The biggest theatre chains in India are counting on Hollywood blockbusters and well-liked regional films to entice moviegoers back to the theatres as the industry tries to overcome obstacles like shifting preferences and the emergence of streaming juggernauts.
According to INOX Leisure Ltd. Chief Executive Officer Alok Tandon, the release schedule for the future few months “is looking really excellent,” citing high hopes for the newly released crime drama Drishyam 2 and the anticipated Avatar sequel. He stated in an interview in Mumbai, “We should have some terrific numbers,” without giving a prediction for box office receipts.
The head of business planning and strategy at PVR Ltd., the largest multiplex operator in India, Kamal Gianchandani, expressed optimism to investors last month that the incoming slate may “possibly surprise a lot of people on the upside.” The most recent box office haul for Drishyam 2 is almost three times what it cost, raising expectations for Bollywood studios and cinemas.
The upbeat predictions follow a protracted downturn for the sector, which has battled to recover from Covid bans in India and lockdowns that severely hurt revenue and forced the closure of several cinemas. INOX and PVR, which together operate more than 1,500 screens in over 100 cities, suffered larger-than-expected losses in the most recent quarter, and occupancy rates were less than 25% across both chains.
The country of 1.4 billion people, who have easy access to large volumes of content on streaming juggernauts like Netflix Inc. and Walt Disney Co., has experienced extraordinary changes in preferences, forcing theatres to adapt. The merger plans between INOX and PVR, which were revealed in March and are expected to be finished by March 2023, were partly motivated by the influx of digital platforms.
The Hindi-language film industry has likewise become mired in a general malaise. A number of Bollywood films, which are typically guaranteed moneymakers for theatres, have underperformed while regional-language productions have become surprising global hits.
Those headwinds are hampering the industry’s much-anticipated rebound. Exhibitors will see a 25% to 30% rise in audience numbers in the three months ending Dec. 31 from the previous quarter, according to Karan Taurani, an analyst at Elara Capital in Mumbai. Hindi-language box office collections will hit 30.3 billion rupees ($371 million) this financial year, or 80% to 85% of pre-pandemic levels, he said, adding the next year will see a full recovery.
Evolving Tastes
Entertainment executives and analysts say Indian audiences have become more discerning after being exposed to well-produced local and international content served up by global streaming giants during pandemic lockdowns, threatening the draw of established cinema houses.
“I’ve never seen the kind of evolution in taste as I’ve seen in the last two and a half years,” Monika Shergill, vice president for content at Netflix’s India business, said in an interview in Mumbai. “The flip side is that as they’re more open to experiencing the new. They’re also quick to dismiss what feels old or hackneyed.”
That seems to include some of the country’s top draw-cards. Laal Singh Chaddha — a remake of Forrest Gump featuring Bollywood star Aamir Khan — was widely panned, while action-comedy Bachchhan Paandey recouped less than half its 1.65-billion-rupee budget, prompting a mea culpa from its leading man.
“Films are not working,” Akshay Kumar, one of Bollywood’s top actors, said in August. “It’s our fault, it’s my fault.”
What has brought Indians to the silver screen has been outside of the Bollywood heartland of Mumbai. Once seen as a parochial creative backwater, southern India’s movie-making industry has produced some of the biggest hits this year, including action epics K.G.F. 2 and RRR. Films in regional Indian languages have benefited from wider dubbing and subtitling efforts and Tollywood — the moniker for the Telugu-language industry — eclipsed box office takings made by Bollywood in the last financial year.
Cinema Powerhouse
INOX is optimistic major Hollywood films slated for release such as Avatar: The Way of Water, will get people back into theaters and the company will continue to show Bollywood movies.
You can’t write off the Hindi film industry,” INOX’s Tandon said. “It’s been there for 100 years, maybe there’s a blip for the last six, seven months. Doesn’t matter, things will look up.”
Industry watchers are similarly positive on the outlook into the new year. More than three quarters of analysts covering INOX and PVR have buy ratings on the companies, according to Bloomberg data. INOX’s stock has risen 53% this year, while PVR’s has gained 43% — both outperforming the almost 8% increase of India’s benchmark BSE Sensex Index — on optimism around their merger and longer term prospects as they expand across the Indian market.
Tandon also said INOX will hit a target to add 77 new screens by the end of this financial year, after opening 33 new screens so far.
“Cinema itself is a pull, cinema is an outing,” he said. “Cinema is a part of every Indian’s DNA.”
