India will lead Cinepolis’ international expansion with 600 screens.
The local arm of Mexican cinema chain Cinepolis is looking to gradually expand its presence in India from 442 screens to over 1,000 properties, said a top company executive. India is the No. 1 priority for Cinepolis’ global business and it has recently signed 600 new properties, he added.
While rivals PVR and INOX are working on a merger Cinepolis, as the third largest multiplex chain in India, will continue to invest aggressively, he said. “We’ve been consistent rather than conservative on expansion (in India), and we’re in no hurry to become the No. 1 player. We remain committed but don’t believe in expansion just for the sake of it. The Cinepolis approach globally is to grow profitably. We don’t want to sign deals that don’t make business sense,” Devang Sampat, chief executive officer, Cinepolis India, said in an interview.
While the company is looking to invest ₹3 crore for each screen on an average, it does not have a definite timeline for launching the new screens yet.
Cinepolis has never faced a capex issue, Sampat said, but real estate in India has been a challenge. That said, the company has been able to expand at a higher rate than the industry average annually. In fact, 49 screens were fitted out during the pandemic across Bengaluru, Gurugram, Hyderabad and Delhi.
According to Sampat, 80% of its global expansion in the past two years has happened in India, and it is looking to open 40-60 screens a year in India across the top 60 cities.
“We’re not here for valuation game, but India is definitely number one priority market for expansion,” he said. India is a profitable market and the firm is increasingly adopting a revenue sharing model with mall developers. While Cinepolis has signed and committed to about 600 screens, things will depend on how fast real estate owners can come up with the malls, given that another 12 months will be required for fitout and licensing, Sampat said.
Furthermore, the company is approached by a lot of standalone operators who’ve converted their single screens into two-screen theatres and is now open to taking over the same.
With the future of Indian box office uncertain despite hits like Pathaan, KGF: Chapter 2 and Drishyam 2, Sampat is optimistic things will gradually look up. For one, the company has released 1,100 titles across languages last year despite the shutdown in early January and February, which is comparable to pre-covid years.
“Our costs, including rentals, electricity and manpower, have gone up by 20%. Average ticket prices and spend per head increased by the same ratio, but the issue is about the footfalls. Even though India is recovering fastest among the territories that we operate in, for a like-to-like film, there is a 20% dent in footfall. But that is being recovered through price increase and food and beverage spending ,” Sampat said. It should hopefully reduce to 10% this year, as there is a huge possibility of mid-budget titles breaking out to become blockbusters, he added.
In March 2022, the boards of rivals PVR Ltd and Inox Leisure Ltd, approved an all-stock merger to create India’s largest film exhibition entity with over 1,500 screens. In 2015, Cinepolis had acquired Essel Group’s Fun Cinemas.