It’s a good time to invest in multiplex business. Know why?

The Indian multiplex industry, which is facing the onslaught of pandemic-induced lockdown across the country, is expecting to witness shoots of green with the increasing vaccinations triggering hopes of wider unlocks. Interestingly, this growth is likely to be complemented by the closure of a tenth of single theatres across the country, thereby increasing the share of multiplex operators.

According to widely accepted numbers by the industry, out of the total capacity of about 9,000 screens, about 3,000 screens are multiplex screens while balance about 5,500 to about 6,000 are single screens. Roughly 10% of these single screens are highly unlikely to operate post unlock.

Ajay Bijli, Chief Executive Officer of India’s largest multiplex chain PVR explains in the company’s Q4 investor concall says, “Thousand seats to fill up day in and day out for fifty-two weeks are not very easy. And therefore, lot of single screens are becoming unattractive to run even pre-pandemic, because you don’t get fifty-two weeks of blockbusters”.

He goes on to add that the government, in most of the places in India, has already given permission to the mom-and-pop or the pop and son property holders of the single screen to convert them into very small commercial outlets of 30,000-40,000 square feet, while retaining 300 seats or 30% of their seating capacity.

This is likely to attract a lot of single screen theatre owners owing to the proposition at a time when there’s a gradual shift from single screen to multiplexes and the fortunes of single screen theatre owners dwindling. Here, multiplexes are in favour of having 4-5 screens with a seating capacity of 200-400 each is the right proportion of entertainment business, opine industry leaders.

“If one movie does not do well, the other movies take care of that entire property (a multiplex). If you have a multiplex, you will have 10 to 12 movies releasing every Friday. So that is another advantage you get. You (also) get the advantage of having staggered show timing. So a new picture is starting after every 15 to 20 minutes. Leaving a few key markets, whatever screens will open will be multiplex screens,” adds Alok Tandon, CEO, Inox Leisure.

These factors are likely to turn around the fortunes for multiplex owners as customers look to catch up on the lost time. A look at the stock price movement of multiplex companies show how the sentiments are improving with the stocks rising steadily since April. While PVRs stock price jumped from Rs 1,019 on April 19th to Rs 1,439 on June 11th, Inox’s stock moved from Rs 252 to Rs 327 respectively in the same time period.

Also, after a hiatus of a year, multiplex operators are hopeful that movies will start coming the theatre way which were either getting postponed or streamed on OTT platforms.

“We still believe in the age-old and world-over practice of theatrical window. We feel that the movie should first come to theaters and then after a lag of a few weeks it should come on any other platform. That helps everyone in the value chain. After all, as per the performance of the movie, it can garner the amount which the producer wants on any OTT platform or through any other channel, so we believe that the theatrical window should be followed and number two, movies could come out in the four to five weeks after various state governments lifted the lockdown,” says Inox’s Tandon.

Several big ticket movies such as Akshay Kumar starrer super cop flick Sooryavanshi, Amir Khan starrer Lal Singh Chadda, KGF2 and 15 others are likely to hit theatres in the remaining months of this year. Multiplex operators are hoping these releases will help revive the sentiments and draw audiences to theatres.