Theatres cross pre-pandemic gross revenue collection despite pricey movie tickets

• Due to inflation, theatres across the board have increased their prices for movie tickets and food and beverages by 5-20%.
• However, their sales remain unaffected so far.
• After almost two years of dry spell, multiplexes and single screens are seeing a strong recovery in 2022.
• Despite costly tickets, consumer sentiment remains high as they flock to watch big-ticket movies on the silver screen with their loved ones.

India’s cinema industry went through a severe drought due to the Covid-19 pandemic. Several pandemic-induced country-wide lockdowns forced theatres to shut down completely for more than 18 months, leading to a significant drop in revenue.

However, after opening their doors to viewers in the second half of 2021, theatres are back to the pre-pandemic level of collections this month.

Inox Leisure’s chief programming officer, Rajender Singh Jyala, said, “Last three months have been good for us. On average, we are clocking more than ₹1000-1500 crore every month.”

Sharing which movies set the ball rolling at the multiplex chain this year, Jyala added, “Movies RRR and Gangubai Kathiawadi pushed the recovery. Before that, Kashmir Files and now with Bhool Bhulaiya 2, our footfalls and domestic ticket sales are at pre-pandemic level or even better.”

With eagerly-awaited Bollywood movies such as Prithviraj, Brahmastra, and Lal Singh Chaddha slated to be released in the next three to four months, Jyala is optimistic that the momentum will continue this year.

With its current progression, 2022 might turn out to be a golden year for the cinema industry, driven by home-grown content.

Media consulting firm Ormax Media’s Partner, Gautam Jain, said, “The overall domestic box office collections have crossed the ₹4000 crore gross mark from January to April. This is the highest gross box office collection for January to April since 2018."

"Given this growth trajectory and looking at the line-up of films slated to release this year, a gross box office collection of ₹12,000 crore looks possible, which would make this year the highest ever in terms of the gross box office [collection]," he further added.

While INOX has reverted to the pre-pandemic level on all metrics, Ormax Jain said that the cinema industry’s overall footfalls and ticket sales are still lower than the pre-pandemic levels.

Explaining why the gross box office revenue is higher than 2019 while footfalls continue to be low, Jain said, “The gross box office collections are higher due to the ticket prices being higher by 15-30% across languages. The ticket prices have increased even in south markets.”

Cinema-lovers ignore soaring inflation, theatres remain unaffected

As the cinema industry jumped past the first major roadblock that COVID-19 threw in its path, it faced another challenge this month – soaring inflation.

The rise in inflation has affected all industries. The Fast Moving Consumer Goods (FMCG) industry has resorted to hiking its product prices and shrinking its products across its portfolio. Theatres have also raised their prices for movie tickets and food & beverages (F&B) by 5 to 20% in different parts of the country.

However, audiences returning to the big screen, after being deprived of the theatrical experience for close to two years, seem to be indifferent to the price increase.

“The rise in the prices of movie tickets and F&B in line to cover inflation seems to be reasonable. Average ticket prices have risen by about 8 to 10% and over 15% in some states and cities. At the same time, the F&B prices have increased between 5 to 10%. The pinch of price increase seems to be ignored by the patrons as both occupancy levels (irrespective of pricing) and the spending on F&B increased during the period,” said consulting and advisory firm Deloitte India’s Partner, Chandrashekhar Mantha.

He calls the steady recovery in this quarter a result of ‘revenge consumption trend,’ wherein consumers are trying to catch up on everything they missed out on in the last two years. The movie industry’s strong content pipeline has also struck a chord with the audience, further pushing the recovery.

Multiplex chain INOX hasn’t felt the inflation’s impact either. While it has increased its movie ticket and F&B prices by 5-10% across its 675 screens, its sales and footfall continue to go up.

“The increase is not on that level wherein consumers can feel the pinch in their pockets. It is between 5 to 10%. In fact, spends on F&B and the ticket sales that we're seeing is more than the pre-pandemic level,” Jyala told Business Insider India.

On the other hand, Ormax Media’s Jain said that small budget films are feeling the impact of inflation and movie-goers are choosing to watch only big-ticket movies that seem to be worth their money.

“Audiences are choosing to watch films that offer a theatrical big screen experience such as RRR or KGF Chapter 2 or spectacle films like Doctor Strange or Spider-Man or a collective experience Bhool Bhulaiya 2 or Saunkan Saunkne. Films that did not offer this, failed to get the audiences – for example Jayeshbhai Jordaar or Jersey," said Jain.

"Apart from the ticket prices, since the audiences are aware of the eventual OTT premieres now and are exposed to OTT viewing, any film that does not fit the above criteria has failed to get a decent opening weekend as well,” he said.

However, it is too soon to tell. Bollywood movies such as Jayeshbhai Jordaar or Jersey also failed to rake in numbers because they didn’t leave a good impression on critics.

Regional movies jump ahead

Regional movies like KGF 2.0, RRR and Pushpa have been reporting recording-breaking revenue collections at the box office, surpassing Hindi movies like Jayeshbhai Jordaar, and Bhool Bhulaiyaa 2 so far.

KGF 2.0 breached ₹800 crore revenue market in terms of net box office collection, which was slightly higher than RRR at ₹720 crore, revealed analytics and financial firm Elara Capital.

The small to medium budget films in regional markets have reported a net box office collection of ₹50-55 crore each. On the other hand, recently released Hindi films have not been able to breach the ₹25-30 crore mark, which is a 50% less target than regional.

“Relaxation of Average Ticket Price (ATP) cap in Andhra Pradesh and Telangana markets is one of the reasons for regional content reporting higher Box Office collections. The next big regional film release slated for June 3 – Vikram, may collect ₹150-175 crore net in terms of lifetime box office collection,” said Karan Taurani, Senior VP - Research Analyst, Elara Capital.

A bright year ahead

The rest of the year will see some major releases such as Akshay Kumar’s Prithiviraj, Aamir khan’s Laal Singh Chaddha, Varun Dhawan’s Jug Jug Jiyo, Ayushman Khurana’s Doctor G and Anek.

From the regional markets, Virata Parvam of Rana Dugabatti, Rocketry: The Nambi Effect of R. Madhavan, Agent of Mamotty, Ravansura of Ravi Teja, the star-studded Vikram, are lined up for the second half of 2022. The Hollywood releases will further strengthen this pipeline.

So, the year ahead looks bright for the movie exhibition industry. Analysts and movie exhibitors are confident about seeing a continued growth momentum in the next half.