Increasing revenues a silver lining for multiplexes: ICRA

ANI | Updated: Oct 06, 2017 17:22 IST

New Delhi [India], Oct. 6 (ANI): Over the last three years, the Indian multiplex industry has grown at approximately 13 percent CAGR in terms of operating screens and 14 percent CAGR in terms of revenue. The silver lining though is the healthy growth of food and beverages (F&B) and advertisement segments which have grown at a faster pace of 21 percent CAGR.

According to Vice President and Sector Head, Mr Shubham Jain, "The non-exhibition segments - F&B and advertisement - have given a strong push to the overall revenues of a multiplex, a trend which is expected to continue in the near term, given the enormous potential of these segments. Through the use of differential offerings with the help of the latest technologies and diversified food options, the multiplex players are striving to improve their average realisations per footfall."

With the recent implementation of the Goods and Services Tax (GST) in the multiplex industry, the state level entertainment tax has been subsumed with a more standard taxation structure, which will benefit the multiplex industry with the availability of input tax credit.

However, with a view to push revenues per footfall, the Indian multiplex players have resorted to differential and customised offerings to provide the customers with a better movie viewing experience. They have been innovative in opening up of IMAX screens, luxury lounges, kids' auditorium and on-demand theatre services. With the inclusion of interactive food ordering kiosks and regional gourmet options, the multiplexes are striving to improve their F&B revenues. A lower F&B spend per head to average ticket price ratio at the Indian multiplexes as compared to their global peers leave room for Indian multiplexes to further capitalise on this segment. Further, advertisement revenues have also witnessed a steady growth in the last three years and provide support to the multiplexes in times of volatile occupancy levels.

As for the single screen theatres, though they still occupy a greater share of the film exhibition market, these have been shutting shop due to the contemporary offerings of the multiplexes, which leave room for the multiplex players to improve their market share.

"Going forward, ICRA's outlook on the Indian multiplex industry is a "positive" for the medium term, given the potential to expand due to low screen density, an efficient taxation structure, differential offerings and steady growth in the F&B and advertisement segments. Overall, we expect the credit profile of the multiplex players to remain healthy on account of the continuing consolidation, increasing penetration of multiplexes and limited debt-funded growth plans." added Mr Jain. (ANI)