Films are expected to get a wider play in India this fiscal year with the multiplex industry planning to ramp up the number of screens, taking their overall numbers beyond the pre-Covid count.
After a slowdown in launches in the last two years because of the pandemic, PVR, Cinepolis India, INOX Leisure and Miraj Cinemas all plan to add more screens. Consequently, the number of multiplex screens is expected to rise from around 3,100 to more than 3,800 by the end of FY23.
“Things are back to pre-Covid levels in terms of screen launches. We are seeing a lot of interest from our developer partners for new properties as well as renewed interest in the completion of existing ones,” Devang Sampat, CEO, Cinepolis India, told Moneycontrol.
He said that the company is planning to add 60 screens in FY23, with an average investment of approximately Rs 3 crore a screen. Cinepolis India has around 417 screens.
“We will be opening more than double the number of screens compared to our five-year average, with higher overall investment,” he noted. Sampat added that in 2018 and 2019, Cinepolis added about 21 screens annually.
PVR, which has a total of 854 screens, plans to add 120-125 screens in FY23, up from 75-100 screens in pre-Covid times. It aims to have a count of 1,000 screens by the first quarter of FY24.
“A lot of the development got stuck due to lockdowns and Covid, and malls were not ready but now the malls are ready and therefore, we are taking handover and starting work on them,” said Sanjeev Kumar, Joint MD, PVR, during a Q4 FY22 earnings call.
PVR has a capital expenditure (capex) outlook of Rs 350-400 crore for screen fit-outs (interior work) and maintenance spends on existing screens.
INOX Leisure plans to open 77 screens in FY23. The company increased its capacity by 85 screens in FY19-2020. In FY22, the multiplex operator had added 32 screens, while PVR had launched 29 screens.
Also, PVR and INOX that recently announced merger have plans to add 200 screens every year as a combined entity.
Miraj Cinemas' MD Amit Sharma said because of the pandemic many screens that were signed pre-Covid had been kept on hold. But now the company has taken 45 screens for fit-outs and will take another 30 or more screens for fit-outs in the July-September period. “We intend to open 75 screens in FY23. Pre-pandemic, we were doing 35 screens on an average,” he said.
“We can do an average of over 50 screens from FY24 onwards. In terms of capex, we will invest Rs 150-170 crore, up from Rs 70-75 crore pre-pandemic,” added Sharma.
Even for Carnival Cinemas, Covid-19 played a spoilsport in terms of screen launches. “With the pandemic coming, we had to completely shut down because we are a debt-raised company. Since we were on the brink of (getting) private equity, which did not happen, our biggest challenge post-Covid was opening our entire portfolio of 408 screens. It was not easy in the absence of debt and the time private equity takes to come in,” said Vishal Sawhney, CEO of Carnival Cinemas.
He pointed out that pre-Covid the multiplex chain had a run rate of 80-100 screens a year, out of which 60-70 percent were organic screen additions while the rest were acquired screens.
"Now, we are up and running with 70 percent of our existing screens and over the next 60 days, we should be able to open up all our screens. Then we have 118 screens in which we have partly invested and are already part of our portfolio. This will take our total to around 518 screens,” said Sawhney. “We see close to 40-45 screens more, which are our own screens. We have a realty division under which we build malls and every mall has three-four screens.”
|Multiplex operator||Screen additions in FY23||Screen launches in FY18-FY19 (pre-COVID)||Total screen count by FY23|
Anuj Kejriwal, CEO and MD, ANAROCK Retail, told Moneycontrol there is a pent-up supply, which will hit the market in the next 12-18 months.
“A lot of screens that are getting added will be assets that have not opened in the last two years. The expectations of landlords in terms of rent from cinemas have been re-established. At present, the (multiplex) cinema industry should be around 2,800-3,000 screens (all India) and by the end of FY23, the number is likely to go up to 3,800-4,000 screens,” he said.
PVR and INOX alone will be adding close to 200 screens, said Karan Taurani, senior VP, Elara Capital. He expects screen additions by multiplexes to take the total count to 3,500 by the end of FY23.
"There are other players, including Miraj and Cineline, that are also adding 200-300 screens because of pent-up demand. Pre-Covid, these multiplexes were adding 200-220 screens."
He added that the healthy screen growth will have a positive impact on box office revenue as multiplexes have been driving growth with higher ticket prices.
“Today we have 8,700 screens (including single screens), and if the share of multiplexes keeps on increasing, you will see a positive impact on the box office. Multiplexes are able to charge higher prices and for premium content, the average ticket price (ATP) is 20-30 percent higher.”
Targeting tier II, III, IV markets
When it comes to expansion strategies, Taurani said the metros are largely saturated. “The opportunity is in tier II and III markets. Close to 2/3rd of screen additions will happen in these markets."
Even Sawhney said that for each multiplex player today, tier III and IV is the way forward. “Eighty-five percent of our screen portfolio is in tier III and IV markets, while 15 percent is in tier I and II, which are saturated,” he added.
Also, the Carnival Group’s malls are specifically coming up in tier III and IV markets, Sawhney noted.
PVR is also moving to newer cities for screen launches, focusing on tier II and III markets.
“Outside of the top 10 developers, a lot of assets are being developed in tier II and III cities, which is bringing in more supply," said ANAROCK Retail’s Kejriwal.