Small towns to drive multiplex companies' growth

Mumbai: After tapping into urban rich and upper middle-class theatre-goers in metros, multiplexes are likely to target tier-II and tier-III cities by introducing economical ticket pricing.

In tier-II and tier-III cities, multiplexes may introduce ticket pricing in the range of ₹50-150.

Analysts expect 15-20% incremental box office revenues for PVR and Inox Leisure from budget-conscious theatre-goers in tier-II and III cities in next five years.

"Multiplexes have tapped into urban rich and upper-middle class in metros and tier-II and tier-III cities to a considerable extent. The urban rich and upper-middle class are clear about what they want to watch in theatres," said an analyst who wished to remain anonymous. "They do not provide stable footfalls to multiplexes as they have access to copious content available on streaming platforms and other avenues."

Budget-conscious theatre-goers in smaller towns are "not yet hooked on to content on streaming platforms like the urban rich and upper-middle class", said the analyst. It is estimated that 100 million people visit theatres annually.

"The next 100 million viewers will come from small towns, as and when there are more screens in their budget. So the incremental source of box office revenues for multiplexes will come from this segment of people," said Ashish Pherwani, leader, media & entertainment sector, EY.

"There is no ticket price range which caters to the urban lower middle class in tier-II and tier-III cities. A ticket price range of ₹50-150 is quite affordable for the urban lower-middle class as it amounts to an outing of less than ₹500 for a family of four people. So, this segment will get a multiplex experience at ticket prices similar to single-screen theatres," said the analyst who wished to remain unnamed.

Exhibition companies are likely to build multiplex screens in the range of ₹2-3 crore in the smaller towns. A multiplex screen costs around ₹5 crore in metros. At present, close to 30% of screen capacity is in tier-II and tier-III cities. In this context, analysts expect multiplexes to expand their presence more intensely over five years.