There are 15 big Bollywood movies waiting to be released in theatres along with 35-40 medium-size films that are in the pipeline.
Soon after Maharashtra announced that cinema theatres would reopen from October 22, producers started lining up films for release on the big screen in the midst of the festive season.
About 10 Hindi films have been announced, including Akshay Kumar’s Sooryavanshi to be released during Diwali, Bunty Aur Babli 2 on November 19, John Abraham’s Satyameva Jayate 2 on November 26, Ranveer Singh’s 83 on Christmas, and Shahid Kapoor’s Jersey on December 31.
According to analysts, with several big-star movies like 83 and Sooryavanshi being rolled over to this year, FY22 could end up with 18-20 blockbusters compared with an average of nine to 10 over the past five years.
“We expect an overflow of content as it has been 18 months since cinema halls have opened up with full capacity. With a pipeline of 300-350 Hindi films, only 31 have taken the direct OTT route since the pandemic,” noted Karan Taurani, senior vice president at Elara Capital.
Maharashtra accounts for 25-30 percent of a Hindi film’s box office collection. While the recovery in the Indian cinema sector has been delayed, it cannot be written off because it remains the preferred mode for family outings, given the limited entertainment options in the country.
Trends suggest there has been little to no change in ticket prices and spending on food and beverages compared with pre-Covid-19 times.
Multiplexes had dropped ticket prices for old content after pandemic-led curbs stalled new film releases. Now, as new movies are released, ticket prices are back at pre-Covid levels. F&B revenue is expected to recover to 90 percent of pre-pandemic levels in FY23.
“We expect overall revenue to revert to 80 percent of pre-Covid in FY23, with a recovery in FY24, which may see revenue moving toward 110-120 percent versus pre-Covid,” Taurani said.
Multiplex operators PVR and INOX are likely to see a strong recovery – 18 percent of PVR’s 840 screens in India are located in Maharashtra and 20 percent of INOX’s screens are in the state.
According to Gautam Dutta, CEO of PVR, Maharashtra holds the key to the revival of the cinema sector. Alok Tandon, CEO of INOX, is optimistic that people will return to the cinema with the successful vaccination programme and significantly low Covid-19 cases.
Taurani said that both PVR and INOX have good liquidity.
"Around Rs 730 crore for PVR after a cash burn of around Rs 40 crore in the last quarter whereas INOX has liquidity of around Rs 350 crore after a cash burn of Rs 22 crore in Q1 FY22," he added.
Last year, PVR raised Rs 1,600 crore and INOX raised Rs 696 crore through qualified institutional placement and debt. Even if uncertainty persists, this would be adequate to sail through until March-April 2022, based on their monthly cash burn, said Taurani.
PVR had fixed costs of Rs 55 crore in the first quarter of FY22, while INOX’s fixed costs were Rs 32 crore.
The key to the revival of Hindi films also depends on the global cinema market. Many producers of big Hindi films rely on the overseas market, which contributes 28-30 percent of a big film’s overall revenue.
In the US, which is a big market for Indian films, average weekend collections jumped from 8 percent of pre-Covid levels in January to 40 percent in July, according to Gower Street Analytics, a global film tech company.
The report noted that 84 percent of the screens in the US were open, 93 percent in China and 90 percent in Europe, the Middle East, and Africa, compared with 41 percent, 94 percent and 24 percent, respectively, in February.
Cinema advertising a challenge
While strong recovery is expected in terms of footfalls and F&B sales, cinema advertising revenue will fall behind. Taurani expects cinema ad revenue to remain 50-55 percent lower than pre-Covid levels until FY23.
“This (in-cinema advertising) remains a long haul for exhibitors due to concerns over the third wave and big-ticket releases being held back until normalcy, thereby holding back advertisers,” he added.