Time Warner, Megabox plan multiplex chains in India

MUMBAI: Foreign entertainment giants like Time Warner and Australia’s Hoyts are in talks with real estate developers such as the DLF group, the Raheja Group and Sobha Developers to set up chains of multiplexes across the country. South Korean multiplex operator Megabox is also believed to be looking at the Indian market.

While talks have been initiated by foreign players, they are still at a nascent stage, sources say.
Merchant bankers point out that deals are likely to be struck in the next six to 12 months and multiplexes are likely to operational in the next two years.

Industry sources say that foreign entertainment players may favour forming partnerships with Indian realty companies since such alliances will help them get properties in prime locations in major cities, something which they may not manage by going alone.

For real estate developers, tie-ups ensure a readymade customer and the possibility of the higher footfalls, especially if a multiplex is part of a big mall.

However, industry watchers say that after the initial frenzy to grow, multiplex owners fail to build a profitable business. Despite all the hoopla around multiplexes, the average occupancy levels have hovered around the 40% mark.

Also, traffic to a multiplex is usually skewed towards the weekend with occupancy levels going up to 95%, but witnessing a dramatic fall during the week at 25%. Experts say that once multiplexes begin cutting into each other’s territories, average occupancy levels could plummet to 30%.

Given the current scenario, ensuring traffic and competitive pricing will pose to be challenge in times to come. Nevertheless, foreign players view the Indian market as an emerging one and believe that there is a lot more scope to build scale.