Will the Movie Theatres Continue to Report Lower Audiences?

Indian cinema has come a long way from silent black and white film to colorful talkie movies. From single-screen movies to technologically advanced, and to the further sophisticated multiple screens giving viewers the much needed rich viewing experience. According to 2019 data, fourteen million Indians go to the movies daily, which is about 1.4% of the population of 1 billion. Since India is a country of sixteen official languages and twenty-four languages spoken by over a million people each, some portions of the film industry are fragmented. Mumbai’s specialty lies with Hindi movies known as Bollywood films. Likewise, the other areas have specified to Kollywood, Tollywood, Mollywood, and many more

These cinemas were primarily unveiled in tents, but it was in 1907, Jamshedji Framjee Madan established India’s first cinema hall called ‘Elphinstone Picture Palace’ in Kolkata. The tickets were priced in three classes from two or three annas to two rupees. Gradually with time, the theatre became a profitable business, and independent entrepreneurs ventured into this exhibition business so much so that we have evolved from a single screen to double screen to multiple screens in a single complex leading to multiplexes and a much-hyped digital experience. PVR (Priya Village Roadshow) was the first to introduce the concept of the multiplex theatre in India in 1997, which is now the market leader of multiplexes. More than that, the investments made by foreign and domestic investors in these multiplex theatres, either individually or in the form of joint ventures, partnerships, mergers & acquisitions, helped to increase the contributions to the economy of India.

But the actual business of theatre owners depends on the constant flow of content every Friday. The film distributor distributes the film to the exhibitors who own the theatre. Distributors get the return from the theatre, and it is known as Distribution Right that is calculated based on an agreement with the Exhibitor Association and film distributor. The agreement can be somewhat like a film producer holds 65% profit share and an exhibitor holds 35% profit share in the first week. By the second week, the profit share might decrease to 60% for film distributors and increase to 40% for the exhibitor. It is usually noticed that with increasing weeks, the profit share of film producers keeps decreasing and that of exhibitor keeps increasing.

With passing time, it has been observed that the movie theatre business has been shrinking in India over the years. From about 12,000 theatre screens it has reduced to 9,500 screens over the last five years. The single-screen theatres have been shutting shop in India, and the multiplex players have also been deteriorating. It is assumed that this is because of the shift in audience by way of people prefer more safe, secure, convenient destinations as compared to a single screen, to widespread piracy, people struggling with a high entertainment tax structure followed by state governments artificial ceiling on ticket prices, and various other reason.

And in the last few years, when OTT (Over The Top) platforms became convenient, the number of viewers in theatres reduced even more. There was an increasing battle between movie theatre owners and video streaming applications. People started saying that now the theatres will die, there would be no rush in theatres like before. We perceived the same when Television, VCRs, and DVD evolution came out, leading to theories that people will stop going to theatres. And it was somewhat true also, in the mid-1980s and 1990’s cinema halls took a backseat due to the creation of TV, VCRs, and VCD’s. This period saw a downfall in profits of running movie theatres, despite the government legislating to reduce ticket rates further. But, this crisis didn’t last long because there is a certain charm of watching cinemas in a theatre, in that dark room with some 300 or more people altogether, feeling the emotion with everyone and screaming out loud with everybody when your favorite actor enters. Hence, watching the film on your home screen is not the same feeling as watching in the theatre. So an OTT can never overcome the theatrical pleasures, just like TV, VCR, and VCD could not.

But now, with the COVID-19 pandemic still raging across India, things are not the same anymore. Even if people want to go to the theatres, they can’t go because either due to lockdown or fear of COVID-19 infection. As such, the exhibitors went into trouble as their business came to a standstill. Exhibitors have already been left revolving amid the social distancing measures, leaving previously busy cinema halls similar to a ghost town.

Due to the COVID-19 national lockdown during last summer and partial lockdown across different states this summer, it is a battle for survival for the exhibitors. PVR reported a consolidated net loss of Rs 184 crore in the second quarter of 2020. The Kannada film industry has incurred an estimated loss of around Rs 3,000 crore due to the seven-month restrictions. At the same time, the Malayalam film industry faces Rs 600 crore loss. Many small producers and exhibitors fear they could go out of business. It is said that the government can save the industry by waiving property tax and utility bills for owners, but there has been no implementation yet.

Even if the theatres are not running shows, the exhibitors have to pay salaries and electricity bills, and the central government didn’t come to their rescue. PVR and India’s other multiplex chains, Inox Leisure, Carnival Cinemas, and Cinepolis, are hit hard during the pandemic, with no income and dipping stock prices, and tried to mitigate damage by negotiating with landlords, closing some sites, and reducing headcount. One of the most known news was on how cinema halls of Delhi were converted into shelters providing beds for the COVID-19 patients. A more significant issue now faced by Indian exhibitors is whether any local films will continue to skip theatrical releases and premiere online. Last year, Angrezi Medium, starring the late Irrfan Khan, was one of the last Hindi films in theatres before the shutdown in mid-March, after which it was released digitally, and now a string of high-profile titles opted for a digital premiere. In between, during unlock 5.0, probably in the last quarter of 2020, theatres were reopened under a list of legally binding precautions that they must abide by i.e. wearing face masks, zero contact, physical distancing, temperature checks, strict sanitization, and maintain a 50 percent capacity. But the Cinemas are reopening by re-releasing films that are eight months to a year and a half old. A few new films like Baaghi 3 did release in theatres, but they could not achieve the revenue goals due to the fear in people’s minds about COVID-19.

In the current COVID-19 second wave, the theatres were shut again, and producers shifted to releasing films on OTT platforms. India has vivid mediums like Netflix, Amazon, and Disney+ Hotstar acquiring films and producing original content and strong local players such as SonyLiv, Zee5, MX Player, and Viacom18’s Voot. Their revenues rocketed during the pandemic as OTT content spreads worldwide. ZEE5 has witnessed an over 45% rise in paid viewers and subscriptions going over 80% during the lockdown. The daily active users on Amazon Prime Video increased by 83%. The viewing time has increased by over 50%, with daily active users and app downloads rising by 15% and 41%, respectively. MX Player witnessed a two-times increase in the time spent on content across various genres by Indian viewers. According to a report by Media Partners Asia, streaming services are estimated to have spent more than $700 million in India last year. The 24×7 availability of countless shows and movies and the easy-to-navigate interface have resulted in more viewers staying back and subscribing to many apps. As more users logged on to OTTs, many film producers also chose these platforms to launch their films. Hence, OTT seems to be the new alternative to watching films in theatres. Many filmmakers are rethinking their distribution strategies for releasing films and reaching out to a broader audience in a hassle-free manner, protecting many small and medium producers from going bankrupt. It is seen that India’s movie box office falls by 2.6% over the next four years as OTT grows by 30.7%. The report says 2020 presents a critical tipping point as OTT revenue overtakes theatrical earnings.
Despite all this, few great films are waiting for this pandemic to get over and release their films on big screens rather than giving a digital premiere. Akshay Kumar-starrer Sooryavanshi, which recently launched its trailer with much fanfare, has pushed the film’s release until further notice. Anand Pandit Team produced film Chehre starring Amitabh Bachchan released its theatre premiere dates twice in two years. With increasing COVID-19 cases and another shutdown of theatres during the second wave, the producers postponed their planned releases. They are not ready to premiere it digitally and waiting for theatres to reopen. This is because of the yearly subscription rates being cheap in India, and with one subscription being shared by multiple people, there are limitations on how these platforms can recover the costs of big-budget films. Hence, they prefer to wait for everything to normalize.

When the normalcy is restored, people will be very excited to go back to the theatres but they will exercise caution on COVID-19 and the audience seating in theatres may not be comparable to pre-pandemic times. The movie producers and distributors will not be able to calculate their success within a week like before; it may take 5-8 weeks or even more as the movie attendance will continue to be less for quite sometime. However, as Indians love to celebrate every occasion by sharing and going out with others, movie producers and distributors hope the situation doesn’t continue for a very long time and that movie-goers will rediscover the immersive entertainment experience that they have been forcefully prohibited in this pandemic. That’s their hope; the expectations of companies OTT platforms are different though and they would want a fall in theatre attendance to bump up revenues. The improvements in OTT platforms and the longevity of COVID-19 will determine the final outcome.

-Aishwarya Soman (Student of MA in Applied Economics at Christ University)

Picture Credits: indiatoday.in

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