COVID-19 ails movie theatre business, could lower revenue by 50%, say experts

The government has ordered the lockdown of public spaces, including movie theatres in several Indian states until March 31

e4m by Sanstuti Nath
Updated: Mar 19, 2020 8:16 AM
Cinema and Coronavirus

At the time when the economy is already struggling to survive, the Coronavirus outbreak spoilt the broth for cinema hall owners. Experts predict this quarter to be down by 40-50 per cent as compared to last year, and loss of ad revenues will be one of the biggest contributing factors.

To prevent COVID-19 from spreading any further, various Indian states including Delhi and Maharashtra, have lockdown public spaces like cinema halls till March 31, 2020. This development will affect the business of not just the upcoming movies but also of cinema halls, greatly. People in other parts of the country, where the lockdown is not imposed, are advised to avoid public places.

e4m also talked to market experts in order to understand the gravity of the situation. According to the information we gathered, the multiplexes will survive the hard times but, lockdown may prove fatal for the survival of the single screens.

Mohan Umrotkar, CEO, Carnival Cinemas in a statement said, "This quarter is completely washed out and shall be down at least 40-50 per cent as compared to last year. One, because the movie line up was weak and then the Covid-19 impact in March."

Umrotkar thinks there is still hope for the business to pick up if the lockdown is not stretched long. He said, "We may not get the desired revenue in this quarter but it will come in the subsequent months. As a business model, we have a fixed overhead so that’s a loss if the cinemas go vacant for a longer period of time."

Movie business analyst, Atul Mohan, explained that the loss of ad revenue will be one of the biggest contributors to the losses faced by movie theatres. He said, “Cinema halls will definitely face a lot of losses as they not only lose ticket sales, but also lose on parking ticket money, food and beverages sales, but most importantly ad revenue.”

Mohan further explained that, though the revenue of cinema hall depends upon how the movie is running, by an average, theatres on a good day, theatre earns 75 thousand to 1 lakh per show. He said, “A big movie in theatre, per show, can contribute to approximately 75 thousand to 1 lakh from ad revenues and ticket sale, among other things. So, if any property is showing 15 shows on two screens, they’ll face a loss of 15 lakhs per day for one property.” He added that revenue is based on film-to-film and property to property.

As per Puneet Gupta, GM, Corporate Communication, Inox Leisure Limited, “The highly appreciated big releases like Sooryavanshi got postponed due to the Coronavirus scare. When there is no movie in the theatre, the footfall is anyway going to be less. If any big releases were scheduled, then it would have been a matter of major concern, as the footfall had been impacted.”

Umrotkar also believes that rescheduled calendar will bring back the normalcy to the business. He said, "The film release calendar has been pushed ahead but after everything gets back to normalcy and film schedule is in place again, we are expecting that 1st quarter on 2020-21 should yield at least 5-8 per cent more revenue than last year same quarter as the current line-up of the films looks very promising, including 83, Raadhe, Bomb, Bond movie and many more. If this situation remains the same in April, the first quarter will also face some heat in that case. The public will be back in cinemas, once the content is available for them.”

The big releases such as Reliance Entertainment’s ‘Sooryavanshi’ and ‘83’, and Yash Raj Films' ‘Yayeshbhai Jordaar' and ‘Toofaan’ have been postponed till the situation betters. Release dates of big Hollywood movies, which were expected to do well in India like 'Fast & Furious 9’ and 'No Time To Die' have also been shelved for now.

PVR too in its official statement said that “We believe that this is a temporary situation and remain buoyant about the film business in India, and our own growth prospects.”

However, Arijit Dutta, who owns Priya Theatre, a single screen cinema hall, in Kolkata, expressed the concern that single screens might not bounce back after the lockdown is lifted. He said, “ Most of the single screens today are running on very low margins. The major concern for single screens would be how to they’ll gear themselves to pay their staff and them bounce back to open again.” He added that “If quality films are just after the lockdown is lifted, it’ll help single screens to get back in business.”

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