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Cinepolis focusing on organic growth
MUMBAI: International multiplex chain Cinepolis India, which had started seven years back with 50 screens in India, is planning to expand its presence across the country. The multiplex is looking to have 400 screens by 2018.
Currently, Cinepolis has a total of 311 screens. While the short-term goal has been 400 screens, the plan is to own 600 screens by 2022. The multiplex is not looking at any particular market for expansion, but rather they are focusing on potential catchment for organic growth.
Cinepolis India director of strategic initiatives Devang Sampat said, “Cinepolis is on a continuous growth trajectory in India; we have the highest organic growth last year. We want to be where the potential catchment is coming up; we are not looking into metros or non-metros.”
However, even with the growing number of cinema screens, availability of screens still remains a constant problem for the entertainment industry. The growth of the whole industry has been much slower in India; there are currently a total of only 2,000 multiplex screens.
Sampat commented, “Organic growth by opening new screens has been a challenge always. Put together, the multiplex industry does not have more than 250 screens opening every year. If we compare it with other international markets, it is very less, as internationally 2,000 screens are opened in a year. Given the population that India has, this will continue to be a challenge, but having said that, things are growing year on year. The contribution from Hollywood and regional cinema has played a key part in the growth.”
One of the biggest problems facing the exhibition industry is taxation, and with goods and services tax (GST) coming in, the problem seems to have escalated. Despite the implementation of GST whose moto is of one tax one nation, exhibitors have no clue on the local body tax.
When quizzed about the effect of GST on the industry, Sampat replied, “GST was a much needed and good step to be implemented. However, the category in which cinema was given is equivalent to casino and gambling, which was not fair. I think movie viewing is an entertainment in India, the government could have given some room to encourage that. Having said that, the 28% GST bracket which have rolled across, the bigger challenge still lies with the local body tax. If the moto of GST was one tax one nation, then the local body tax should be avoided. That is something we don’t have any clarity on as of now. No states have implemented it, but there are provisions where central government should give direction on ‘One Nation One’ tax.”
In spite of the ever-growing challenges, Sampat believes that India has much scope and can take more screens as 65% of revenue comes from multiplexes. The director of strategic initiatives further commented that the collection we further improve when we grow organically and double the size of screen. ‘Baahubali’ has expanded the collection pie and has set a new benchmark. The collection pie was earlier expanded by ‘3 Idiots’, so he does see the potential of growth in multiplex.
Following the success of ‘Baahubali’ and few other big-budget films, the first half has been extremely good for the multiplex chain. They are expecting the second half to be much better than the first half following the star-studded line up of film releases. The second half of 2017 will witness release of some big budget films from three Khans—Aamir (Secret Superstar), Shahrukh (Jab Harry Met Sejal) and Salman (Tiger Zinda Hai), as well as Akshay Kumar’s Toilet: Ek–Prem Katha. The line-up will also include the return of famous ‘Golmaal’ franchise and some popular Hollywood releases.
“The first half has been good as we saw biggest movie of the industry Baahubali. The positive thing that happened was that all the segment grew not just the Ticketing but food and beverage as well as advertising as most of the people wanted to advertise during that time. So overall, I think it is been great half of the year and the second half also look promising as we have some big films lined-up. Even out of 10, five films deliver then the second half will be bigger than the first half, barring there is no sudden things happening like demonetization. If the right content keeps coming than exhibition industry will definitely grow,” Sampat stated.
Though, the first half has been profitable and second half seems equally good, piracy is still the rampant problem for the exhibition industry. With the advent of technology there has been a spike in unauthorized duplication of copyrighted content that is then sold at substantially lower prices in the ‘gray’ market.
Cinepolis has taken some steps to control this growing issue of piracy by hosting its own anti-piracy squad. The multiplex chain is also working closely with studios creating awareness campaigns against piracy.
The special anti-piracy squad is a special security guards who keep check only on pirates and are given training on how to identify pirates. Recently, the anti-piracy squad succeeded in capturing a pirate at their Ghaziabad cinemas.
Though Cinepolise has managed to capture the pirate, Sampat stated that the big disadvantage is that there is no specific law or hard punishment against the pirates which can stop a person from doing it again. “We have Multiplex Association of India, Producer Guild Association and Motion Picture Association for Hollywood, who are working on viable term. They are trying to figure out what can be done to make it tough on the pirates. Also, if there is a clear path for police which they can take than the case against the captured pirates become much stronger. From exhibitor point of view, the first responsibility is to catch the pirate which are doing and the second step is where we need to work on which is to work with government to make the law stricter against these pirates,” he commented.