The state government’s decision to allow the reopening of theatres from November 5 has brought a sigh of relief to all the involved stakeholders. Maharashtra accounts for nearly 1/5th of the total box office collections generated in the country and is an essential market for the Hindi film industry.
CARE Ratings, in its report released on Thursday, said that as movie producers start releasing movies in theatres, footfall and occupancy rates shall improve. The existing cap of 50 per cent on the total seating capacity may not impact much, especially for multiplexes. Even during pre-COVID-19 times, the average occupancy rate was around 25 per cent to 35 per cent. However, the advertising income, which was nil in the past 2 quarters, shall increase as the footfall rises gradually.
“A strong movie content pipeline and the festive season will augur well for the movie business. However, film exhibitors will incur costs on sanitisation and maintenance and may have to roll out discounts on ticket prices as well as food and beverages in the initial days to attract an audience. This could pose as a challenge for near-term operating cash flows,” the report says.
The decision to not open cinemas across the country has affected the content pipeline. Movie producers have decided to further postpone their movie releases. “Hence, with negligible fresh content, movies that were released prior to the lockdown were being re-shown in theatres. This negatively affected the footfall for film exhibitors. Quite a few of these movies were already released on OTT platforms in the past 8 months,” the report notes.
According to CARE Ratings, the content pipeline for movie theatres in the coming months is strong. It is expected to attract footfall for film exhibitors. Some Bollywood movies are expected to release in Q3 and Q4 are 83, Sardar Udham Singh, Suryavanshi, Bunty aur Babli 2, Mumbai Saga, Toofan and Jayesh Bhai Jordar.
The Hollywood content pipeline includes Tenet, Free Guy, The King’s Man and Monster Hunt, amongst others. The regional content pipeline includes Master, Cobra, Doctor, Krack, Red, Kavaal and Lokkhi Chele. Most of these showcase big movie stars and are made by renowned directors and production houses.
Analysis of the financials of film production and distribution in Q1-FY21 shows that the industry witnessed a sharp loss in revenue in the first quarter of this financial year. However, losses were controlled by reducing expenditures, which are general and administrative in nature along with a fall in employee costs. The common area maintenance charges declined and rentals were waived off for some film exhibitors.