Just about everything that is multiplex cinema is proving to be a liability for the film industry and, maybe, also for its landlords. And the various state governments that gave all kinds of concessions to enable multiplexes to be built, disregarding the single screens, have not helped in any way.
It was a strange way to promote a new cinema exhibition business entity. Easy acquisition of land, an entertainment tax holiday for five years and, thereafter, the assurance that the tax would be applicable only in stages. This was in total disregard of the survival of single screens that were expected to live with the same tax structure (entertainment tax rates, being on the Concurrent List, varied from state to state.)
Building multiplex properties was the business of the future for many. Zee’s Fun Republic, Fame Adlabs, Reliance Big, Satyam Cinemas and HDIL were among the initial entrants. They were also the first to get out.
Imagine, when a film released at one single-screen cinema per locality and catered to the local population, the films had a long run. Compare this to the multiplexes.
Not one screen but five, seven and some even dared to promote 12- or 16-screen properties! How did they plan to feed those screens?
Multiplex managements started deciding release strategies, so film releases became ambitious: a 100-screen release of a film turned into anything from 2,500 to 4,500 screen releases nationally. The idea was to benefit the cinemas, not the film producer.
It was not the multiplex prospect hunters who were creating properties to accommodate multiple screens, but real estate developers. The trend was to build malls with multiplexes. Both were meant to share each other’s patrons.
The combined assumption was that the people who came to malls for shopping or to visit food courts would also take in a movie at one of the screens and those who came to watch a movie would in turn give custom to the mall!
It was a far-fetched idea, as corny a thought as one could conjure up. Because the assumptions did not come true. Combining multiplex screens with malls was an idea doomed from the beginning.
When the pioneers of the multiplex trend in India gave up on the idea soon enough, others were springing up.
The smart ones, however, decided to pursue the business without encumbrances — to rent the properties instead of owning them.
Staff appointments were outsourced and films were coming without any investment from the exhibitors, which gained footfalls that fed the parking lot and cafeteria!
But what happens when the film of the week fails to bring in the footfalls? It seemed like a great idea to run the business on rented premises, but when the film fails, your booking window, parking lot, cafeteria, all generate negative returns.
And the rent for the property doesn’t change, audience or no audience.
After all, how many big-star-cast, major-draw films can the industry churn out every year?
This year, in the third quarter, the industry has given six films, hits or workable, as one may call them. The combined total domestic collections of these six films — ‘Gadar 2’, ‘Jawan’, ‘OMG2’, ‘Fukrey3’, ‘Dream Girl 2’ and ‘Rocky Aur Rani Ki Prem Kahani’ — are estimated around Rs 1,600 crore. Against this, the major multiplex chain with as many as 1,600 screens shows a profit of a mere Rs 100 crore or so!
So, how will the multiplexes survive? Looks like they have no clear plan. They want to continue to be greedy, without sacrificing their own profits, which have been non-existent so far.
They won’t rework on admission rates so that more footfalls are attracted or sell samosas and popcorn for a film viewer to enjoy rather than to earn at a 400 per cent premium!
Instead, these cinema managements have decided to eat into their own roots! They want to renege on the rent they are paying to the landlords and, instead, want them to come in as revenue-sharing partners.
What revenue, the landlord may ask with justification! There is definitely no revenue if all that a multiplex chain has to show as profit is Rs 100 crore, despite some major hits.
The landlords are trapped because they designed their properties to accommodate multiple screens.
In a metropolitan city such as Mumbai, where space is at a premium, breaking partitions and converting these auditoriums for other uses is a matter of days. After all, all of them are located on prime properties in upmarket areas.
That is not all. The multiplexes want to bite the very hand that feeds them. And, this is really as corny an idea as it can get! You will never guess what it is!
They now demand that the producer of a small film who wants to screen a film at a multiplex, will be mandated to buy 40 to 50 per cent of the tickets of his own film. Yeah? That is not all, the filmmaker would also need to buy samosas and colas in equivalent numbers!
In the first place, I can’t imagine what a producer will do with 40 per cent of the tickets he is compelled to buy because he has no licence to sell them. And, most of all, what will he do with all those samosas and colas!
I always thought filmmaking was a business involving creativity and the one marketing a film needed to know both, filmmaking as well as identify the audience for a particular film to plan its release accordingly. Releasing on 3,000 to 4,000 screens is not how it is done.
To state the reality, multiplex owners/managers have not only killed their own business, they are also in the process of killing the Hindi film industry.
Nothing wrong with Hindi films, because they do well on OTT platforms. The fault lies with this new system of film exhibition trade. If they have not understood this business after almost 25 years, they never will.
And they know it. The biggest chain managements are cutting their losses and looking for prospects abroad, and they have brought their stakes down to single digits by selling them to foreign investors.
It is time for the film industry to reinvent the old way of doing business and for some entrepreneurs to come forward and take us back to the single-screen theatre experience.
–By Vinod Mirani