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India will see 2,000 permanent screen closures by end of second COVID-19 wave, say experts

Contribution of small single screens is not sizable to make a larger dent in the earnings; shut downs will certainly impact box office collections, particular of regional cinema.

June 25, 2021 / 04:55 PM IST
Down south, 70-year old Lakshmi Theatre and Shree Nagaraja theatre in Mysuru have been added to the list of theatres that are winding up operations. (Representative image)

Down south, 70-year old Lakshmi Theatre and Shree Nagaraja theatre in Mysuru have been added to the list of theatres that are winding up operations. (Representative image)

 
 
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The situation could not be more ironic.

While the film industry is gearing up to release blockbusters, not many theatres will be up and running to screen them!

It is estimated that by the end of the second wave of coronavirus, as many as 2,000 screens will shut down permanently.

Vishek Chauhan, a single screen exhibitor in Bihar, points out to some permanent screen closures this year in his area.

"One of the oldest in the area, Vasant Cinema (Talkies), in Katihar have decided to close down permanently. Another cinema hall called Prem Talkies, Forbesganj, are not planning to reopen when they get permission to restart."

Close

Down south, 70-year old Lakshmi Theatre and Shree Nagaraja theatre in Mysuru have been added to the list of theatres that are winding up operations.

Pre-COVID, India had around 9,527 screens out of which there were around 6,327 single-screens and 3,200 multiplexes, according to an EY (Ernst and Young) 2020 report.

Last year around 1,000 screens had shut shop permanently.

With theatres closing again this year due to the coronavirus-led lockdown, more exhibitors are looking at permanent closures. This means that India's overall screen count could come down to around 7,000.

Such a drop will negatively impact box office collections.

Box office impact

According to Karan Taurani, Vice-President, Elara Capital, the impact will be felt more by the regional cinema.

This is because 60-65 percent of box office collections for regional films come from single screens.

When it comes to the Hindi film industry, popularly known as Bollywood, the impact on the box office will be minimal, as most of these theatres are low-priced single screens, points out Shailesh Kapoor, CEO, Ormax Media, a media consulting firm.

"For Hindi films, more than 70 percent of the box office comes from multiplexes, and contribution of smaller single screens is not sizable to make a larger dent in the earnings," he explains.

However, Chauhan notes that single screens are properties that Bollywood has held on for so long. With these screens going to the wall permanently, he says, Bollywood will lose properties that contribute around Rs 40-50 crore (for a film).

"When a theatre shuts down in an area, you lose that audience. The audience of that area then resorts to pirated versions. So, you are killing your own market," he adds.

He thinks that big Bollywood films will see the impact of single screen closures on their business.

In 2018, films like Ranbir Kapoor's Sanju and Rajkumar Rao's Stree saw 40-45 percent of their collections coming from non-multiplex zones. The same year, John Abraham-starrer Satyameva Jayate saw 70 percent of its box office collections coming from single screens.

Experts say that due to lower ticket prices, the footfalls are higher in these cinemas. But with more single screens shutting this year as well, Taurani predicts that overall footfalls in theatres will see a drop.

More screen closures, less screen additions

Along with drop in footfalls, another challenge is lower additions of new screens.

Taurani also says that compensation will not happen anytime soon. "Pre-COVID, if 350-400 single screens were shutting down, 200-250 screens were opened up by multiplexes. Currently, there will be delays in screen openings by multiplexes. So, the additions of new screens will not offset the closures."

Multiplex operator PVR, which has the highest screen count in India, saw its slowest new screen addition in FY21 – 13.

Company's CFO, Nitin Sood, in an earlier interview with Moneycontrol had noted that this was the lowest screen addition by PVR in the last five to seven years.

PVR, which saw the shutting down of 16 screens and currently has 842 screens, has suspended capex and fit outs for all other screens until the situation normalizes.

The scenario is similar for other multiplex players as well. INOX Leisure's CEO, Alok Tandon, had pointed out that expansion plans are deferred due to lockdown and with no revenue coming in.

Now, at a time when Bollywood as well as regional films are ready to release in theatres, more screen closures are on the anvil.

Bollywood has announced the release of Akshay Kumar's Bell Bottom on July 27. From the regional theatre, south superstar Mohanlal's Marakkar: Arabikadalinte Simham will hit the theatres on August 12.
Maryam Farooqui
first published: Jun 25, 2021 04:55 pm

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