse socio-economic backgrounds.

Emergence of Multiplexes: The concept of multiplexes gained traction in India during the late 1990s and early 2000s, marked by the emergence of players like PVR Cinemas, INOX, Big Cinemas, etc. These multiplexes offered moviegoers a superior viewing experience with multiple screens, comfortable seating, and state-of-the-art amenities. Initially concentrated in urban centers, multiplexes gradually expanded their footprint across tier II and tier III cities, capitalizing on the growing disposable income and changing lifestyle preferences of consumers.

The Indian movie theatre industry now stands at a pivotal juncture with the advent of digital media. The proliferation of 3G and 4G services, coupled with a significant mobile phone user base, has paved the way for massive potential in digital content consumption. While this presents numerous opportunities for multiplex chains, it also brings forth distinct challenges in areas such as content localization, distribution, pricing, regulations, and piracy.

The great Pandemic disruption

In India, the number of single screens dwindled from 8,500 in 2018-2019 to 6,200 by 2022, as reported by Financial Express. This decline stemmed from the displacement of single-screen theaters by multiplex chains. Moreover, the situation was exacerbated by the onset of the coronavirus pandemic and subsequent lockdowns, which constrained Indian movie enthusiasts to resort to watching films on television and OTT platforms. Capitalizing on this downturn, the OTT platform sector witnessed substantial growth. According to The Ormax OTT Audience Sizing Report 2022, India’s OTT landscape expanded by 20% between 2021 and 2022, with the audience base swelling to 424 million individuals, including 119 million paid subscribers.

From the exhilarating release of ‘RRR’ and ‘Gangubai Kathiawadi’ to the eagerly anticipated arrivals of ‘The Kashmir Files’, ‘Bhool Bhulaiyaa 2’, and ‘KGF 2’, the first half of 2022 delivered a relentless string of blockbusters to Indian movie enthusiasts. After a prolonged dormancy of nearly two years, the multiplexes, hard-hit by the pandemic, had started to rebound, witnessing record-breaking figures.

However, beneath this resurgence lies a sobering reality. Despite the box office successes, the performance metrics of multiplexes reveal a stark contrast. In a recent investor update, leading multiplex chain PVR-Inox announced plans to close 50 screens over the next six months. This strategic decision comes in response to a consolidated net loss of Rs 333.99 crore in the March 2023 quarter, highlighting the challenges that persist despite the industry’s recent triumphs.

Enhancements in the Multiplex ecosystem

Speaking to Adgully, Sanjeev Kumar Bijli, Executive Director, PVR INOX, noted, “In 2023, India witnessed a historic milestone as the gross box office revenue crossed the Rs 12,000 crore-mark, marking a substantial 15% growth over 2022 and surpassing the previous record set in 2019 at Rs 10, 984 crore.”

He further elaborated, “Hindi cinema experienced an unprecedented surge, grossing Rs 5,380 crore, surpassing the Rs 5,000 crore threshold for the first time. This achievement dispels any concerns regarding the volatility of Hindi films. Encouragingly, the steady addition of screens, fueled by mall expansions in Tier 1, 2, and 3 cities, has facilitated the proliferation of multiplexes across diverse regions, despite the challenges posed by the pandemic.”

Rahul Puri, Managing Director, MuktaA2 Cinemas, observed, “There has been a significant shift in content consumption patterns in India. Viewers now embrace a diverse array of genres without linguistic constraints. This trend is accompanied by a heightened emphasis on immersive movie experiences, such as premium screenings, augmented by offerings like gaming zones, luxury seating, and technological advancements like laser projection, IMAX, and 4DX formats, contributing to a seamless cinematic journey.”

The Indian multiplex industry has undergone profound changes, propelled by key factors such as:

Expansion of Multiplex Chains: Leading chains like PVR Cinemas, INOX Leisure, Carnival Cinemas, Cinepolis, and Miraj have expanded their footprint nationwide. Ankur Roongta - MD - ROONGTA (R) CINEMAS highlighted, “R Cinemas, a burgeoning multiplex chain, celebrated its first year in business by establishing new theaters in Tier 1, 2, and 3 cities, catering to the burgeoning demand for cinematic entertainment.”

Diversification of Content: Sanjeev Kumar Bijli noted, “Post-pandemic, we have witnessed a surge in big-budget event films dominating the box office, alongside smaller and mid-scale films achieving notable success. This trend underscores the enduring appeal of niche content, indicating no significant shifts in movie-watching habits.”

“While Bollywood remains a cornerstone of box office revenues, contributions from regional and Hollywood films have seen steady growth, offering audiences a rich tapestry of cinematic experiences,” pointed out Devang Sampat, CEO, Cinépolis India.

Technological Advancements: Multiplexes are embracing cutting-edge technologies to set global standards. Devang Sampat highlighted Cinépolis’ adoption of advanced formats like 4DX and MacroXE, catering to the growing demand for immersive entertainment. Sanjeev Bijli spoke about introducing the ICE Theatre Concept, enhancing the panoramic cinematic experience, while leveraging cloud delivery platforms for streamlined content distribution.

According to Ankur Roongta, investments in technology upgrades, including advanced projection systems and sound technologies like Dolby Atmos, alongside amenities like recliner seats, are enhancing the viewing experience for patrons.

Cinema-Dining Experience: Multiplexes are revolutionising the culinary experience, offering an extensive array of gastronomic delights beyond traditional concessions. PVR-INOX collaborates with industry-leading chefs to curate bespoke menus, tailored to local tastes and global inspirations. Cinépolis India boasts an eclectic in-cinema menu featuring a diverse selection of culinary offerings, from classic favourites to gourmet delights.

PVR and INOX merger, a game changer

Multiplex chains have been forming strategic partnerships and collaborations with content creators, distributors, and technology companies to offer exclusive content and innovative services. This includes tie-ups with streaming platforms for simultaneous releases and special screenings.

However, one major partnership which has revolutionised multiplexes is the PVR and INOX merger. Sanjeev Kumar Bijli said, “Our primary focus lies in maximising synergies after the merger as PVR INOX Limited. Through strategic integration and collaboration, we aim to unlock greater value and elevate the cinematic experience for our valued patrons. We have realised significant synergies in terms of revenue and cost in the first 9 months of FY24 to the tune of Rs 147-176 crore and on track to deliver a significant portion of EBITDA synergies by the end of the current fiscal. We have already added 102 new screens in FY24.”

Impact of OTT platforms

Sanjeev Kumar Bijli highlighted the symbiotic relationship between cinema and streaming services, emphasising their coexistence rather than competition. Citing an Ernst & Young report commissioned by NATO in February 2020, he said, “Those who attended movies in theatres more frequently also tend to consume streaming content more frequently. The theatrical release serves as a catalyst, generating an initial surge of excitement and anticipation that extends into the digital sphere.”

According to Bijli, theatrical releases act as catalysts, driving initial excitement that extends to digital platforms. As audiences exit theaters, they actively engage in word-of-mouth promotion, attracting a wider audience across cinemas and streaming platforms, benefiting all stakeholders.

Devang Sampat echoed this sentiment, citing a BookMyShow consumer study, “As per a BookMyShow consumer study report from Oct’23, proves that despite the growth of OTT there’s still a strong preference for cinema experience amongst Indian audiences. Although OTT became a key mode of content consumption during pandemic, since 2022, the growth in the number of admits across cinemas pan India indicates a return of the Indian audiences to cinemas, specifically for the differentiated experience which can’t be replicated at home.”

However, Rahul Puri of MuktaA2 saw OTT platforms as a challenge for cinemas. He added, “Firstly, the biggest effort has been in understanding the new kind of content the consumers want to watch. Multiplexes have adapted by offering unique experiences and premium content. Also, a decent time gap between the cinema and OTT release was another important implication to ensure people go to the cinemas to watch and enjoy movies on the big screen.”

Ankur Roongta of R Cinemas acknowledged the impact of streaming services on multiplex business models and strategies, highlighting several key developments:

• Increased competition for audience attention due to the convenience and affordability of OTT platforms.
• Challenges posed by shortened theatrical release windows, necessitating negotiations with distributors and studios.
• Diversification of content offerings to include regional cinema, independent films, and curated screenings.
• Emphasis on the unique cinematic experience offered by multiplexes, including immersive formats and premium amenities.
• Partnerships with streaming platforms to offer bundled packages or exclusive content.
• Investments in technology upgrades to enhance the customer experience.

In response to these challenges, multiplexes in India have adapted their strategies, diversified their content offerings, and emphasised the unique value proposition of the cinematic experience. Despite the disruptive influence of OTT platforms, multiplexes continue to innovate and evolve to meet the changing needs and preferences of audiences.