A surge in multiplex construction is expected in the still under-screened Indian market now the producers’ strike is over. But can air-conditioning and plush seats alone finally prise open the box office for foreign films?

Since the Indian producers’ strike was finally resolved at the beginning of June, the nation’s multiplexes have been trying to claw back lost revenue through a string of big-ticket Hindi film releases.

The first of these, Yash Raj Films’ New York, restored confidence with an $11.3m (rup550m) worldwide opening weekend (June 26-28) and the multiplexes can draw comfort from some big Hollywood releases.

Although the US studios did not officially support the strike, they did not release many films during that period though are now rolling out big titles including Terminator Salvation (June 26), Ice Age: Dawn Of The Dinosaurs (July 3) and Transformers: Revenge Of The Fallen (July 10).

“With Indian audiences becoming more globally aware, a strong market for distinctive content has evolved in India”

Tushar Dhingra, Big Cinemas

Unfortunately, however, it is unlikely the cinemas can make up for the lost months of April and May when, due to a dispute over revenue-sharing terms, no big films were released. There is now a major film scheduled for every weekend until the end of the year - except during the Islamic fasting month of Ramadan which begins on August 20 - but the bottleneck means individual films are unlikely to reach their full potential.

Meanwhile, multiplex operators, which were already struggling with lower occupancy rates during the financial downturn, will also receive a smaller share of box office under the terms of the agreement negotiated with producers. Then there are the Indian industry’s perennial problems of high entertainment taxes, piracy and property costs.

Most multiplexes were built with a five-year holiday from taxes that can be as high as 50% in some states, but these are coming to an end on a rolling basis.

Yet despite a tough business model, there is still room for growth in the Indian market. Therefore, now the strike is over, exhibitors are pushing ahead with the ambitious expansion plans that they put on hold last year, especially now capital markets have started to thaw.

Big Cinemas says it is planning to add around 125 screens across India and international markets, PVR plans to open 40 screens in India during the current financial year, and Cinemax has plans for an additional 300 screens.

There are also new entrants to the sector including local real-estate developer HDIL, with plans for 150 cinemas over five years, and Mexican exhibitor Cinepolis, which plans to open 500 screens in India over a seven-year period.

“The strike and recession are temporary setbacks so not something that affects our vision or long-term planning,” says PVR joint managing director Sanjeev Bijli. “India is still under-screened and there are lots of pockets without the multiplex experience.”

Bijli and his brother Ajay Bijli revolutionised Indian exhibition when they opened the country’s first multiplex, in partnership with Australia’s Village Roadshow, in 1997. At that time, the country was dominated by single-screen cinemas and had the world’s lowest ticket prices. But the emerging middle class was happy to pay up to $3.80 (rup185) for tickets, and multiplexes now account for more than 50% of India’s box office, which reached $1.6bn (rup78bn) in 2008.


“The strike and recession are temporary setbacks so not something that affects our vision or long-term planning”

Sanjeev Bilji, PVR

The big six, mostly Mumbai-based exhibitors (see sidebar) operate around 750 screens while other companies, including Chennai-based Sathyam Cinemas and Pyramid Saimira, focus on the south. Most operators have also diversified into production and distribution with mixed results - PVR scored a hit with Taare Zameen Par, directed by and starring Aamir Khan, while Pyramid Saimira’s production investments resulted in huge losses. But no-one can deny the multiplex operators’ core exhibition business is booming and last year contributed to box-office growth of around 12%.

The major players are raising funds for the next stage of expansion which has become easier in recent months. “India’s stock market is recovering and private equity has re-energised its interest in the media and entertainment sector,” says Rajesh Jain, head of information, communication and entertainment at KPMG India. Meanwhile, the rollout of shopping malls - which house many new multiplexes - remains slower than before the credit crunch, but this in turn is resulting in more carefully planned developments.

Audience for imports is slowly growing

While growth looks assured, it is harder to predict to what extent multiplexes will open up to foreign films in a market that remains dominated by local product. Multiplex development usually expands the market for Hollywood movies, but the US studios have experienced only slight growth in India from 4% five years ago to around 7%-8% last year.

“On one hand we’re very happy that business has improved over the past five to six years because of the multiplexes. But in some ways it’s improved less than we thought it would in market share terms, because Hindi films have managed to protect their market share even in the multiplexes,” says Kurt Rieder, UIP vice-president, sales and marketing, Asia.

Indeed, Hindi films continue to take the lion’s share of screens and foreign films also have to compete with regional-language product. But there are signs the market is slowly opening. “With Indian audiences becoming more globally aware, a strong market for distinctive content has evolved in India,” says Big Cinemas COO Tushar Dhingra.

“We’ve screened opera, theatre and international films, and would definitely look at exploring more international content options in future.” Some exhibitors are also buying foreign films to supplement their line-up.

PVR acquired eight titles at Cannes, including Broken Embraces and Taking Woodstock, with the aim of exposing Indian audiences to new genres. “We’ve been doing this for a few years because the audience in the metros - mostly Mumbai, Delhi and Bangalore - is keen to see them,” says PVR’s Bijli.

The introduction of D-cinema in India is also expected to open the market to foreign movies. India has around 2,000 e-cinema screens, but as e-cinema screens are not Digital Cinema Initiatives (DCI)-compliant, they have mostly been used to screen local product.

However, Big Cinemas is rolling out 500 DCI-compliant screens by 2010, and local D-cinema integrator Scrabble Entertainment has virtual print fee deals with most of the US studios.

While it is unlikely Indian audiences will ever turn away from their much-loved local stars, there should be enough growth to leave room at the edges for foreign product. To put this into context, KPMG predicts India’s box office will reach $2.5bn by 2013, of which even a 20% share ($500m) would be bigger than the 2008 total box office of Brazil ($313m).


2005 - 340
2006 - 410
2007 - 520
2008 - 747
2009 - 850
2010 - 1,000*
2011 - 1,120*
2012 - 1,254*
2013 - 1,405*

* Predicted figures. Source: FICCI-KPMG M&E Industry Report 2009

In Figures


Growth at the Indian box office, 2008


Approximate multiplex market share in India


Total Indian box office, 2008


Predicted Indian box office, 2013


Big Cinemas

Owned by Reliance ADA Group and part of a vertically integrated film studio, Big Cinemas is India’s largest circuit with 207 screens in India and 233 in overseas markets including the US, Malaysia, Mauritius and Nepal.
Who to know: Tushar Dhingra, COO

Cinemax India

Part of real-estate developer Kanakia Group, Cinemax has 25 sites totalling
74 screens, mostly in Mumbai, and has plans to add 300 screens across the country.
Who to know: Himanshu B Kanakia, managing director

E-City Ventures

Owned by the Essel Group, which also owns broadcaster Zee Network, E-City Ventures operates 188 screens under three brands - Fun Cinemas (lifestyle), Talkie Town (low cost) and E-City Digital (e-cinema).
Who to know: Atul Goel, managing director

Fame India

Established by the Shroff family, which also owns distributor Shringar Films and a food court business, Fame India operates around 74 screens across 11 cities, mostly in northern India.
Who to know: Shravan Shroff, managing director

Inox Leisure

Owned by Gujarat Fluorochemicals, Inox Leisure operates a nationwide circuit of 27 cinemas with 97 screens. It recently established a production division that made its debut with Arup Dutta’s Morning Walk.
Who to know: Alok Tandon, CEO

PVR Cinemas

Originally a joint venture with Australia’s Village Roadshow, which has since exited the market, Delhi-based PVR opened India’s first multiplex in
1997 and now operates 26 cinemas, totalling 108 screens. It also has a production and distribution arm, PVR Pictures, and a joint venture with Thailand’s Major Cineplex to open bowling alleys and ice-skating rinks.
Who to know: Ajay and Sanjeev Bijli, joint managing directors