The movie exhibition business has been one of the most affected sectors due to the pandemic. Covid-19 pandemic delayed opening of cinemas resulting in the postponement of movie releases.
Horror comedy Roohi hitting the big screen today will set the pace for Bollywood’s recovery and determine its future.
Roohi featuring popular actors in cinemas after the outbreak of covid-19, is being looked upon as the litmus test for the already suffering movie exhibition business for a long time now.
Bollywood announces slew of releases
Over the last couple of days, top and renowned production houses have announced release dates for 17 movies. This includes the much awaited 10 big-budget ones among them. If you look on average there will be 2 big-ticket movies being released every month in 2021. The industry has indicated gradual additions of features to each release date once consumers start returning to cinemas.
Prominent stars in the past contributed 27-39% of the total box office during the financial year 2017 to 2020. This might be the key to pulling audiences back to cinemas.
Warm reception
The warm reception of South Indian movies has been dauntless despite Covid-19. ‘Master’ which released in January 2021 collected more than Rs 220 crore gross box office collection worldwide. The same is expected from the Hindi language movies. Audiences are edging to return to cinemas and see their favorite stars back on the big screen. With this movie exhibition business could be on the path to recovery.
Many triggers to drive momentum
The movie exhibition business in India has several triggers that will drive momentum in the near to medium term. They are; adequate supply of content as out of 300 Hindi films made every year, only 26 are being announced for OTT platforms, backlog of big budget movies, big market share gains on the back of single screen shutdown intensifying, increased family outing, support of large production houses and recent success of ‘Master’.
Crucial role by Social media
Social media has played an important role in the success of various small to mid and big budget movies at the box office in the last 2-3 years. This trend is expected to continue and strengthen in the post-Covid era. The movies which were released directly on OTT platforms as theatres were shut have not got thumbs up from the audiences. Thus, good content quality and public reviews will be at forefront.
OTT platforms have so far been a mixed bag
Movies released directly on OTT platforms in the last 6-8 months have got mixed reviews from the audiences. Some got accepted well like Dil Bechara, Gulabo Sitabo and Shakuntala Devi. Big-ticket movies were flops, for instance Sadak2, Lakshmi Bomb, etc. Thus the performance of direct to OTT movies have been diverse.
Recovery in Ad revenues
Given that the audiences are expected to gradually come back to cinema, ad revenues will follow the occupancy levels during the initial months of fresh content releases. The revival in ad revenues will be very important due to high contribution to operating performance.
Footfalls in key markets like Delhi, Mumbai, Pune, Bangalore, and Ahmedabad will be a deciding factor for the pace of ad revenue recovery. With slew of releases in 2021, we are expecting ad revenues to bounce back to earlier FY20 levels.
Hollywood and Regional Releases
Restaurants, domestic travel, vacations etc. have seen significant uptick in the last few months. With the release of much anticipated movies, we are hopeful of a similar recovery for movie exhibitors as well. The dates for Hollywood movies are also expected to be out during the second quarter of the financial year 2022. In addition, release of various regional movies could also support box office collections and pull crowds as well.
Key Risks
After seeing a dip in new Covid cases, states like Maharashtra, Delhi, Punjab, Kerala, Madhya Pradesh and Chhattisgarh have started to see a surge in daily new cases. The containment of cases and the fast pace of vaccination dose will be crucial to get audiences back in cinemas. OTT and direct to consumer releases will continue to pose a threat to the business.
Closing Comments
Multiplexes usually come back stronger after every crisis; be it demonetization, the advent of GST and Food & Beverages issue (Outside food). Thus we believe Covid too will help in a strong rebound in terms of occupancy and share price performance.
