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Research Paper on MULTIPLEX V/S SINGLE SCREEN EXECUTIVE SUMMARY This study is all about to understand the consumers’ perception towards the multiplexes and to forecast the future of multiplexes. The study reveals that the future of the multiplexes is very bright and since there is sudden increase in the per capita income which led to the increase in standard of living of the natives. Now the metropolitan culture has started intruding in the city and people are in the condition to spend more. The spurt in the nationwide standard of living of the people has led to some very drastic changes in the current scenario. This study is carried out with the help of questionnaire which discloses the extravagant responses of the respondents towards the multiplexes. As per the data collected we found that all respondents welcome the culture of multiplexes in the city. The people are very happy to have the pleasant experience of watching the movies in multiplexes which they so far used to get only in metropolitans but now in their homeland. The fact is quite apparent with the kind of data we have gathered through this study which is mentioned later. In our research project our point of focus is on determining the movie viewing habits for the age group of 20-30 years of age. It includes the medium preferred by the people for watching movies, how frequently they watch movies and what their monthly expenditure on it is. Some key issues like strikes in multiplex, their effect on the revenue generation for multiplex and the competition between multiplex and Cineplex
INDEX Serial No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Particulars OBJECTIVE AND LIMITATIONS HYPOTHESIS GENERATION RESEARCH METHODOLOGY DATA COLLECTION AND DATA ANALYSIS GRAPHICAL REPRESENTATION OF DATA THE HYPOTHESIS ANALYSIS THE CURRENT INDUSTRY SCENARIO FILM EXHIBITION BUSINESS IN INDIA TREMENDOUS SCOPE MULTIPLEX KEY PLAYERS IN MULTIPLEX 15 WHY MULTIPLEX PREFFERD OVER SINGLE SCREEN (CINEPLEX)? DEMAND SIDE OF MULTIPLEXSTRONG PULL STRIKE ISSUE OF MULTIPLEXES MULTIPLEX BUZZ!! RISKS AND CONCERNS IS SINGLE SCREEN (CINEPLEX) GOING TO DIE SOON? ANALYSIS ON THE BASIS OF INFORMATION COLLECTED FROM VENDORS CONCLUSION ANNEXTURE
Page no 5 6 7 8 9 14 15 16 17 18 20 21 23 25 26 27 28 29 30
OBJECTIVE For any research work there has to be some objective which can highlight the purpose of doing the research work. The main objectives are: To determine the effect of emergence of multiplex on single screens and societal influence (Strike Issue) on their growth. To find out whether Multiplexes are considered better option for watching a movie as compared to Single screen and the reasons behind their preference. This research was conducted in two phases. In the first phase the study was based on the results of a wide survey, that is, personal interview with the aid of printed questionnaires. The second phase of study was conducted by Secondary Research using Google and other Databases. The internet basically serves the purpose for the same
LIMITATIONS 1. This study is purely based on the responses received from the respondents. 2. Since we are not the authorized researchers so this study is made keeping in view utmost cost effectiveness. This study is done in a limited time span
HYPOTHESIS GENERATION H0 = Single Screens are going to die soon H1 = Single screen are not going to die soon H0 = Multiplexes incur heavy losses due to strike H1 = Multiplexes did not incur heavy losses due to strike H0 = Multiplex/Cineplex business is affected by piracy H1= Multiplex/Cineplex business is not affected by piracy
RESEARCH METHODOLOGY Research Methodology •
Desk Research: In this stage we focused on secondary data analysis and looked for the film exhibition industry as in whole.
Questionnaire Survey: We prepared a questionnaire and got it filled by online survey and our respondents constitute age group of 20-30 years.
The Sampling Technique Stratified Random Sampling: we have divided the entire population into subpopulations or strata and used simple random on each strata. The Contact Method Questionnaire from different respondents NO. OF RESPONDENTS Sample size: 50
DATA COLLECTION Secondary data Different published and unpublished (only online) materials basically articles from the internet have been focused on. We have studied and gathered information from a number of authentic sources like: • Books • N ewspapers • Magazines • Internet Primary Data For our research we have used only the questionnaire survey method to conduct our analysis. Questionnaires are of three categories such as structured, un-structured, disguised and undisguised. But we have used structured questionnaire for our survey. Structured question is the one which has specified number of responses. Such questions restricted the interviewee from giving his own answers and required them to choose from among the alternatives given. This saves a considerable amount of time as the respondents is quick enough to choose from among the options given to him. Age Group We have focused mainly on the age group of 20 to 30Yrs. of age group which includes mainly youth i.e. college going students and earning group as well. DATA ANALYSIS The following graphs and table are basically a representation of the respondents in the form of questionnaire being filled by them. 6
The number and percentage wise distribution is shown below and also separate analysis of the graphs has been shown therewith. Finally a detailed conclusion of all the graphs has been told focusing on key points as well.
GRAPHICAL REPRESENTATION OF DATA 1) What is your monthly expenditure in watching movies? 36%
7 Total responses: 50 2) How frequently you watch movies? Responses Once a week
Once in a month Fortnightly
25 16 5
Total responses: 50
3) Which medium do you prefer to watch a movie? Responses Multiplex Single Screens Television
4) Do you think Multiplexes are better options than Single Screen (Cineplex) for watching a movie? Respons es 72%
Total responses: 50
5) What makes Multiplex a better source of entertainment than Single Screen (Cineplex)? Responses Ambience
6) Did you find ticket price of Multiplexes as per the service and quality provided? Res ponses 76%
Total responses: 50
7) What are the areas of improvement you find for Single Screen (Cineplex)? Respon ses Structure
8) Do you think Piracy has eaten into Multiplex and Single Screen (Cineplex) Business? Responses 70%
Total responses: 50
9) Do you think the strike by Multiplexes over profit sharing issue was justified? Responses 54%
Total responses: 50
10) Will the recurring strikes will influence you or direct you to watch movies in Single Screen (Cineplex)? Responses YES
Total responses: 50
HYPOTHESIS ANALYSIS Single Screens are going to die soon As per the data collected we can conclude that the ‘Single Screens’ are passé, it no more attracts the consumers these days. After the primary research we have arrived at the conclusion that almost 38.2% of respondents prefer multiplex over single screens, television and DVD. As per 72% respondents multiplex is the better option than the single screen for watching movies. Respondents prefer multiplexes due to factors like ambience, crowd and presence of shopping malls. Hence as per the survey the above hypothesis is justified.
Multiplexes incur heavy losses due to strike After the primary research we have come to the conclusion that almost 54% of respondents feel that the strike over profit sharing issue is justified and the rest 46% think otherwise. Movie viewers irrespective of strike would prefer to go to multiplex rather than cineplexes. The above hypothesis has been accepted after the analyzing the results and the factors involved in it.
Multiplex/Cineplex business is affected by piracy As per the 70% of respondents, they agree to the fact that piracy has eaten into Multiplex & Single Screen business. This shows the extreme impact upon the movie viewing business. Piracy has seeped into every sphere of the Film Industry, which has led to deep losses borne by the filmmakers, distributors and other intermediaries. The primary data helps us to prove our hypothesis that multiplex business is affected by piracy.
THE CURRENT INDUSTRY SCENARIO India's craze for films has not been fully exploited by the "Film Exhibition" industry due to the lack of screen density in the country coupled with the poor quality of screens. "Multiplex Cinemas" offer an alternative to tap this potential by providing a quality experience to the viewer as well as economies to the multiplex operator. "Films" has been one of the integral components of the Indian entertainment industry contributing nearly 27% of the total revenues of the entertainment industry. Besides, films also contribute to other components of the entertainment industry like music, television and live entertainment. The Indian film industry is one of the most complex and fragmented national film industries in the world 13
comprising of a number of regional film industries like Hindi, Tamil, Telugu, Kannada and others. The Hindi film industry is the most popular among them. Though India produces the largest number of films in the world (Approximately 1000 per year), it accounts for only 1% of the global film industry revenues. In spite of being over 90 years old, the Indian film industry was accorded the status of industry only in 2000. Over the years, the Indian film industry has been highly unorganized as film financing was dependant on private and individual financing at extremely high interest rates. Only recently, the industry has got access to organized finance. With vertical integration taking place between producers, distributors, exhibitors, broadcasters and Music Company’s corporatization is now taking shape in the Indian film industry. We believe, that corporatization, will bring about transparency, accountability and consolidation which will help to improve the overall profitability of the Indian film industry as well as reduce piracy and leakages which presently account for 14% of the Indian film industry's revenues.
FILM EXHIBITION BUSINESS IN INDIA TREMENDOUS SCOPE
Film exhibition forms the most important component of the Indian film industry. According to the - KPMG report domestic theatrical revenues contributes 57% of the total Rs59bn film industry revenues and are expected to grow at 17%. Overall, the Indian film industry is expected to grow at 16% CAGR it is expected to reach Rs143bn in 2010. The main pockets for film exhibition in India are Delhi, Mumbai and South India. Due to various regional language film industries in the South, it has become an important film exhibition pocket. Hyderabad and Bangalore are 2 southern cities where occupancies are exceptionally high at around 70%-80%.
MULTIPLEX India currently has 11500 existing screens, 95% are standalone, single screens. These single screen cinemas are poorly maintained as the owners find it difficult to upgrade and renovate their facilities, due to unavailability of organized finance. The deteriorating quality of these cinemas dissuaded viewers and they started using alternative viewing options. Over the last few years, multiplexes have emerged as a trend in urban India. "Multiplexes" are essentially cinemas with 3 or more screens. They provide a quality viewing experience and are generally located around shopping malls to increase footfalls in these malls. Each screen in a multiplex has small seating capacities in the range of 150-300 seats as compared to single screen cinemas which have capacities in the range of 800-1,200 seats. With around 11500 active screens, India is under screened. China, which produces far lesser films than
India has 65,000 screens while the US has 36,000. India’s screen density stands low at 12 screens per million populations. There is a need of at least 20,000 screens as against the current 11500. This gives multiplex operators enough room to grow as the traditional single-screen theatres do not have the financial wherewithal nor do they enjoy tax incentives.
KEY PLAYERS IN MULTIPLEX 1. PVR CINEMAS:
Strong operational performance
Aggressive expansion plans
Foray into co-production
Leading Multiplex operator
Entertainment tax burden to decline
2. INOX LEISURE
Impressive capacity ramp-up over the last 4 yrs
Top 25 cites - compelling growth stories
3. ADLABS FILMS
Integrated Play on the Media & Entertainment Sector
Exhibition Segment - The largest player
Expansion through acquisitions
Film Processing - Leader controlling 70% of market
Film Production & Distribution
• Cinemax India (Cinemax) is one of the smallest multiplex exhibitors
within the listed space with 56screens across 19 properties, a majority of them concentrated in the Mumbai territory. The company has a predominant presence in the Western region and is the largest exhibitor in the Mumbai territory with a 35% share of the multiplex screens in Mumbai. Cinemax is now focused on expanding its presence across the rest of India and is seeking to aggressively add capacity across other regions • Aggressive capacity addition plans • Tapping ancillary revenue streams
Why are Multiplexes preferred over single screens for movie viewers? On the basis of our analysis, 72% of the people think that Multiplexes are better options than Single Screen (Cineplex) whereas; only 28% negate the fact. The reason behind this can simply be answered by pointing out the difference between single screen and multiplexes.
The multiplexes enjoys rebates and exemptions from the government.(Entertainment Tax) They just don’t offer movie but also offer so called add-on facilities They offer customer with choice in different movies
Single Screen doesn’t enjoy such exemptions on part of government
Talking of the ambience, multiplex offer better sitting , Dolby digital sounds and good graphics for viewers Multiplexes, by offering food courts, ATM Facility, shopping facilities can offer Add value to money to customers.
Cineplex on the other hand offer only movies and no extra facilities. Single screens don’t offer such facilities with no options to the customers Single screens on the other hand don’t offer such facilities to viewers. Single Screen on the other hand doesn’t offer add value to money to the customer’s income.
The mushrooming of multiplexes has thrown up huge competition amongst multiplexes and is giving the stand-alone theatres a run for their money. However, multiplex owners are still upbeat about their business. “In India, we had 3,100 million admissions last year and only 12 screens per million. So there is a huge potential for growth. The road ahead for theatre owners is both exciting and challenging. “The service industry is ever changing and you have to change proactively.
Demand Side - Strong pull Demand side environment has never been better for the whole media & entertainment industry in general and multiplex sector in particular. A lot of demographic changes coupled with sector fundamentals are expected to fuel demand side of the story for the sector. Prosperity to drive discretionary spend
India is a highly favorable country for consumer industries with the entire key indicators pointing towards higher consumer spends in the coming years. It has seen its per capita income doubling in the last 6 years, it has more than 60% of its people under the age of 60, urbanization and exposure to western lifestyle is rising, all leading towards increasing consumerism in the coming decade. In the buoyant times; people tend to spend more on the leisure based consumption. For the multiplex sector, the target group is in the age group of 1560 years of age, which visits the theaters more often than others. People willing to pay for quality With the entry of multiplexes, which provide better quality movie watching experience at a higher price compared to single screen theaters, more and more middle income group people are coming back to the theatres thus unlocking a latent demand. This is a classic case of leisure consumption winning over value proposition in India. As content supply booms, more and more people will turn to multiplexes because of the rising willingness of people to pay for such services. Production of Hindi movies
The Indian film industry, with over 3 billion admissions per annum, is the largest in the world, in terms of number of films produced per year. This industry, which was worth US$ 2.12 billion in 2006, is estimated to grow at a CAGR of 16 per cent to US$ 4.42 billion by 2011. The opening 19 of the film industry to foreign investment coupled with the granting
of industry status to this segment has had a favorable impact, leading to many global production units entering the country. For example, Walt Disney has partnered with Yash Raj Films to make animated movies, the Warner Group is funding the Sippy’s' film projects.
STRIKE ISSUE OF MULTIPLEXES What was This Multiplex Strike All About With the emergence of phenomenon like liberalization and globalization, society and culture of every country has taken a leap. We can see transmission of ideas, trends, culture and behavior across the global. One of the trends that have caught the momentum in the past decade is the ‘ERA OF MULTIPLEX’. The reasons for the same can be attributed the fact that over the past couple of years, the 21
dynamics of movie making has changed dramatically. Not only has the craft of story telling changed, the audiences have as well. Case in point a film like Chak De or even Dev D. Till a couple of years back you wouldn't have imagined these films gaining acceptance, forget becoming hits. This has largely been possible due to a growing section of audiences collectively and colloquially defined as the "multiplex audiences". These are the upwardly mobile section of the audience which doesn’t mind paying for a story well told, no matter how unconventional it is. This in turn has given rise to the multiplexes – swish, clean, popcorn smelling environments which woo you with combo meals and a great film. Producers were quick to spot this trend and starting creating cinema which was largely aimed at the "multiplex audience". What they didn't realize was that in the bargain they were creating a goliath that would in turn start dictating terms to them and that's where the seeds of this conflict were sown. Multiplexes and distributors / producers starting conflicting on revenue share. With each movie would start a new bout of conflict over who gets how much, with each party expecting more. Multiplexes wanted a larger share in the pie as according to them, they get the audiences to see the movies. However, distributors / producers would argue that content generation is more critical hence they should get an equal share if not more. A couple of other issues like the 20 multiplexes inability to clear huge amount of out standings towards the distributors, not haring the benefit of certain incentives given to them by the government with the distributor, led to the eventual deadlock.
On ground of revenue sharing between the producers and the actors, what has been finalized Bollywood producers incurred losses running into hundred of crores due to the strike over revenue-sharing between producers, distributors and multiplex owners. This ended when the multiplexes have agreed on sharing revenue of all movie ticket sales for the: For First Week
For Second Week
For Third Week For Following Week
40-60 basis 38-62 basis
On account of negotiations between the actors and the producers they have come up to this percentage distribution as per film. This is classic example of how any business or industry gets affected by the important development in it. The strike has also affected auxiliary industries like hoardings, public relations and advertising, as their work has come to a complete halt. Apparently, this industry has suffered an estimated Rs. 100 crore loss. This shows how the multiple dynamics act as very important factor in determining the industry growth and development.
MULTIPLEX BUZZ!! The nation's multiplex industry is all set for an unprecedented boom buoyed by positive regulatory changes and booming consumerism. Multiplexes / megaplexes have been instrumental in contributing 28 percent of the total theatrical sales for the film industry according to a report by Systematix Institutional Research. Industry experts estimate that top six multiplex chainshave plans of 300-500 screens each by FY-10.
DLF, a leading real estate player in the country, plans to invest US$ 298.12 million for the expansion of its multiplex business. The company has planned to add at least 500 screens in the next four to five years across the country.
Entertainment conglomerate Adlabs Cinemas has drawn up a plan to build 12 megaplexes in India where you can not only see movies but also cricket and soccer matches on screen.
Multiplex chain PVR Cinemas, which currently has 92 screens, is also planning to add over 150 screens across India, staggered over a period of three years from 2008-2010, with a total investment outlay of around US$ 71.55 million.
Cinemax India, the multiplex chain which currently has 55 screens over 17 properties across the country is planning to scale up its presence to 299 screens across about 100 properties by fiscal 2010.
RISKS AND CONCERNS
Slowdown in content supply As multiplexes are the consumers of content, they have no control over the supply quality and quantity. Multiplexes thrive on rising footfalls which in turn depend on the better supply of films from producers. Hence, any disruption on the supply side will definitely have a negative impact on the multiplex players' growth.
Alternative entertainment avenues
Movies compete for customer attention with other forms of entertainment viz. DVDs, TV, cricket, festivals etc. An increased acceptability of these avenues will divert footfalls away from multiplexes.
Mall development delays Supply of quality real estate has been a problem in the past for multiplex players. Mall delays due to various reasons will hurt expansion plans of the companies. We are building in a 50% delay in mall handovers to the multiplexes in our analysis. Any delay more than this will hurt future growth of multiplexes.
Uncertainty over entertainment tax Entertainment tax in India is among the highest in the world leading to a much higher occupancy levels required for break even of multiplexes. Even though state governments have announced tax free windows for these players, uncertainty looms over the viability of multiplexes after the window expires. We believe that the levels entertainment tax will come down in the future, otherwise any increase will be passed on to the consumer to a large extent like it is done at present.
Worsening economic environment The whole footfall growth story depends on rising prosperity in the country leading to higher discretionary consumer spends. If the economic environment starts worsening for a prolonged period, it will affect patronage levels negatively pulling down top line growths. We are assuming very low CAGRs at the top line levels for all of the players and are quite optimistic that multiplexes will grow as expected.
Are the single screen theatres in India going to die soon? With the boom in the multiplexes and the trend of multiplexes which can be seen in India, a question has been raised that, are single screens going to die soon. The perfect answer to this will be a big “NO”. Our analysis shows that more than 70% of people prefer going to multiplexes as compared to Single Screen, but “The bigger the mob the greater the thrill” is an old saying. In a country like India 25
where people still say that a movie should have to a PAISA VASOOL, it shows that the expenditure on movie or price of movie tickets has always been a question. Multiplexes offering tickets at around 150 bucks cannot call for large chunk of audience on account of high prices. On the other hand, if a common middle class family-- comprising a man, his wife and two thinks of venturing out into a multiplex on a Saturday evening, the idea doesn’t seem too pleasing, if you count the costs! The Indian film industry is the world’s largest, churning out more than 1,000 films each year. There are an estimated 11500 cinemas in India. Of those, nearly 600 are multiplexes and around 10900 single screens. No doubt the road ahead for single screens is very challenging and exciting. Single theatres would do well in smaller towns where multiplexes don’t go. They can price themselves on par or maybe slightly above the numerous video parlors that are thriving in the rural areas. They themselves have to look and explore their potential to serve better in the rural or their expected market.
Analysis on the basis of information collected from vendors We discussed with staffs and managing body of some multiplex and cinema theaters. As a discussion with them we perceived the following ideas. Traditionally, price-conscious Mumbaites now don’t seem to mind paying as much as it takes to enhance their movie experience. They are quite affluent to spend money in multiplexes. Crowd is better in multiplexes. Within a few time gaps some positive moves are 26
expected to come and will make it a better place to hang out. Multiplexes generally cater to high and middle income groups, with an increase in the number of households within this earning group, will result to higher consumption and spending patterns. Similarly migration of households from lower income to middle income levels will further drive the consumption patterns. Urban consumers have increased their expenditure on leisure and entertainment. Simultaneously spends on eating out, movies and theatre, and books and music has increased. A younger population tends to have higher aspirations and will spend more as it enters the earning phase. On the other hand people still moving to cinema halls as the price of ticket is lower. The segment that is attracted towards theater is different. They say that their business is also running fine. People are rushing for the local movies like anything. They also find their house full. They are trying to get good movies to attract more customers. If the movies are good, they used to generate better revenues. At the time of strike as there was no release of new movies there was a fall in sales of tickets. It affected both the multiplexes and cinema theaters. Generally in Sundays multiplexes remain houseful if there is a release of new movie. In working days there is a sell of 20-30 percent of the tickets. Multiplexes give offers like gift vouchers, group tickets, and discount coupons etc. At the time of strike the issue was different. Very few new movies were released at that time. So the business in multiplexes was affected a lot. The ticket sold was dropped down to lower than 50%. But cinema theaters managed to some extent because of regional movies.
CONCLUSION On the basis of Primary data analysis:
We have 50 respondents as in total and on the basis of the questionnaires being filled by them we can say that – Around 50% of the respondents watch movies on a weekly basis Amongst the media which they mostly prefer to watch movies, Multiplex and DVD’s have a major say. Multiplex constitutes around 38% of total respondents and DVD’s with 27.5%. For a view of personal liking to watch movies either in Multiplexes or in Cineplex’s, around 72% responses came in favor of multiplexes. In a question regarding justification of prices charged by multiplexes in accordance to the services provided, 76% agrees to it. Around 70% feel that piracy is going to affect the business of multiplex and Cineplex’s. For improvements on part of single screens, around 33% feel that structure and quality of service is really important along with security and quality. Due to the ongoing strikes between the producers, distributors and multiplex owners we have come to a question that whether strikes are going to influence viewers to watch movies in Cineplex’s and we got a shocking response 60% feel that strikes will not influence viewers. Thus, on the basis of these following answers we can conclude that piracy has a major say for the businesses of multiples and cineplexes. Something has to be done to get rid of it very soon. Moser bare has come up with original CD’s at low prices to demotivate sellers of pirated movies. Some other innovative moves in this regard can also solve the purpose. People still like watching movies in multiplexes in spite of the high ticket prices so it can be said that quality is still the top priority and they want their value for money which can be seen by our analysis.
This questionnaire is meant for determining the Effect of Emergence of Multiplex on Single Screens (Cineplex) and societal influence on their growth. Kindly answer the following question to the best of your knowledge. Name. Age: Mobile/Email: Q1. Which medium do you prefer to watch a movie? Multiplex Single
Q2. How frequently you watch movies? Once a week
once in a month
Q3. What is your monthly expenditure in watching movies? 0-500
Q4. Do you think Multiplexes are better options than Single Screen (Cineplex) for watching a movie? If yes, than go to Ques.5 Yes
Q5. What makes multiplex a better source of entertainment than Single Screen (Cineplex)? Ambience
Others, Please specify__________________________________ Q6. Did you find ticket price of Multiplexes as per the service and quality provided? Yes
Q7. What are the areas of improvement you find for Single Screen (Cineplex)? Structure
Q8. Do you think the strike by Multiplexes over profit sharing issue was justified? Yes
Q9. Do you think such strikes effects your interest in watching movies in Multiplex? Definitely
Q10.The controversies generated out of movies affect the revenues earned by Multiplexes? Positively
Does not effect Q11. The recurring strikes will influence you or direct you to watch movies in Single Screen (Cineplex)? Yes
Q12. Do you think Piracy has eaten into Multiplex and Single Screen (Cineplex) Business? Yes
REFERENCES AND SOURCES Important Links
www.magportal.com/c/ent/ movie www.dreamznetsolutions.com/ articles
websitedesigning.html www.legalserviceindia.com/ articles /fban.htm www.ankurb.info/2007/03/16/300- movie -re view / www.exchange4media.com/e4m/izone1/izone_fullstory.asp? section_ id=4& news_id=17336&tag=12066 www.techtribe.com/ view BlogEntry.html?blogEntryId=8413080e5d38-102b-a627-000f1f68a9bf
BOOKS REFERRED •
Business Research Methods, ICMR