Multiplex - A Class Apart

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MULTIPLEX – a class apart

EXECUTIVE SUMMARY

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MULTIPLEX – a class apart

Forget the crazy hall of mirrors. Multiplex moguls are giving you crazy hall of screens. Many many of them. But is it serving well? Its not with mirror anymore, it is to do with screens make and multiply celluloid magic, that is. And the businessmen leading the mania for multi-screen movie theaters – the Multiplex Moguls – are almost teeny-bopper in their enthusiasm for the concept that Priya Village Roadshow (PVR) introduced to Indian audience five years ago. India in terms of its theater capacity around 11,962 (approx) theaters is not meeting its consumer demands. And moreover out of this there are about 8,400 permanent theaters which are not good in terms of its consumer base which makes viable only 11screens per million people. Indian film exhibition industry was never as high as it is in present. The government is keen on developing Indian film exhibition industry by providing it with all guns to fire in form of tax and entertainment incentives and exemption. Indian businessmen are never too far from exploiting this opportunity which is seen in form of number of multiplex coming up in our surroundings. This is being well supported with newer film projects with much enhanced quality of viewing and tech support. This is very much suitable to the need of the developing multiplexes. But the film viewing is not the only part of multiplex revenue. Nowadays it is the supplementary services which the multiplex are turning attention to with its greater profitability. This is food and beverages services. This is making the developed upholstery a need of hour which will lead to better revenue model for multiplexes. IT support services by providing computerized ticketing, food stocking levels, movie scheduling a ticket pricing among a host of other things. It is said Software is the new hero at Indian box – office. MULTIPLEX – A CLASS APART.

MULTIPLEX – a class apart

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INDEX: Sr. No

PARTICULARS

Pg. No.

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Prologue

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Overview Films

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3

Emerging trends and new development

10

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Overview Indian film industry

11- 12

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Key emerging trends

12-13

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Main Issues faced

14-16

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Tax inference

17-18

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Broaching MULTIPLEXES

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The MULTIPLEX phenomenon

20-31

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Need for MULTIPLEX

32

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Advantages

33

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The Maharashtra State Law

34 -35

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The Policy

36- 37

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Notification

38 – 39

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Necessities for appellation of MULTIPLEX

40

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Upcoming MULTIPLEXES in country

41

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In The NEWS

42 – 47

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Major disadvantage

48

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MULTIPLEX – IMAX case study

49 -51

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Leader Speak

52- 54

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Facts and Figures

55 – 56

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In the NEWS

57-64

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MULTIPLEX – IMAX case study

65-66

Prologue

MULTIPLEX – a class apart The entertainment industry has been evolved because of the human need for entertainment. This

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industry has been immensely expanded over the years. All businesses can go down but entertainment industry is ever expanding as a rich or a poor person requires entertainment from some or the other source. The players in this industry are radio, television, live entertainment, films etc. There has been immense growth and improvement in technology, which brought up better forms of entertainment from black and white films to colored, digital films, to an old traditional theatre to a multiplex. Entertainment – the very name conjures images of performers, of color, of sagas, of pleasure and of relaxation. Each and every one of us has been touched by the various facets of the entertainment industry, viz, films, television, radio, music, live entertainment to name a few. These together comprise the popular, evergreen, ever expanding “Entertainment Industry”. This industry has always been successful in drawing, the masses from the days of Roman gladiators to Shakespeare to Sholay to Taal. Performers and entertainers since time immemorial have immense themselves in entertainment masses. Given the inevitable convergence between entertainment and telecommunication, the potential of this sector is unrivalled. While technology drives this revolution, there is no disputing the fact that ‘ content’ is what will fuel the fire of convergence. The various segments of the Indian entertainment industry, though an integral part of our lives and social fabric, has always been treated like children of a lesser God, when it comes to Government support and encouragement, particularly in comparison with certain newer industries. The nebulousness of this industry is probably why the Government has not been able to fully appreciate the size and latent potential of this industry. If properly nurtured, this industry can be one of the largest contributors to exchequer and a dominant player in the new economy. This industry is unique compared to any other Indian industry, let alone foreign, considering the diverse tastes and cultures the industry caters to. The demand from expatriate Indians, the rekindling of global interest in Indian culture and art forms, and the promise of convergence, are the key factors influencing the potential of this industry

Overview Films

MULTIPLEX – a class apart

5 The current size of the films segment, in terms of costs, is estimated at Rs. 13 bn, with the industry budget increasing at about 10% per annum over the last 5 years. The future

PROJECTED REVENUES FOR THE GOVT 2005 2004

growth of the segment will be driven by

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expansion in exhibition infrastructure and

2001

development of multiplexes, availability of

4500 3400 2000

2002 2000 1999

1600 1200

Rupees in crore

500 250

finance from institutional sources, exports of film and animation software and emerging revenue sources such as web-casting, etc. On account of the above factors, the segment is estimated to grow at 25% per annum to a size of about Rs. 40 bn by FY2005. The industry/ Government should take the following measures for the segment to achieve its growth potential: Diversification: Film companies should diversify into other segments of the entertainment industry like their global peers. This will not only mitigate risk associated with films but also enable the companies to cross promote their offerings across several delivery platforms in the era of convergence. Expansion in exhibition infrastructure: At 12.5 mn screens per mn people, film exhibition infrastructure in India is much lower than in developed countries and woefully inadequate for the large population. In order to boost revenues, there is a compelling need to expand and spruce up exhibition infrastructure. Reduction and rationalization of entertainment tax: The entertainment tax in India is much higher than in other Asian countries. Besides, the level and nature of taxation varies from state to state. The Government should reduce and standardize entertainment tax to encourage fresh investment in theatre infrastructure. Ceilings on ticket rates: This regulation, present in some states, has rendered operations of numerous theatres unprofitable. The State Governments should consider doing away with this regulation.

Emerging Trends and New Developments

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MULTIPLEX – a class apart Some of the major fast growing segments in the domestic industry include the music, cable and

satellite advertising, infrastructure, exports, animation and FM. The domestic music industry was estimated at around Rs 17,000 million in the year 1999 and is projected to grow to around Rs 30,000 million by the end of the current year. The export segment is also expected to increase from around Rs 4,000 million to around Rs 10,000 million during the same period. Revenues from the animation segment are also forecasted to increase from Rs 2,200 million to nearly Rs 4,400 million by the end of the current year. In order to capitalize on this fast growth ahead, companies are making large-scale investments in terms of infrastructure. For instance, the Mode Family has invested around Rs 1,500 million towards the construction of multiplexes that can screen around 16 films simultaneously. At the same time, majors such as Zee Telefilms and Eenadu TV are expanding their horizons to other markets as well.

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Overview of the Indian film industry Indian cinema has come a long way from the shaky flickering images and grating noises and sounds to a very sophisticated state-of-the-art technology for creation and projection of image and sound track. The film industry has grown multidimensionally with unique blend of commerce, art, craft, star glamour, social communication, literary adjuncts, artistic expression, performing arts, folk forms and above all a wide-ranging and abiding appeal to the heart, the mind and the conscience. Ramoji Film City, outside Hyderabad (AP) is the biggest film single center in the world for making films, outside of the US. The most important trend for the Indian entertainment industry is that the number of Indians scattered around the world are numbering close to the affluent population back in India. And as entertainment becomes a strong ethnic bond for Indians in alien lands, theatre owners, TV/cable channel operators, event managers are all hankering for Indian entertainment products

Indian film business is set for a period of sustained growth. Among the impressive forecasts in this report: production investment will rise 70% by 2006, the Indian film industry's export revenues will climb 120% over the same period, foreign films' theatrical rentals in India will also rise steeply. India has not one film industry but several. The Bollywood industry's output of over 240 films in 2000 made it the largest of India's film industries, the Tamil, Telegu, Malayalam, Kannada and Bengali language industries are also significant, between them producing over 500 films in 2000. Indian government is moving to encourage corporatisation of the industry, improving access to bank finance and reforming taxation laws to encourage exports. Behind these measures lies a perception that the film industry, like telecommunications and information technology, is one that can leverage the country's highly skilled workforce and low costs to create an internationally competitive economy. Valuable export markets have already been developed in countries like the UK, USA, the Gulf States,

MULTIPLEX – a class apart South Africa & Kenya. The Indian government is convinced of the link between a healthy

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theatrical exhibition industry and film industry success. In order to encourage modernization of the country's 9,000 hardtops (to which can be added another 3,000 mobile cinemas), entertainment taxes are being massaged downwards, especially for new cinemas, and import duties on cinema equipment have been cut. After a number of false starts involving foreign investors like Warner Bros, United Cinemas International, Kodak and Decatron, it now seems India will at long last get its multiplex boom, though in practice this will mostly mean multiscreening of existing large halls by their Indian owners, together with construction of relatively small new multiplex cinemas. Cinema equipment suppliers, however, are already enjoying good business as local operators seek to upgrade their venues.

The changing landscape of the Indian film industry and the Key emerging trends (1). the introduction of institutional financing across the film value chain of production, exhibition and distribution will transform the Indian film industry. (2). This process has been started by the Industrial Development Bank of India (IDBI), which has adopted a scheme for financing films. It invested 100 crores in 2001 and has set aside the same sum for 2002. It is forming a consortium with commercial banks and institutions to extend film financing. This marks the break with funding from private sources which charge interest at a rate of up to 36-48% compared to Ibis’s 16%. (3). The Indian film industry is showing signs of transformation at the operating level as it begins to embrace corporatisation and organized business structures. Mukta Arts was the first to raise equity finance through an initial public offering in 2000. It was also the first to take out film insurance, offer legally enforceable contracts and a completion bond. Other producers such as Aamir Khan and Yash Raj Films are following the trend, which is growing as many producers can see the advantages of moving from a family business to a corporate entity.

MULTIPLEX – a class apart (4). India is studying various funding models including those of Australia, Canada, the US and

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Germany, to develop a film financing structure for its own film industry which addresses the needs of both the large players as well as independent film producers. (5). Many producers are adopting a more structured approach to film production. New practices include continuous shooting schedules and the use of better technology, as evidenced by the Oscar-nominated film Lagaan, and a greater focus on marketing and packaging as seen by Kabhi Khushi Kabhi Gam. (6). There is an increase in the production of niche films with smaller budgets as established television companies like Pritish Nandy Communications, Pad Malaya Telefilms, Zee Telefilms, Balaji Telefilms, Tips Industries and Devgan Entertainment move into film production. Cable and satellite television is also becoming an important driver of content and financier of film production. (7). Film insurance is becoming an established concept. Taal was the first film to get insured and United India Insurance the first company to introduce a policy for film production along with producer Mukta Arts. Increasing numbers of films are now seeking insurance against loss and damages including time and cost of over-runs. (8). Over 1,000 multiplexes with between 150-400 seats are expected to be built in the next few years. The impetus for the multiplex boom has been provided by entertainment tax incentives introduced by state governments. The central government has also announced that operators setting up multiplexes in non-metropolitan areas will be eligible for a deduction of 50% of their taxable profits for five years. Organized corporate players are now investing in this market while single screen owners are able to access bank and financial institution loans to upgrade to multiplexes. (9). Indian cinema is beginning to adopt digital technology. In March 2002 the government reduced the basic duty on certain elements of studio equipment and digital projection is expected to be a new area of growth.

MULTIPLEX – a class apart

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The main issues faced by the film industry (1) A lack of transparency, unorganized financing and piracy: -have been the major barriers to attracting investment from venture capital, private equity, public, bank and institutional financing into the sector. The challenge facing the major production houses is to become corporate entities - to implement sound accounting practices and adopt corporate governance as a code of conduct. The industry also needs to adopt security mechanisms such as legal contracts with artists and other agencies, film insurance and film completion bonds. (2) Lack of screening facilities: - India has around 12900 cinema screens (a UN Study). This leads to a serious shortage of screening facilities in India. Even the existing screens aren’t technically up to the standards required. Most of them are also closing down or being converted to a multiplex or shopping malls. The economics for a multiplex works better. The success rate for movies has gone down drastically since the last year. States like Rajasthan, Maharashtra Haryana, Uttar Pradesh and Madhya Pradesh have given tax breaks for multiplexes. Halls with smaller capacities also are better for niche films. (3) Lack of exhibition and distribution infrastructure: - The average seating capacity of a theatre in India is between 700-800. General attendances are only 35% of capacity. The high level of taxation has led to under investment in the exhibition infrastructure resulting in decrepit cinema halls. High taxation has also led to exhibitors under-reporting the levels of ticket sales to avoid paying taxes and sharing the box office profits with the producers/directors and distributors. The film industry needs to explore other revenue streams such as home video, DVD sales and rentals, cable television rights, pay per view, video on demand and merchandising. (4) Training and education: - There is a dearth of technical and creative talent in India. With the exception of the Film Institute in Pune, there is no credible organization in India providing professional training in acting, directing, and scriptwriting or cinematography skills. There are however, a significant number of private organizations delivering such training. The industry is facing an acute shortage of trained personnel and there is an urgent need to establish institutions providing the latest technical training.

MULTIPLEX – a class apart (5) Up gradation of existing movie theatres -The existing halls need to be renovated so that

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more viewers are attracted to cinema house. As per the current market trend most hall owners don’t earn enough to be able to upgrade the existing theatres. The answer could be flexible ticket pricing. Black marketing of tickets is common feature whose advantage is taken by unsocial elements. A system could perhaps be introduced whereby the film industry or the theatre owners to whom it rightfully belongs derive this advantage. This can possibly be achieved by introducing the concept of flexible pricing of tickets. Theatres should be allowed to collect higher revenues for more popular movies by temporarily increasing (or decreasing in the case of a non – hit movie) the ticket prices. This would generate higher revenues for the industry, which in turn would encourage them to spend more to upgrade the standards. (6) Lack of adequate infrastructure for movie production: - There is a serious dearth of movie production facilities in India. Most of the movies are produced at shoestring budget. Though there are adequate creative ideas, implementation is poor. The primary cause is lack of facilities. Examples like Ramoji Rao City Studio in Hyderabad, Whistling Woods from the house of Mukta Arts are recent examples of where the country is headed. (7) Financing: - In terms of volume, India produces the largest number of movies in the world, 800 on an average annually. But the Film industry structure has been highly non-corporatized till date. It has generally been family run companies with no access to institutional finance. Finance is tapped from family friends and other sources with high rate f interest (up to 40%) being charged. With the Film industry being granted the official ‘industry status’, it has propelled companies like Mukta Arts to go in for institutional sources. Still not many Film companies have availed finance from these sources. This is because corporate structure in place is a pre requisite for such a venture. This means that the company has to clearly define the following: A. Documented scripts in place B. Legally enforceable contracts with the artists and technicians C. The entire time schedule documented D. The producer has to make sure the filming activity is completed in time and there are no time and cost overruns.

MULTIPLEX – a class apart Companies like Hinduja TMT, which has earmarked Rs 20 crores for Film financing this year,

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and UTV which made Fiza, are entering this arena while the emerging finance sources encourage corporate to invest: These sources of finance are available only to companies and not to individuals, thus the need for corporatisation. CII & CRISIL are also working at developing a financing model that would enable the banks to weigh the risks in this industry. (8) Piracy: - Indian film industry loses about Rs.300 crores annually to piracy. The industry is worried that while the avenues of piracy are increasing at an alarming rate and the laws are either inadequate and where they aren’t, the problem is enforcement. The fines paid when caught are inadequate and so is the punishment. They also cite the non-cooperation of cable operators as a major handicap in their efforts to curb piracy. The cable industry on the other hand finds it difficult to check it on its own. The nature of piracy in the Entertainment industry is such that since the consumer demands the pirated product, the administration finds it difficult to check it. The cable operators cite this reason among others as to why it is difficult for them to control it. If one operator does not showcase a pirated movie, the consumer switches to the other. And since there isn’t strict enforcement of the laws, there is not disincentive for anyone to stop showing such movies. The operators claim that even the film industry is not clear as to which rights are to be given to the cable operators and how to distinguish them from satellite rights of movies. Last year alone it is estimated that unlawful copying and distribution cost the industry $66 million in revenues. To combat the problem the government has set up a task group to identify anti-piracy measures. The Confederation of Indian Industry's Enter media group, FICCI and finance house Rabo India have made recommendations to the task group on the issue which include the need to educate the public on the menace of piracy, the launch of a campaign of wide-spread raiding operations, the promotion of organized retailing and the introduction of 'source identification' codes on each unit. Perhaps the most significant obstacle relating to piracy is the lack of a centralized government body to regulate all matters concerning the film industry. Current responsibility is divided across multiple government and regulatory bodies such as the Ministry of Information and Broadcasting for film censorship, the Ministry of Finance for taxation issues and the Ministry for HRD (which controls Education, Youth and Sport) for intellectual property rights protection and copyright violation issues.

MULTIPLEX – a class apart

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Tax Inference To recapitulate, the Indian Entertainment Industry comprises films, television broadcasting, cable television, television software, music, radio, and live entertainment and event management. The budgetary support of the Ministry of Information and Broadcasting is being increased by 22 % to Rs 415 crore for the year 2002 – 2003. Some other benefits announced for the entertainment sector include: reduction of custom duty on certain earth equipment and studio equipment from 35 % to 25 % and allowing for the next five years a deduction of 50 % of the profits earned by units constructing and operating multiplex theatres in non metropolitan towns if such multiplex theatre is constructed between April 1, 2002 and March 31, 2005. No excise duty is levied on CD ROMs but there is a levy on audio CDs and video CDs although the manufacturing process, requirement of raw material and plant requirement for three types is the same. A 4 % excise duty has been imposed on MRP with regard to audiocassettes. This will result into an outgo of about Rs 60 crores from the music industry alone. The service tax on broadcast service, which leads to multiple taxation on production of programme and broadcasting content, is leading to a cascading effect. No abatement has been offered with respect to this service tax on broadcast services. The sector is reeling under a heavy tax burden of entertainment tax, which goes up to even 100 % and beyond. Unlike other categories, service tax for film production sector cannot be passed on to the final consumer. The film sector has been given industry status by the Government. Estimates show that the Entertainment Industry is currently generating revenue of Rs 100 billion and this will increase to Rs 315 billion by the year 2005. Apart from giving the industry status to film segment; the Government has announced several measures that can give the critical push to the overall growth of the entertainment sector. These measures including allowing listing of a company with 10 % public ownership akin to the information technology industry television broadcasting has been privatized. Simultaneously the Government intends to bring the convergence bill, which ensures growth in several sectors, and

MULTIPLEX – a class apart renders the regulatory mechanism more effective. One of the major sectors of the industry is

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the film segment. The current size of this particular segment is worth 22 billion. The average growth of budget for films has been increasing by 15 % p.a. The growth of the film industry depends not only on the basic activities like film production and distribution, but the intensification of and expansion of exhibition infrastructure and development of multiplexes. The availability of finance through institutional sources is imperative for this expansion and diversification. Stream lining is also called for in the areas of corporatisation of film companies, reduction and rationalization of entertainment tax, ceilings on ticket rates and expansion of exhibition infrastructure. The present size of the television segment is estimated to be Rs 35 billion. The DTH system will give a new dimension to the television broadcasting in the coming days. The subscription revenues of the television channels are estimated to be around Rs 25 billion currently. There are 35 million households having access to about several channels through cable networks. The penetration of cable TV, particularly in the rural segment is expected to grow by 12 % in the coming years. The growth of music industry has been astounding in recent years. In the year 2000, the industry sold an estimated 250 million music cassettes and 15 million compact discs. This is a growth of 15 % compared with the previous levels of sales. The music industry is dominated by MC sales rather than CDs. The music industry in India is expected to grow at a rate of 18 – 20 % in the coming years.

MULTIPLEX – a class apart

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Broaching multiplexes in India

Introduction to Multiplex Multiplexes are not a new concept in India. Chennai (then Madras) had the Devi complex and Diamond/Sapphire/Emerald complex over three decades ago, while Mumbai had Shivam/Satyam/Sundaram complex for the same period of time. But the US had set up movie complexes in the suburbs about twenty years back and this concept is now spreading all over the world. Major movie production houses and media companies, including 20th Century Fox, Paramount, United Artists, Columbia-Tristar/Sony and Warner Brothers, operate multiplexes all over the world. From the release of Imperial Film Company's March 14, 1931 to the screening of Armaan in May 2003, from the first Indian song to Chamma Chamma in Moulin Rouge; from the success of Lagaan in Shanghai to Taal in the UK, the Indian film industry or our Bollywood has traversed a victorious journey surpassing criticism, language and physical barriers. In this journey even the facet of the cinemas has immensely changed. The magical word in cinemas today is multiplex. It emerged out of the necessity faced by the cinema owner to cater to the busy, fast moving and variety-loving consumer who wants more than just one film under a single roof Multiplexes have become just a rage that most of the old cine complexes are converting to multiplexes. First of all, what is a multiplex and how is it different from a

MULTIPLEX – a class apart cinema hall? It is a large cinema or a movie theatre with several separate movie

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screens, says the Oxford Dictionary. Today it is not just several screens; it is an ultra-sophisticated complex with a variety of retail activities revolving around it.

The Multiplex Phenomenon: The growing share of entertainment expenditure in the disposable income pie is driving a revolution around India's favorite entertainment option today - Movies. The combination of cinema with other services and facilities has led to the burgeoning growth of multiplexes around the country. Globally, multiplexes are operated primarily by major movie production houses and media conglomerates including the likes of 20th Century, Paramount, United Artists, Columbia-Tristar/Sony, and Warner Bros. The primary reason for the popularity of this business model has been the escalating cost of movie distribution as well as a hedging opportunity to run multiple revenue streams around self owned content. In India, the movie industry is not quite as developed and organized as the industry in USA. Multiplexes arrived in India in June 1997 when Priya Village Roadshow was the first to pioneer the concept with its initial establishment PVR Anupam, a multiplex with 4 theatres and a host of other entertainment options including restaurants, music centers, gaming centers etc. The multiplex model is based on the concept of umbrella entertainment built around a primary anchor - movies. The revenue streams, however, do not necessarily center around a single anchor. Typically, the possible income generating channels in a multiplex can include:

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MULTIPLEX – a class apart

The box office collections Rent from display systems Food & beverage Product launch rentals Promotions by companies seeking to promote consumer goods More often than not, multiplexes earn lot more from other revenue sources as compared to box office collections.

It is unlikely that India’s experience with the multiplex form of cinematic exhibition can be comprehended without understanding the mechanisms of the liberalized economy in which it emanated. But to locate its persona and impact as being solely the affections stemming thereof would in some ways amount to a limited and inadequately informed view. Since its inauguration in 1997, the Indian multiplex experience has been smattered with instances that stand in opposition to its immediate environs. Incoherent, inconsistent, possibly transitional yet aggressively attentive, these lend to it markings of an indigenous, self-derived and developed nature. Though patterned along the ‘shopping mall’ model of the multiplex as developed and prevalent in the West, and sustained by the retail boom unleashed by the economic liberalization policy of 1991, the Indian multiplex site sports all the features of an upmarket turf. It has aligned with and extended the transformation of India’s urban milieus being re-visioned within the framework of consumerism. The multiplex’s steady proliferation in the metropolis’s and simultaneous penetration into some smaller cities and towns testifies to its increasing popularity, coinciding with the rise of disposable incomes in the hands of the urban Indian family. But in terms of its exhibit, i.e. the films on its screens, it makes for a space that mirrors a complex cinematic multiplicity. The increasingly curious mix of parallel, regional and art cinema along with the mainstream, both domestic and foreign, is what distinguishes most multiplexes in India, such that the Indian multiplex has come to position itself, not so

MULTIPLEX – a class apart much by identifying with particular kinds of films, as by being a theatre for accessing

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the ‘latest’ from a wide spread of cinematic fare – mainstream or fringe – in comfortable, colourful and inviting surroundings. While the former, mostly Bollywood films which, given their steadily improving production quality and contact with newer territories, especially overseas markets, aligned quickly with the multiplex’s swanky appearance, the latter too, mostly low budget, non-narrative films, easily if not as promptly, penetrated into the multiplex without bearing any proximity with the site or its vicinity which is enlivened with an array of branded local and global products and services. The multiplex intervention, as of the moment, can be termed as appropriating varying audience segments to stabilize and secure its own position, establish its distinction and engage the audiences in a varying film viewing exercise. It has emerged as comprising a mix of seemingly contradictory strains wherein central and peripheral tendencies coexist. Taking cues from each other, multiplexes all over the country are making for variables that don’t just originate in, or correspond with, the existing common needs of their audiences, but have also identified and accommodated overlapping tastes and preferences by readying access to fare, which may have previously been considered as lacking numerical encouragement vital for profitability. Most art films and much of parallel cinema have usually faced reluctance from distributors and exhibitors alike. Given the limited response they face, bodies like the National Film Development Corporation (NFDC) have regularly stepped in to support them financially alongside promoting them at foras like film festivals and national network television. Their penetration into the multiplex can first be located in simple mathematics – the proliferation of screens, enhancing access to films. More important than simply the number of screens is the fact that even though more cinemas are getting converted and new multiplexes are being set up, the number of seats has not increased in equal proportion. It is only when new multiplexes are constructed that seating capacity has recorded an increase. While the capacity at a single screen cinema is usually in the region of 850 to 1000 seats, or sometimes a little over that, a single screen in a multiplex seats a far smaller audience,

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MULTIPLEX – a class apart

Because when a cinema is converted from one to multiple screens the seats get divided among them, though not equally. Anupam PVR, India’s first multiplex situated in Delhi, was converted to four screens, two with a capacity of over 300 seats and the others with 150 seats. The pattern continued, shaping into a trend, with the result that even when a new multiplex is constructed the seating capacity per screen rarely parallels that of a single screen hall. Consequently, the number of admissions per screen stands far reduced at the multiplex. However, though non-mainstream films are unlikely to attract audiences of the size as a conventional Bollywood film would, their showings are still lucrative because the numbers they command constitute a greater, more competitive marginal value. Further, the multiplex has not followed the conventional 12-3-6-9 time schedule as prevalent in most cinemas. This created opportunity to schedule and programme films on the different screens. The ability to manipulate schedules allowed for films of varying lengths to be accommodated. Since non-mainstream films are of varying lengths and usually shorter than an average feature, they could easily be integrated in the multiplex’s film menu. Multiplexes have charted cautiously in relation to industry films. In relation to Bollywood, multiplexes have not depended entirely on conventional films as they are in any case competing with the single screen cinemas which draw larger audiences. This is not only because they have a greater seating capacity, but because they are more accessible. They usually outnumber multiplexes, are located within easy reach and, more importantly, offer the same product at a lower price. Besides, a thriving video piracy industry coupled with a deep penetration of cable television meant that the multiplex settled for exhibiting selected films – usually the awaited, big budget, publicized, mostly familial films. These films coincide with the multiplex’s redefinition of cinema as a family outing comprising other amenities like food and games. Since it needs only a section that would guarantee a sell out of its limited seats being offered at a higher rate, it tends to exclude the average Bollywood film. But in

MULTIPLEX – a class apart so doing it has managed to elicit viewership from upper class segments, which

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previously may have held reservations towards cinema going, given the lack of facilities like air-conditioning, upscale interiors and so on. In relation to Hollywood films too, multiplexes find themselves playing on limited ground as releases in non-western territories are usually a couple of months after the film’s release in home territories. And the access to films through DVDs before a theatrical release (at least in metropolis’s) has implied a replication of the approach as adopted towards Bollywood films. Initially, multiplexes were projected primarily as theatres for English films. That changed soon, because despite their popularity English films are rarely accessed by nonEnglish speaking, illiterate and non-affluent audiences. These films seldom transcend metropolis’s and large cities and, on the screens, they compete for space with films from a flourishing native industry that appeal to a wider audience. The apprehension towards foreign films is not determined by the urban or linguistic divide only. Within the different income regions of say a metropolis itself, one finds multiplexes located in posh localities exhibiting foreign films along with substantial numbers of non-mainstream films. However, when located in the lower income group areas, multiplexes get smaller, being composed of fewer screens and English films (mostly well advertised ones) constitute a smaller portion of the assortment. As one moves away from the Hindi heartland, the film menu tilts correspondingly in favour of native languages and no longer reads bilingually (i.e. comprising only Hindi and English films). Neither is it always trilingual, say in cities like Mumbai and Delhi, or regions such as South India. Here films in the immediate native language get complemented with those from other regions, in differing dialects. With the multiple screens accommodating a spillover of linguistic access that may be rooted in a host of factors – education, migration, employment and training or just proximity – this gets converted into overlapping cinematic preferences. The variation is not simply of language, but extends to genre as well, including treatment in relation to content and construction in terms of form.

MULTIPLEX – a class apart Responses at the multiplex to the non-mainstream films have not been completely

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negative. In fact, a few low-budget, non-mainstream films, despite a cast comprising prominent film stars, could only secure screening at multiplexes in some territories. Such a trend coupled with the entry of vernacular films into non-native regional territories, and an active Indo-western intersection has also facilitated the entry of non-mainstream English and non-English foreign films into some multiplexes. The multiplex also constitutes the primary site for the increasing territory of films directed by overseas Indians, whose representations span both the Indian diaspora and the home-land. Sociological in their orientations while dealing with the diaspora, these present traditions and lifestyles as altered by being away from the homeland; and in terms of the homeland, they highlight native habits and attitudes as seen from a ‘foreign’ eye. Explicated mostly in humorous, familial scenarios that involve the play of customs and rituals along with the essential element of entertainment materializing in song and dance, these films are developed along non-native patterns of construction, aesthetic and language. Their duration too is a variable, almost always under three hours. Despite being located within the native community and thus being readily decipherable, they too like other foreign films have enjoyed limited appeal not extending beyond the largely educated audience that’s bilingual and enjoys familiarity with diaspora experiences and attitudes. Though films surrounded with more publicity are played at a few single screen halls as well, the multiplex is more promptly identified with non-native cinema. Add to that the fate of films like Fire (1997), and the polarization between the single screen and multiplex cinemas stands further sharpened. Given the fast pace of its spread, its acumen towards cinema of diverse kinds and a long gestation period, central and state governments are encouraging major investment and offering sops to investors and developers who comprise real estate entities, film exhibitors and distributors, film processing companies and media conglomerates. But the concessions are accompanied with conditionalities aimed to prevent concentration of multiplexes in select regions and in some cases to promote regional cinema. A microcosm of retail culture including significant portions of global brand names, the multiplex site

MULTIPLEX – a class apart makes for the kind of up-beat location that coincides with government attempts to alter

22

conventional images and all that compliments the bandwagon. It also enables foreign tourists to access cinema. While multiplexes may be emerging as local macrocosms of native and foreign cinema, they constitute a kind of exception when compared with their western counterparts, most of who pressured by their functional mechanisms and operating in advanced, more developed markets characterized by deeply entrenched segmentation which extends into film exhibition as well, have ended up institutionalizing and popularizing the blockbuster syndrome. It is thus necessary to recollect a few trends that may not bear directly on the subject but do not bypass it either, having operated upon audiences as much as the multiplex itself has.

First, the multiplex is preceded by and concurrent with a tradition in parallel cinema that reached a peak in the 1970s. More recently a trend in rethinking, innovative cinema has gained prominence for confronting pressing social and political issues like feudalism, sexuality, terrorism and separatist movements within the scale of mainstream films. These films occupy the space between the mainstream and art film, reaching audiences without the essential melodrama typical of Bollywood films in which characters are foregrounded, on occasions distanced, from their milieu. These films situate sharply defined characters as the site where the opposing pulls of an irreconcilable crisis operate. They have gained critical acclaim at home and abroad alongside box office endorsement. While the attraction of some can be located in the dynamics of stardom and a heady mix of song and dance, all interpellate the audience through commonplace situations, traumas and experiences. Despite the difficulties it faces, the fringe comprising art and off-beat films has been sustained both independently and in collaboration with firmly positioned industry players. Similarly, it is important to remember that non-Hollywood cinema too has commanded an audience promoted by international film festivals, film study circles, national network television

and

cross-cultural

exchange

programmes

with

other

nations.

The

preponderance of single screen cinemas has not come in the way of screening critically acclaimed foreign films from time to time.

MULTIPLEX – a class apart Second, in the backdrop of a film industry steeped in financial crisis, the small budget

23

and independent films have received considerable approval and encouragement when compared with the industry product. With off-beat content and newer forms, their slice of the cinema is expanding. For them too, the multiplex constitutes a crucial exhibition space, given that they target specific rather than mass audiences.

Third, and to further unpack the possibilities at the multiplex, a brief recap of the functional impulse/s for it is vital. Upon introduction of liberalization, retail chains emerged and expanded as the momentum of consumerism slowly rose. Consequently, retail spaces steadily gained premium over commercial ones. Strategies to cover costs had to be revised. While rethinking products, prices and efficiency, retailers linked promotions, fun and entertainment to penetrate bigger chunks of the market and secure customer loyalty through customization. In a climate of alliances and add-ons like food joints, the concept of holistic family entertainment experiences gained patronage. In such a scenario, the immensely popular leisure activity far older than television in India – cinema – suffering from inadequate exhibition facilities intersected with aggressive retailing and helped prompt the multiplex. This served to revive the diminishing cinema going habit by enticing audiences away from their television sets, with their clutter of imagery from all over the world drawing upon the cable and satellite boom. The desire for the image now combined with other leisure activities and occupations. Once in place, the multiplex developed a counter to the unitary propensity of the single screen hall, founded on exclusion, perpetuating homogeneity and cultivating committed audience segments. While single screen cinemas identify themselves with films of particular kinds, say the Hindi masala and blockbuster, the English, or the porn movie, the multiplex has capitalized on an inclusive tendency to motivate and assemble diverse audiences. On the one hand it has contained the influence of embourgeoising forces within its edifice, allowing on its screens the interplay of alternative and mainstream or conventional strains. Further it has limited contact with the West to no more than the

MULTIPLEX – a class apart fashioning of its site, preventing the hegemony of either Hollywood blockbusters as the

24

result of a partial global encounter, or conventional Bollywood films that enjoy a panlinguistic and cultural appeal cutting across regional, religious, class and other variants. On the other hand, it has remained an urban, largely middle and upper middle class leisure pursuit, with its highly priced tickets excluding the masses crowded in the lower regions of the income graph. While the masses take to cinema readily, given their financial capacity and lack of identification with the plush appearance, products and services at the multiplex – in any case targeted at the socially and economically mobile sections – this numerically significant chunk of audience has remained confined to the outer edges of the multiplex experience. And it is unlikely that the dynamics of the multiplex in its present avatar will manage to secure their participation. Spatially too, multiplexes can mostly be spotted in affluent neighbourhoods, within the easy reach and concentration of young audiences. So far a nascent experience, the number of multiplexes is soon slated to rise sharply. The full impact of its rapid spread, particularly over the last two years, is yet to be determined given the long gestation periods and concentration in and around selected pockets. As a result, it is too early to draw any conclusions about its impact or chart any definite course for its future. Going by the variables that are emerging in response to the needs of immediate audiences, and the fact that in its present form it has acknowledged cinema as composed of diverse possibilities, the multiplex may in the future enhance segmentation and result in branded theatres exhibiting particular fare, say the art, mainstream, or foreign films, maybe even documentaries. The mechanisms of competition would then come into operation and influence aspects such as ticket pricing. As a space commanding flexibility and an ease with maneuverability, the multiplex, concurrent as it is with the digital revolution, could even aid in the promotion of the format. Not simply by providing accompanying exhibition facilities like digital projection or digital sound, but by making available alternative display spaces for digital films that bear potential as a distinct genre. With the conveniences of its apparatuses, film form is

MULTIPLEX – a class apart already witnessing alteration in some parts of the world, and filmmakers without

25

access to elaborate film equipment have received a fillip from this technology. New territories in relation to content are being explored by a breed of filmmakers who are exploiting the ease of accessibility accompanying the medium. Redefining film form and content, digital films could prompt and occupy viewing spaces as differing from conventional films and embody forms like the ‘walk through’ film that may require simultaneous projection on more than one screen, not necessarily of conventional theatre size. From its present shape, there only emerge more queries than any concrete predictions. Will the rapid spread of the multiplex and its concentration in particular zones with audiences constituting existing and potential markets for the retail entities supporting the multiplex, emerge as the dominant trend, and push doors for further segregation and institutionalization of segmented audiences, leading to branded multiplexes? Or will encouragement from the various governments drive away the multiplex, aiding its penetration into other urban and semi urban, non-affluent territories? Will the multiplex alter existing film form so as to align with its own plush and colourful appearance? Or will it encourage alternative films? Its dispersal away from well-heeled spaces is crucial if the intention is for it to emerge as at least a pan-urban, if not a pan-Indian experience. Well meaning as government policies may be, without their committed implementation and in the absence of the shopping mall culture in other locales, the possibilities of the multiplex there remain suspect. But in the meanwhile cinema stands redefined for the Indian viewer as composed of fare other than the regular three-hour film. From the present assortment at least, sporadic and transitional as it may be, there are definitely more films to choose from. And the choices aren’t merely linguistic. In Mumbai a multiplex is one with a minimum of four screens and 1250 cinema seats. In other parts of Maharashtra the specification is for three screens and minimum capacity of 1000 seats. Typically, film exhibition centers particularly in the metros have to compete with various other avenues of entertainment available to the public at large: -

MULTIPLEX – a class apart A. They can choose to watch the movie on satellite film channels, cable television, and home

26

video B. They can choose to spend the time and money on other sources of entertainment such as video games, amusement parks etc. The only way to pull people back to theatres is to make theatres attractive, comfortable and equipped with the latest amenities, thereby offering the audience more than what they expect out of a theatre. The mantra of renovation and up gradation has given a fresh lease of life to theatres in cities like Mumbai, which were reeling under a severe financial crunch and succumbing to commercial pressures. Since more than one movie is screened in a multiplex at any given time, a potential viewer rarely goes home without seeing a movie though it may not be the one he first came to view. Multiplexes, the hot new concept in movie exhibition, have the potential to radically alter the entertainment business in time to come. Multiplex embodies the luxurious amenities of the modern day theatre, multiple screen choices, state of art technology, ergonomic seating, eye catching architecture and top of the line cafes and food courts. The first Indian multiplex set up in Delhi, Priya Village Roadshow (a joint venture between Priya exhibitors of the Bijli Group of Companies and Village Roadshow Limited of Australia) has been pulling in crowds with the provision of wholesome one stop entertainment. Now with various state governments announcing Tax Holidays for Cineplex (multiple movie theatre) projects, more multinationals are preparing a foray into India. The Gujarat Government had announced a seven-year entertainment tax holiday for such projects. These announcements has been have given a definite boost to those planning to build multiplexes. Among the major foreign players interested in multiplexes are Columbia Tri-Star, Eastman Kodak and John Buck and Company. According to the industry sources, theatre admissions in England, Germany and Australia tripled with the multiplex and theatre boom and a similar growth could be expected in India with development of multiplexes/ theatres. At the same time, multiplexes should not be viewed as a threat to the one screen theatre. With the growth in the theatre going population, the single screen theatre will also benefit from the growth in multiplexes. Typically, the multiplex model is built around a primary anchor - movies. The revenue generating channels in a multiplex includes box-office collections, rent from display systems, restaurant rentals, food and beverage collections, product launch rentals and promotions by

MULTIPLEX – a class apart companies. The other revenue streams are often larger than box-office collections, but

27

movies are the main pull of such complexes. Several of these multiplexes are being located in shopping complexes and average an investment of around Rs. 5 crore for a four-screen theatre. Having a multiplex ensures about 1,200 footfalls daily, which is great for a shopping mall. There are about 1000 screens planned over the next five years all over the country, joining the existing 12,000 screens. The screens per one million population for India are only 11 as compared to 117 in the US and 77 in France. Though this scheme has not boosted the existing single screen cinema theatres, several theatres are planning to upgrade to the multiplex concept and hence provide a boost to the big screen cinema. There is healthy competition among the multiplexes and the initial high-ticket rates will definitely come down to more acceptable levels. In fact, these may actually spur the declining cinema market in India. The smaller cinema halls provide the owner flexibility to rotate the movies economically. The cinema going concept has changed drastically, becoming part of the “broad spectrum” family entertainment. This is good for consumers and film buffs. The threat of over-capacity of cinema seats has not dampened the multiplex mania currently prevailing all over India.

MULTIPLEX – a class apart

28

Need for Multiplex Though the Indian entertainment industry had been growing @ 33 % for the last few years, the number of screens had gone down, attendance had decreased and box office collections had reduced in real terms. In comparison, during the 90's - directly due to the growth of Multiplexes - the number of screens had increased by 100 %, attendance levels by 150 %, and box office collections by 200 %.

Attendance in per Box No.

office

Of

Country

capita

visits

per collections

in

Screens annum

million dollars

Australia

850 to 1800

2.5 to 4.7

285 to 729

New Zealand

140 to 320

1.8 to 4.3

38 to 109

Thailand

180 to 410

0.2 to 0.4

0.64 to 2.63

5.25 to 3.56

Rs. 21 to 36 billion

11,962 India (APPROX)

India in terms of its theater capacity around 11,962 (approx) theaters is not meeting its consumer demands. And moreover out of this there are about 8,400 permanent theaters which are not good in terms of its consumer base which makes viable only 11screens per million people. This creates a need for more and more screens and much developed exhibition centers for movie and movie goers.

MULTIPLEX – a class apart

29

Advantage More often than not, multiplexes earn lot more from other revenue sources as compared to box office collections. However, due to the role of "pull" creator that the movies play in this scenario, overall returns are highly correlated to box office contribution. Most multiplex projects break even at an occupancy rate of 40-45%. This figure may vary as per the maintenance standards of various theaters and the revenue streams running parallel to it. Real estate is the major cost component and a strategic resource for the multiplex business. Typical built up area required per seat is around 30 sq. ft. and average no. of seats per screen is around 250 - 400. Although much smaller than traditional theatres in a screen to screen analysis, multiplexes often command higher collections and space efficiencies due to the following reasons: The element of choice of movies available to the consumer Premium pricing possible due to the total entertainment platform Multiple revenue streams hedge the risks associated with movie performance Most of the initial multiplex projects started in the major metros due to the availability of larger catchment areas. However, a recent trend in multiplex operations has witnessed the proliferation of multiplexes Into non metro urban centers of the country. The driver for this phenomenon is a combination of lack of quality entertainment options in non metro cities together with a growing consumer base and disposable income available for entertainment. The primary targets in this list include Pune, Baroda, Indore, Ahmedabad and Jaipur. Maharashtra, with its attractive tax sops for multiplex development and operation is likely to get a lion's share of these projects. Multiplexes in Mumbai Metropolitan Region (MMR) will get a 100 percent exemption for four years while in the rest of Maharashtra the exemption period will be five years. These projects will be entitled to a number of facilities including stamp duty relief (if located outside the municipal limits), power at the industrial rate for five years etc.

MULTIPLEX – a class apart

30

THE MAHARASHTRA STATE LAW

THE STATEMENT The salient highlights of the Statement are: (a) Due to the onslaught of cable television and advancement in the field of information technology, the average occupancy in cinema theatre has fallen considerably and hardly any new theatres started in recent past. Public at large, these days, prefers seeing movies at home. Keeping in view this scenario, a concept of complete family Entertainment Center more popularly know as ‘Multiplex Theatre Complex’ has emerged. These Multiplex Theatre Complexes offer various entertainment facilities for the entire family under single roof. However, these complexes are highly capital intensive, their gestation period is also quite longer, and therefore need Government support and incentive in entertainment duty. (b) The Government of Maharashtra therefore considers it necessary to encourage, by giving incentives for the construction of new cinema theatres and to ensure the healthy cultural development in the State of Maharashtra. (c) Government has, therefore, with a view to commemorate birth centenary of Chitrapati late V. Shantaram decided to grant concession in entertainment duty to Multiplex Theatre Complexes to promote construction of new cinema houses in the State. (d) To preserve and promote Marathi cinema, it is obligatory for such complexes to reserve one screen for one month in one year, exclusively for Marathi movies.

31

MULTIPLEX – a class apart (e) Power is taken to specify by notification, the facilities and conditions

including multi entertainment activities such as providing one theatre for Stage Performance, Family Entertainment Center, Art Gallery, etc., which are to be provided by the Proprietor in a Complex and the Proprietor is not to discontinue any of such facilities without the prior permission of Government. (f) Power is also taken to withdraw the concession in case of violation of the conditions subject to which the concession is granted. (g) Provision is also made for the existing theatres to convert into Multiplex Theatre Complex and to avail of the concessions, subject to compliance with the specified conditions and requirement for setting up of a Complex.

MULTIPLEX – a class apart

32

THE POLICY The extracts are from the English translation of the Bombay Entertainments Duty (Amendment) Ordinance, 2001 (Maharashtra Ordinance XXIV of 2001), published under the authority of the Governor of Maharashtra. It is an Ordinance to further amend the Bombay Entertainments Duty Act 1923 and was notified on August 18, 2001 It applies to any person partnership firm, body corporate or a company registered under the Companies Act 1956, responsible for or for the time being charge of, the management of any Multiplex Theatre Complex. Multiplex Theatre Complex means an entertainment-cum-cultural center which provides, (i) within the limits of Municipal Corporation of Greater Mumbai not less that four theatres in a complex with minimum total seating capacity of 1250 and (ii) anywhere else in the State, not less that three theatres in a complex with minimum total seating capacity of 1000 and such other incidental and connected matters, facilities, multi-entertainment activities and other facilities as specified by Government by notification in the Official Gazette. There shall be levied and collected by the State Government from the proprietor of a Multiplex Theatre Complex the duty in respect of any such complex as follows namely (i) for the first three years from the date of commencement of the Multiplex Theatre Complex, no duty (ii) for the subsequent two years, at the rate of twenty five percent of the rate of duty. (iii) from the sixth year full amount of duty leviable at the rate specified.

MULTIPLEX – a class apart

33

For the purpose of the above (i) the date on which the Multiplex Theatre Complex is opened to the public for admission shall be deemed to be the date of commencement of the Multiplex Theatre Complex. (ii) the change in the management of Multiplex Theatre Complex or the change in the name of the complex shall not be constructed as a fresh commencement of the Multiplex Theatre Complex. The concession in duty shall be available to the proprietor of the Multiplex Theatre Complex subject to following terms and conditions, (i) the proprietor shall not charge less payment for admission than the prevailing highest rate for admission than the prevailing highest rate for admission at any given time, in any of the cinema theatres in the Districts in which the Complex is situated, till the period of concession is over. (ii) one theatre in the complex shall be reserved for a total period of not less that one month, in a year, exclusively for Marathi movies (iii) the proprietor of a complex shall not levy the service charge (presently rupee one per admission ticket) till the period of concession is over. After the concession period is over, the proprietor may levy service charges as specified (iv) the Multiplex Theatre Complex shall be operating continuously for ten years (v) no facilities provided in the complex as specified in the notification shall be discontinued or curtailed, without prior permission of the Government In case of violation of the above conditions, the concession shall be liable to be withdrawn and the duty shall be levied and collected form the date of commencement of the Multiplex Theatre Complex, at the rate specified along with the interest leviable at the

MULTIPLEX – a class apart

34 rate specified.

If an existing Cinema Theatre is converted into a Multiplex Theatre Complex by not reducing its original seating capacity and by complying with the above provisions, the converted theatres shall be also entitled to concession in the duty as specified.

THE NOTIFICATION Extracts from Notification no. ENT/1099/C.R.76/T-1. The Government of Maharashtra specifies the following conditions which shall be complied with and other facilities including multi-entertainments activities which shall be provide by, the proprietor of a Multiplex Theatre Complex, in such a complex:

The complex shall have: (a) state-of-the-art sound system like Dolby-DTS/Dolby-Digital, projection system like xenon light and illumination system (b) be centrally air-conditioned (c) comfortable seating arrangement with minimum width of every seat from center to center twenty-one inches. (d) one of the theatres compatible for stage performances (e) an art gallery with a minimum area of 500 square feet with facilities such as display panels, stands, counters etc. (f) an exhibition center with a minimum area of 500 square feet with facilities for

MULTIPLEX – a class apart exhibition of works of arts, traditional garments, handicrafts etc.

35

(g) a family entertainment center such as video game parlour having electronic games, slot machines, prize redeeming machines (not amounting to gambling) virtual reality games, computer games or any other gadgets which can be installed for entertainment etc. with a minimum area of 500 square feet, bowling alley, pool parlour (containing minimum 2 tables), cyber café The art gallery, exhibition center can be a designated part of the foyer or waiting lounge and the family entertainment center can be designated part of the foyer area or such other centers which may be prescribed by general or special order issued in this behalf by Government (h) a restaurant (i) adequate parking facility; and (j) such other facilities, as may be specified by general or special order by Government The complex may also provide any of the following facilities. (a) commercial complex (b) health center/health club (c) small apartment hotel

The state has over 230 applications for exemption of entertainment taxes. Maharashtra has the most attractive policy for multiplexes, followed by West Bengal, Gujarat and Rajasthan. The requirements are at least three theatres with a minimum of 1000 seats, which must be completed within two years of the application being approved. HUDCO too has plans to use prime areas in major cities belonging to the Department of Post (DoP) for multiplexes.

MULTIPLEX – a class apart

36

Necessities for the appellation of Multiplex 1)

Set Up Multiplex Should Be With Latest Sound System Like Dolbydts/Dolby Digital

Latest Exhibition Machinery, Like Xenon Light And Latest Light Arrangement Etc 2)

It Should Be Centrally Air-Conditioned

3)

There Should Be Comfortable Seating Arrangement

4)

One Of The Theatre Should Be Suitable For Drama Stage Performances.

5)

Art Gallery Should Be Minimum 500 Sq Ft Area With Amenities Like Exhibition Board,

Light Arrangement, Stand, Windows Etc. 6)

Exhibition Center Should Be With 500 Sq Ft Wherein Entertainment Programme Or

Family Entertainment Center (Wherein Electronics Games, Slot Machinery, Price Displaying Machine Not Gambling Machine, Realistic Game, Computer Game Minimum 3 Machines) or 7)

Play house having minimum area of 500 sq ft for entertainment having video playroom

bowling alley, pool parlors (minimum 2 tables, cyber café etc)

8)

Art gallery, exhibition center or rest room for relaxing should be specifically treated as

part of the same. 9)

Also the foyer of entertainment center for family or resting shall be specifically treated as

part of the same. There should be other such centers as prescribed video journals or special orders from time to time by govt.

MULTIPLEX – a class apart

37

Upcoming multiplexes in the country Multiplexes are not a new concept in India. Chennai (then Madras) had the Devi complex and Diamond/Sapphire/Emerald decades

ago,

while

complex

over

Mumbai

three had

Shivam/Satyam/Sundaram complex for the same period of time. But the US had set up movie complexes in the suburbs about twenty years back and this concept is now spreading all over the world. Major movie production houses and media companies, including 20th Century Fox, Paramount, United Artists, Columbia-Tri-Star/Sony and Warner Brothers, operate multiplexes all over the world. In the next 5 years. Companies include Pentamedia, which has 10-12 complexes on the anvil over 5 years and the Essel Group, which plans 12 multiplexes cum entertainment centers over 10 cities. Other groups include Ad labs, Runwal, Sringar Films, PVR Group and Inox Leisure. Overall there are plans for over a hundred such multiplexes coming up all over the country in the next 18 months. Inox Leisure is setting up 8 multiplexes including 4 in Mumbai, with its flagship at Nariman Point, covering 1 lakh sq. ft. opening in June 2003. PVR Group has planned a massive 8-screen complex in Phoenix Mill compound in Central Mumbai. The multiplex will include entertainment facilities and a shopping mall. Pune could well become the city of multiplexes with 41 applications submitted for clearances of the same in the next five years. Besides this 'Prasad - The multiplexes are operated primarily by major Experience' at Hyderabad 'Prasad - The upcoming integrated family entertainment center has five multiple theaters with IMAX technology in movies.

MULTIPLEX – a class apart

38

IN THE NEWS:

PVR Faridabad Multiplex unveiled PVR), pioneers in the movie exhibitions and entertainment business unveiled its latest state-of-the-art, fully digital PVR Cinemas - Faridabad. The two-screen multiplex, located in the popular Ansal Crown Plaza, was launched with the screening of Shahrukh Khan and Sushmita Sen starrer "Main Hoon Na". Their latest offering in Faridabad is unique as always keeping in view its class and quality. The new multiplex located in a mall offers its patrons a variety of entertainment options under one roof. The multiplex, with a total seating capacity of 522 seats, will feature a mix of both English and Hindi films. Equipped with the latest THX approved three way surround sound system with real life sound effects and state of the art projection facility with Xenon based technology (the latest in the world), the stadium seating arrangement ensures unobstructed viewing from anywhere in the auditorium. Plush, ergonomically designed seats have been installed to provide flexibility and ultimate comfort to guests. Wall-to-wall, floor-to-ceiling curved screens and digital sound will contribute in creating the ultimate movie going experience. The multiplex has studio effect interiors and screens continuously projecting moviethemed images. Station concession counters will offer customers a wide selection of the traditional movie going fare of sweet and salted popcorn, hotdogs and soft drinks, as well as candy,

MULTIPLEX – a class apart nachos, fruit juices and bottled water. Abundant parking space will be available at the

39

multiplex. Our drive to build and develop state-of-the-art multi-screen entertainment complexes in the capital has been a tremendous success thanks to the overwhelming response from the citizens here. Faridabad was the obvious destination for us this time because we realized that there was an immediate need for a quality cinema hall in this area. Our endeavor is to provide the residents in and around this locality a complete entertainment complex," said Ajjay Bijli, Managing Director, PVR Ltd

MULTIPLEX – a class apart

40

Adlabs to develop Satyam theatres in Central Mumbai into multiplex Theatre management is new expansion mantra Adlabs has struck a profit sharing deal to take over the management of the prime cinema property ‘Satyam Shivam Sundaram’, shut since November 2001. Adlabs will also convert the cinema complex, located in Mumbai’s up market Worli area, into a multiplex to take advantage of the Maharashtra governments entertainment tax waiver policy. The renovation will involve, increasing the number of seats to 1,300 to fit the ‘multiplex’ requirement of 1,250 seats. Shivam and Satyam will have 160 seats, Sundaram will have 610 seats and Sachinam will have 395 seats. "High end audio equipment, Xenon projectors and the carving out of a restaurant, video games parlor and an art gallery, shopping mall will be other introductions," said Mr. Shetty promoter of Adlabs. Adlabs’ agreement with cinema owner CD Shah, which has been under negotiation for over three months, involves investment worth Rs5 crore in refurbishment and conversion of the three-theatre complex into a four-screen multiplex. The larger ‘Satyam’ will be broken up

into

two

screens.

The management of the multiplex will be entirely with Adlabs, while profits will be shared on 50:50 ratio between Adlabs and Mr. Shah. The agreement has been drawn up for

10

years,

with

a

provision

for

further

renewal.

Conversion to a multiplex in Maharashtra gives the proprietors the benefit of a threeyear entertainment tax holiday. And a 75% waiver for the next two years. However, the proprietors

have

to

run

the

multiplex

for

a

minimum

of

10

years.

With the Worli multiplex, Adlabs will establish a chain of multiplexes in Mumbai. There are five screens in Imax Adlabs in Wadala and another four screens in the ‘Fame Adlabs’ multiplex at Link Road in Mumbai. The Worli multiplex will be re-named ‘SatyamAdlabs’. The 27 year old cinema property fell into disuse and its revival has proved to be Herculean task as its proprietor Mr. Shah has been embroiled in financial complications

MULTIPLEX – a class apart

41

Pentcity’s Rs.200 crore multiplex in Jodhpur!! On the pattern of Film City in Mumbai, Jollywood is being developed at village Gangana, 12 kms away from Jodhpur on a plot measuring 150 acres costing Rs. 150 crores. The project-in charge Kiran Shah of Pentcity, leading company in the field of films, television and music, said, "Under the first phase of Jollywood Film City Development, an office complex, attractive swimming pool and roads have been completed. Under the second phase of development, a five star hotel, film studio, about a dozen small and big sets besides a vast and artistic gorgeous set are to be taken up. The entire project will be completed within the next two-three years. But, film shooting will start here within seven to eight months". The entire complex including drive-in cinemas at Jodhpur, Jaipur and Udaipur will cost Rs. 1000 crores in all. The plan of construction of multiplex, theatre complex and shopping paradise in Jodhpur at a cost of Rs. 200 crores is being finalized.

Jaipur: Three multiplexes & drive-in cinemas It may be added that the future of cinema in Jaipur looks bright. Three of the multiplexes with the latest technology are going to open here very shortly. Once the multiplexes start functioning in Jaipur, going to cinema will gather momentum Jaipur Development Authority (JDA) has decided to allot land for drive-in cinemas in areas marked for entertainment category for the purpose in the master plan of Jaipur.

Accordingly, on the pattern of drive-in cinemas in Ahmedabad facilitating film viewing while sitting in car, a plot of land will be soon auctioned on Tonk Road beyond Bambala Drain in Sukhpuria region for setting up a modern drive-in cinema, the first of its kind in Jaipur.

MULTIPLEX – a class apart

42

E-City to invest Rs. 450cr in multiplexes

Media baron Subhash Chandra to focus on multiplexes E-CITY Entertainment, part of the Essel Group that promotes Zee Telefilms, will invest Rs 450 crore in setting up 14 entertainment centers across India. "The family entertainment centers, at an estimated cost of Rs 450 crore, will be up and running in major towns across India by 2003," said Atul Goel, chief officer for business development at E-City Entertainment. The choice of location of an E-Citi center will depend on the demography of the area, its economic conditions and the preferences and demands of the population in the area. The first of the 14 multiplexes, named "Fun Republic", is already operational in Ahmedabad, and the company is in the process of acquiring land and civil work for the other projects. The Ahmedabad multiplex houses half a dozen cinema halls, department stores, book and music stores, games alleys and restaurants. E-City Entertainment’s next multiplex will open in Mumbai this year and will be followed by Delhi, Chandigarh, Lucknow, Jaipur, Hyderabad, Bangalore, Pune, Chennai, Kolkata and Baroda. Goel said the company has invested about Rs 110 crore in the Ahmedabad multiplex and is acquiring land in other cities. For Delhi, the company has drawn up plans to invest in Raja Garden area and the land has already been acquired. The proposed multiplex will have four movie screens. The company has already undertaken construction at Andheri and Chembur in Mumbai. The company has borrowed Rs 80 crore from some leading banks like HDFC Bank. Goel said the company was expected to break even two years after all units became operational.

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Theatre owners countrywide against Multiplex incentives If one watches a film in an old cinema hall, it is taxable entertainment. But if one goes to watch the same film in a multiplex theatre at four times the usual ticket rate, then it becomes ‘promotion of tourism’ and need not be taxed. Or so believes the Gujarat Government, which has exempted the state’s multiplex theatres from all sorts of taxes, while the conventional cinema houses are gradually going out of business under pressure of competition and nearly 51 per cent taxes. The Gujarat Government’s tourism policy exempts the multiplexes — cinema halls with multiple screens showing different films — from sales tax, turn over tax, electricity duty, luxury tax and also entertainment tax. As a result, while conventional cinema halls with ticket rates of Rs 30 or Rs 40 pay out almost 51 per cent as taxes, the multiplexes with ticket rates of Rs 100 do not have to pay a penny as taxes simply because these have been included in the ‘tourism projects’. During the last three years, the concept of multiplex theatres had been catching up in Gujarat even as cinema halls have been complaining about bad complaining about bad business due to competition from video parlours and cable television. Originally, the Tourism Policy 1995-2000 had given a tax holiday for tourism units which included 22 types of projects like multiplexes, hotels, motels, amusement parks, heritage hotels, health farms, ropeways and convention centers. Though the tax holiday for multiplexes was available for projects set up only in areas outside the city, an amendment to the law ensured that the concessions were available to multiplexes inside city limits too. With the state’s upwardly mobile middle class willing to spend lavishly on any new concept, the multiplexes have caught the imagination of the urban elite.

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Major disadvantage of a multiplex Major problem faced by multiplexes is ticket pricing. Going to a movie in a multiplex is nice whether in terms of sophisticated facilities, crowd or comfort but it is expensive. A ticket cost is anywhere between Rs.110 Rs.150. Movie for a family of four could cost around Rs.600 and with food it becomes Rs.1000.A person who goes to a multiplex pays around two to three times more money that what he gives in a normal cinema shall be it the ticket or food. The rates are still steep even after the reduction in the entertainment tax from 60 per cent to 30 per cent.

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Multiplex – IMAX A Case Study

Business Profile Adlabs is a leading motion picture processing laboratory which started in 1978. Founded by Manmohan Shetty and Vasanji Mamania, Adlabs Films Ltd, initially catered to only the ad film market. Processing documentaries and short films then became a part of Ad lab`s growing business. The company has processed films for almost all production companies in Mumbai. It has a 70 per cent market share in the 35 mm negative film processing and 60 per cent market share in the 35 mm colour processing in the western region. There are about 110 to 160 Hindi films released in a year. Of this, 30 to 40 are from major production houses and another 30 to 40 belong to the middle range group. The company has a major chunk of this work. The company went public in December 2000 with an IPO of Rs 53 crore. The largest portion (Rs 39 crore, originally budgeted Rs 29.3 crore) of this was used to build the IMAX Dome Theatre in Mumbai. Multiplexes have been built at the cost of Rs 13 crore (originally budgeted Rs 9.71 crore). The companies setup the first Imax dome theatre with screen size of 12,700 sq.ft.accompanied by 12,000 watts of astounding wrapsound. The theatre was open for public screening on 31st March, 2001. The company launched the first multiplex with four theaters in the same premises as the IMAX Adlabs theatre on October 24, 2001. Ad labs Films, one of India’s leading motion picture processing laboratories, had recently signed an agreement with IMAX Corporation - Canada, for the setting up of an IMAX Dome Theatre in

MULTIPLEX – a class apart Mumbai. Almost eight-storey high, the 15/70 images IMAX screen is 10 times larger than a

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conventional 35mm frame and five times bigger than a standard 70mm frame. Constructed of a special diffused matte white vinyl perforated with thousands of tiny holes, the IMAX screen is specially made for "acoustical transparency". Sound is the other critical element of the IMAX Experience! The multiplex project, comprising the IMAX dome and four regular theatres, totally costs Rs. 52 crores with the 520-seater IMAX dome alone accounting for Rs. 39 crores, Mr. Manmohan Shetty, Managing Director, and Ad labs,

The IMAX six channel, high-fidelity motion picture sound system , with sub-bass, eliminates variation in volume and sound quality over the theatres seating area. This allows all the members of the audience to experience superb sound quality regardless of where they are seated. The 520-seater IMAX Dome Theatre, which is located in Wadala in Mumbai, is to be part of a four-cinema multiplex and is scheduled to open its doors for Mumbai’s movie going public. Films for screening on this huge screen (typically of 45-

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minutes duration) are specially shot with dedicated equipment and on celluloid having the largest frame size. Each IMAX movie, given the logistics involved (cameras are big, one stretch of shooting cannot exceed three minutes and a finished film can weigh 250 pounds) costs $5-6 millions. Incidentally, the IMAX Dome, which is 30 meters wide in diameter, is the largest IMAX dome in the world and the first of its kind in the Indian subcontinent In India, IMAX currently has received business queries from Ahmedabad and Hyderabad, the latter for a flat screen facility. Worldwide, there are 237 IMAX theatres in 25 countries with another 36 in 15 nations due for addition this year Chief Minister Vilasrao Deshmukh and Deputy Chief Minister Chhagan Bhujbal inaugurated the IMAX theatre, in the presence of several film personalities including Sunil Dutt, Kiran Shantaram, Govind Swarup, Govind Nihalani, Subhash Ghai, Prakash Jha, Ramesh Sippy, and Vidhu Vinod Chopra among others. On March 31, 2002,IMAX Ad labs celebrated its first

MULTIPLEX – a class apart anniversary .The Multiplex – the first in Mumbai boasting the Worlds largest and India’s only

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dome theatre for IMAX viewing has grown to become an integral part of the city landscape and its citizen’s life. The destination was conceived under the vision of Manmohan Shetty as a leap forward in the progression of India’s already well-established entertainment industry. And, has been ably managed by Director, Ad lab Films, Pooja Shetty, whose business acumen and operational skills has resulted in creating a special space for “image maximum” in Mumbai. In the span of just one-year, IMAX Ad labs has brought to Mumbai City, many activities, events and causes of joy allowing into its fold more than half a million people from Mumbai and across the country. The IMAX Ad labs multiplex is also the only one in the city with special facilities for the disabled and handicapped allowing this community too the ability to enjoy the spectacular fare of a film in ‘Image Maximum’ format. The past year and all its activity have again proved the adage that he who dares to dream wins. Mr. Manmohan Shetty, Chairman & Managing Director Ad labs Films Ltd and Dreamer Extraordinaire has shown this city that the competency of vision can turn a company into a landmark, both for the city and itself. Let that be reason to celebrate!

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LEADER SPEAK

In an interview with R Venkataraman and Nishant Jadav of India Infoline, Mr. Shetty talked about latest trends in the industry and the company’s key growth factors.( November 21, 2003) What are the key growth drivers for the company? What kind of growth company is likely to witness over the next 2 years? Multiplexes and film production will be the key growth drivers for the company. Film processing, which generates almost 40-45% of total revenue of the company will continue to show a growth at historic levels. Our processing business is unaffected by fate of the film at the box office. Piracy in films has hampered the revenues of most companies in the industry. How does piracy take place in this business? Every consumer has what is called the "first day first show" syndrome where he wants to watch a new film within days of its release. With mass promotions of films through television and print, consumers all over India know when a film is going to be released. However, the reality is that we have 12,000 theatres all over India and only 250-350 original prints are released per film (number varies based on market expectations of a film’s success). This is because the cost of making a print is approximately Rs55,000 and so the economics of making prints for the B and C class theatres – where the tickets cost Rs20 to 25 – does not work out. It takes 2-3 months for prints to reach B and C class theatres from A class theatres in metropolitan cities. Theatres in small and mid towns do not get the prints within the first week of the film’s release but manage to get the pirated versions within days of the film’s release. They manage to do this because of leakage in the system, which is difficult to control. Does digitalization help to curb piracy? Digitalization is an alternate and cost effective method of making prints by which we can release a film all over the county on the same day. Lets say we make 250-350 original prints and 450-500 digital copies for a film. The digital copy of the film reaches the B and C class theaters on the day the film is released throughout the country. Thus the scope for piracy is reduced.

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You are one of the pioneers in this field. Can you tell us more about your plans for digitalization of theaters in India? We have already invested in the technology required for digitalization of theaters. So far 42 theatres have already been digitalized and we plan to add 100 theatres more to the list. We have entered into a 50-50 joint venture with Mukta Arts Limited starting September 1,2003 to help us achieve this target. The vast experience of Mukta Arts in distribution and strong presence in certain regions will be an asset to the venture. What is the revenue model and pay back period for digitalization of theatres? The initial investment of setting the server and projector is around Rs1mn, which is borne either by us, by the theatre owner, by a bank, or on a partial basis by the parties involved. We usually have a revenue sharing agreement with the theaters. We intend to have a contract with all cinemas for 5 years out of which, the pay back period is approximately 1.5 to 2 years depending on the territory, success of films, etc. How has been the performance of your multiplexes? The multiplexes have gained momentum and average occupancy has increased. Especially on weekends, we experience almost 100% capacity utilization. Going forward, much like in the western countries, the concept of multiplexes will pick up and occupancy will be highest during weekends. IMAX Dome theatre has, however, not performed up to the mark. The risk to return ratio, considering the high capital expenditure, is not favorable. We are operating at occupancy rates of 28-32%, which is far below the required 40%. Limited variety of content is a strong negative and we are trying to overcome it. Currently, we are showing ‘Matrix Revolutions’ at the Dome, and it has faired well in its first week. Which other cities apart from Mumbai are you looking at for setting up new multiplexes? We are planning of setting up 1 multiplex in Pune, 2 in Delhi and a few more in Chandigarh, Jalandhar, etc. However, we have limited our capex plan to setting up 2 multiplexes a year, financed mainly by accruals from existing multiplexes. Entertainment One India Ltd is your company’s 100% subsidiary. Tell us more about it. We undertake film production and financing through Entertainment One India Ltd. We have not made it a part of Adlabs business model since most of our clients are in film production and also because film production is a risky business. The company would be investing around Rs180-200mn per annum across four to five films. Some of the films

MULTIPLEX – a class apart under its banner are ‘Gangajaal’, ‘Main Madhuri Dixit Banna Chahati Hu’, ‘Intehaa’ and a forth-coming film ‘Munna Bhai MBBS’ We have also part financed Aamir Khan starrer ‘1857 Rising Sun’ to the extent of Rs120mn. 50

There are rumors in the market about Sahara Media taking a stake in Entertainment One India Ltd. Can you tell us more about it? We intend raising funds in the company from all sources, debt or equity, for expansion and growth purposes. We have not finalized anything with Sahara yet and thus nothing is on paper as of now. What kind of competition do you have in film processing? There is stiff competition to the company in the processing business mainly from players based in Hyderabad and Chennai. What about your plans to enter television business? We are working out the possibilities of entering content production for television. We still have to workout the resources and the team who will be responsible for it. We are recruiting the management team how will make a detailed plan for the same. We had an expectation to start by end of December this year but that will be pushed to April next year. Your message to shareholders When Adlabs went public its turnover was close to Rs360mn. Last year we saw a turnover of Rs780mn and this year we expect to touch the Rs1bn mark. Thus the company has always tried to live up to the expectations of its shareholders and shall strive to do that in the future also.

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Facts and Figures of IMAX

Sources of Income to Broach the IMAX 1)

They had taken loans from Bank of Baroda amounting to Rs 37 crores – at that time the

interest rate varied from 8 – 10 % 2)

They also issues the IPO and collected Rs 12.5 crores

3)

Distribution Share – 40 to 60 % goes to the distributor for their share for multiplex

4)

Dome – 18 – 20 % share of the net collection – to the distributors of Canada

Other incomes received by IMAX 1) Retail stores, Displays, Advertising – They collect approximate of Rs 2500 – 3000 per day 2) They even have location hire charges i.e. shooting charges

Various Taxes levied by the Government on the IMAX 1) Show tax—Rs 20 per show, which goes to film division 2) 1% INR—Indian news reel 3) Property tax –112.5% on rate able value 4) Resale tax—0.5 % on café sales and art gallery (paintings) 5) Income/corporate tax--- 35 % on net profit levied on the company

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6) Dividend tax—12.5% is levied on the amount of dividend declared by the company 7) Service Tax and Sales Tax not applicable

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In the news: Multiplexes gag business for Kolkata cinema halls The growth of multiplex culture here is throwing traditional cinema halls out of business as they fail to match the facilities and gloss of the modern entertainment hubs. The unmatched competition has so far resulted in at least 18 city cinema halls closing down. Many more are struggling to stay afloat. Kolkatans are increasingly crowding multiplexes to catch the latest movie only because these entertainment zones offer more things than the traditional cinema halls. The city has three multiplexes that match up to the best in the country. A few more are coming up. "Given a choice we would watch a movie at a multiplex because they are a better hangout and the entertainment options are more," says Amit Jajodia, a 23-year-old student of management. Besides having at least four auditoriums, these multiplexes are equipped with coffee shops, video game parlours, shopping malls, bookstores and music stalls with jukeboxes. Regulars at multiplexes - mostly youngsters - say the atmosphere of the place where they hang out is very important. "The mood's got to be cool and casual for the place to run," says Jajodia. But only atmosphere and the mood wouldn't do. There has to be money's worth as well. "The facilities at multiplexes are far superior. For instance, the acoustics are of the highest grade," says Sanjay Sahu, a young computer professional.

MULTIPLEX – a class apart While most cinema halls have crackling sound systems or a rudimentary Dolby

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technology, these multiplexes use Dolby X Processor with 6.1 channels for depth and the 3D effect and electro-voice processors for the speakers. The seating facilities are also special with moveable armrests, bigger seats and more leg space that ensures "equal viewing pleasure" from any part of the auditorium. In comparison, the traditional cinema halls pale into insignificance with their betel juicestained walls, crammed auditoriums, creaking seats and defective air-conditioning systems. In at least one city hall - which survives by screening B-grade movies and skin flicks spectators have to sit with their legs on their seats in the rainy season because water from a nearby canal floods its floor. The Eastern India Motion Pictures Association (EIMPA), a body of film producers, distributors and cinema hall owners, admits their folly. "Most halls haven't changed with times. Cinema halls should have been packed as brands. Those who have done that are fighting it out with the multiplexes," says EIMPA president Arijit Dutta, who is among a few cinema hall owners who have managed to adapt with the changing times. Many cinema hall owners admit that they had taken spectators for granted and didn't bother about their facilities. Some complain that running the business had become difficult because of rising establishment costs and labour trouble. Cinema halls that are going out of business are turning into auditoriums available on hire for occasions such as marriage parties. Some others let out their space for holding of exhibitions of cheap items of daily use or garments.

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Videocon Entertainment jumps on Multiplex bandwagon Strategic alliance with Warner Village, Singapore The Dhoots-controlled Videocon group has decided to rope in a strategic partner for its entertainment business. The group will house its entertainment multiplexes, film studios and Hindi film production business under a new company: Videocon Entertainment. Anirudh Dhoot, manager (marketing and sales), Videocon International and also head of the entertain ment business said, "We will be divesting stake in favour of a strategic partner in our entertainment business. The Videocon group will be holding 51 per cent, while the balance will be held by the partner." Explaining the rationale behind the Rs 40 billion group’s foray into entertainment, Dhoot said, "This is a new area and a different line of business. Also we wanted to try our hand at it." According to Dhoot, the theme parks, multiplexes and film production will be divisions of Videocon Entertainment. "But, since we are negotiating with a lot of companies for a possible joint venture, depending upon the partner’s strength, focus and interest, we will then hive off the divisions into separate companies and rope in different companies/partners for the divisions. The group will, however, hold a majority stake of 51 per cent," Dhoot said. On the cards is multiplex theatres which will be set up in Thane, Bombay and Ahmedabad, which will house eight screens for movies, Dhoot said. The group may also explore the possibility of converting its plant premises into multiplex theatres. Dhoot said, "It all depends on the location such as the Salt Lake in Calcutta which is a prominent location." Videocon had bought the consumer electronics factory at Salt Lake from Philips India. The group is also in talks with Singapore-listed Warner Village for a strategic alliance to set up family entertainment centers and multiplexes.

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Universal Studios tie-up?

In the case of film production, Videocon will produce two-three movies each year. It is negotiating with production companies such as Boney Kapoor Productions, Pritish Nandy Communications and K C Bokadia Productions to produce their forthcoming movies.

For international studio facilities, the company is negotiating with Universal Studios as it is interested in investing in the venture.

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Mumbai’s Multiplexes: ECiti, Citi Mall, Adlabs, INOX, Modi, Shroff Multiplexes can bring Rs. 500-cr investments in Maharashtra Among the new multiplexes which have become operational is the one promoted jointly by Shringar Films and Adlabs’ Manmohan Shetty and Vassanji Mamania coming up as part of the Ajmeras’- developed Citi Mall Plaza in Oshiwara, in Mumbai’s northwestern suburbs. The five-screen 30,000 square feet multiplex, has been developed at an approximate cost of Rs 16 crore. Close on the heels of Citi Mall multiplex, Subhash Chandra’s ECiti entertainment mall, barely a stone’s throw away, will also soon see a five-screen multiplex. Meanwhile, Adlabs on its own has also put up a four-screen multiplex in addition to its Imax dome theatre at Wadala at a total cost of Rs 12 crore. Mumbai alone is expected to see at least 50 additional multiplex screens over the next year. The Inox group, promoted by Shishir Baijal, for instance, will put up a four-screen complex in the Nariman Point shopping center The company has also leased space for a four-screen multiplex from the Runwalls, a group of developers who are constructing a 3 lakh square feet mall in Mulund on a property that once belonged to New India Industries, manufacturers of the well-known Agfa photo film brand. Another big project in the western suburbs is being developed by the C L Raheja group at Goregaon-Malad where an eight-screen complex costing around Rs 30 crore will be leased to the K K Modi-Lalit Modi group. The latter have large interests in the entertainment industry. Beyond Mumbai, a number of developers are looking at putting up multiplexes in Nagpur, Kolhapur, Pune, Amravati, Auran- gabad and Nashik. In Mumbai, on account of the high cost of land, an average five-screen multiplex costs Rs 20 crore, but in the smaller cities and district centers, investment can be scaled down to around Rs 13 crore for a similar multiplex. Shravan Shroff, a promoter of Shringar Films, says the group is looking at setting up

MULTIPLEX – a class apart three or four more multiplexes outside Mumbai in Nashik and Kolhapur. Pune’s first

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multiplex ‘City Pride’, promoted by Prakash Chappalkar, is already operational. "There is obvious shortage of cinema seats. Whenever there is a good movie in town, tickets are always hard to get," observed Shroff.

China: 67,000 screens. India 13,000! Taxes and growth potential interlinked The multiplex concept is fast catching up in India. Multiplex embodies the luxurious amenities of the modern day theatre, multiple screen choices, state of the art technology, ergonomic seating, eye-catching architecture and top of the line additional recreation facilities like cafes, gyms, shopping malls and food courts. There are 13,000 movie theaters in India, the second largest in the Asia pacific region. However, that is insufficient to meet the entertainment needs of the country’s population who can afford watching a movie at least once in every three months. As against this China, which ranks first in terms of number of screens in the Asia Pacific region, have around 67,000 screens on last count. High entertainment taxes in India have, till recently, adversely affected the economics of running a movie theatre and hence a major disincentive for expansion of theatre capacity in the country. The entertainment taxes in India range anywhere between 50120% varying across different States. The prevailing rate of entertainment tax in Maharastra is 37.5% of the ticket revenue. The state governments of Gujarat, Rajasthan and Uttar Pradesh have passed resolutions exempting multiplexes from entertainment taxes for next 5-7 years. Added to that there has been a relaxation in the import duties of film equipment in the last budget, which has also led to acceleration in multiplex projects coming up in the country. Last year itself around 40 multiplexes were built in India and more than 600 are in the pipeline. The entertainment tax concession for multiplexes given by the Maharashtra government is expected to spur fresh investments worth Rs 5 bn in the sector

MULTIPLEX – a class apart over the next two years, adding an estimated 200 screens and an additional 50,000

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cinema theatres.

Multiplex matinee ends By: Mayank Shekhar August 17, 2004

In a strange anomaly, multiplex owners want to charge less, but the government wants them to keep their ticket rates hiked up. So pre-matinee (9.30/10 am) shows, which were earlier priced at Rs 60, have now been completely discontinued from cineplexes. According to a recent government notice issued to multiplex owners, their ticket rates cannot be lower than Rs 100. The rationale is to protect single screen cinemas. And the existing rule is that multiplex admission fees have to be more than the highest priced ticket of any single screen theatre within a district. Complains Fame Adlab’s Shravan Shroff, “Unless we keep rates low, who will watch shows so early in the morning? The moderate prices for morning screenings were also to encourage collegians to watch films. ” However, while all Mumbai multiplexes (for example Andheri’s Fun Republic and Wadala’s Imax Adlabs) have stopped early screenings due to commercial reasons, Bandra’s G-7 continues with its pre-noon shows priced at Rs 35 — a common grouse among its competitors. Another grouse of multiplex owners is that its pricing policy is set vis-à-vis ticket rates of cinemas in the entire district, as against in the neighbourhood. Explains Shroff, “For instance a multiplex in Bhandup is expected to charge more than

MULTIPLEX – a class apart the highest priced ticket at Sterling (Colaba), which doesn’t make sense.”

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Shroff also claims that the Maharashtra law is not implemented in any city beside Mumbai. The district collectorate, despite repeated attempts, was unavailable for comment. What this means for filmgoers though is that the only time you can catch a movie at a multiplex now is after noon. G-7 unaffected While morning shows at all multiplexes in the city have been discontinued due to government stipulation to keep ticket rates high, G-7 in Bandra (which includes Gaiety and Galaxy among seven screens) is unaffected by the dictum. Says Manoj Desai, executive director, G-7, “We had been issued with the same government order but appealed to the state chief minister who allowed us to keep the ticket rates low until further notice.” G-7 recently converted to a multiplex. The exception for Desai’s complex, he says, comes from the patrons being used to low prices for years: “If we had suddenly hiked our fares, we would have lost all our customers.”

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Bibliography: www.famecinemas.com www.adlabsmultiplex.com www.indiainfoline.com http://web.mid-day.com www.inoxmovies.com www.fun-republic.com http://incometaxindia.gov.in http://www.domain-b.com http://www.smallindustryindia.com http://www.indianmultiplex.com/ http://tradeniconline.nic.in

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Magazines & Newspapers: Business World Business Today Times Of India Mid Day (website)

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