Exhibitors fret over massive negative impact on footfalls after lockdown

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Going to the movies may not be on the minds of moviegoers even after the lockdown is lifted - a thought that is making the exhibitors jittery.

"Cinema halls in China shut shop again after opening recently after COVID-19 due to poor occupancy. If occupancy in Indian theatres remains at 10-12 percent after operations resume, that will lead to significant cash burn and losses. A minimum of 20 percent occupancy is needed for break-even," said Karan Taurani, Vice-President, Elara Capital.

According to Rahul Puri, MD, Mukta Arts, one of the main challenges after the lockdown will be reviving consumer confidence, content slate and the need to ensure that fixed costs are met during a period of poor occupancy.

"Films that would have brought theatres much needed revenue have been postponed for months, some to next year and many have not revealed new release dates. All this, coupled with large fixed costs that are payable whether there are patrons or not and the amount of expense probably required to get these movie halls safe and up and running again, means the future of the exhibition business is likely to be quite bleak for the next few months," he said.

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The cinema business in March alone has suffered losses of around Rs 800 crore, said Shailesh Kapoor, CEO, Ormax Media.

"Exhibitors are the biggest losers, as producers will eventually release their films and recover money to a large extent, but the exhibitors have theatres shut and their loss is not recoverable," he said.

Kapoor thinks that "it will take about two months after the lockdown opens for business to come somewhere close to normalcy. In best case scenario, we can look at July as the first normal month for theatre business."

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Along with consumer confidence, content pipeline is another worry for exhibitors.

"Global releases may get postponed beyond June as the situation outside India remains worst due to a high number of coronavirus cases. Also, big budget movie projects may drag till FY22 as production houses are struggling due to liquidity crisis and this may also impact box office collections even after coronavirus situation settles," said Taurani.

He added that cinema halls that resumed business in China have cut ticket prices and Indian exhibitors may have to do the same to encourage footfalls. But this will impact growth in business.

While it is a tough road ahead for theatres, there are certain things cinema owners can do to revive exhibition business.

"Marketing of safety is key. When the lockdown is called off and theatres are able to reopen, it is vital that cinemas market themselves as safe. This could mean ensuring masks and sanitizer is easily available for patrons," said Puri.

He added that theatres should ensure that ad spends don't drop.

"Ad spend is likely to be the blood that sustains the industry for a while. Ad spend is critical to bringing in good revenue to theatres and off-screen sales will need to be prioritized as well, perhaps dropping prices but ensuring bulk offerings and cash flow up front," he said.

Puri also suggested that in case of lack of content, theatres should think of alternate usage like offering cinema halls for live events.

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