Business News

Malls are concerned about declining multiplex attendance.

New Delhi: Shopping mall operators are concerned over faltering revenue from cinemas, with some even considering reducing space allocated to theatres in their upcoming projects.

PVR Inox recently said in its fourth-quarter earnings call that it has delayed the handover of about 200 screens due to the “volatility at the box office”.

After ‘Pathaan’ in January, box office collection has been tepid, although the release of ‘The Kerala Story’ this month managed to revive the revenues of malls to an extent.

Malls have a revenue share agreement under which they get a guaranteed minimum rental and also a share of the revenue.

In the case of cinemas, they are getting only a minimum guarantee since revenue is not breaching that threshold.

“Currently, we are in the advanced stage of fitting out about 175 screens, which we plan to open this year. We have a very robust pipeline of a similar number of screens, which are coming up for handover this year. But in view of the huge amount of volatility at the box office that we have seen, we want that to stabilise before we take the next leg of screens for handover and start fitting them out,” said PVR Inox. “And keeping that in mind, we delayed all new handovers that are coming up.”

PVR Inox recorded a decline in footfall to 140 million in 2022-23 from 168 million in 2019-20.

Malls expect that the movie line-up from July onwards will revive the industry, said industry executives.

“Cinemas reported 27% occupancy in the last three months but in May the occupancy increased to 40%. At 40%, we hit the revenue share and though the last three months have been tough, we hope cinemas to bounce back,” said Harsh V Bansal, co-founder of the Unity group, which operates about half-dozen malls in Delhi and Punjab.

Rajendra Kalkar, president-west at Phoenix Mills, which operates more than half-dozen malls in Mumbai, Pune, Bengaluru, and in some tier-2 cities, also said that revenue from cinemas had dipped but May has seen some improvement.

“There is a clear trend of occupancy of cinemas going down and PVR also announced shutting of about 50 screens. Future malls may plan to reconsider the size and number of screens and add more alternate entertainment options on higher floors,” said Shriram PM Monga, co-founder of retail consultancy firm SRED.

PVR Inox said that May is looking better than what it had anticipated.

“April, of course, has been slow, but then July picks up again with a lot of big movies coming. We are expecting much better content, starting May-June onwards. Q2 and Q3 are looking quite good on paper based on the content flow we have,” the company said.

Operating costs for theatres also increased in 2022-23 as most of the rebates offered during the Covid-19 pandemic ended.

“Cinema as a category will continue to give an advantage to malls as Indians like going out for movies. There will be phases when movies won’t do good, impacting the revenue, and that is likely to be covered by releases that will be blockbusters,” said Muhammad Ali, CEO of Forum Malls of Prestige group.

PVR-Inox added 79 screens in the fourth quarter of 2022-23, taking the additions during the financial year to 168 screens. In the current fiscal, the company intends to open another 150-175 screens.

Of these, nine screens have opened till date, 15 are awaiting licence for commercial openings and 152 screens are currently under various stages of fit-out. The company has also decided to shut down about 50 screens over the next six months across the country.



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