This Entrepreneur Explains Why India Needs More Multiplexes
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During the second half of 2000, Dr. Shrikant Bhasi, an agri trader by profession was looking to diversify his business portfolio. One of his close source suggest him to venture out in to movie making business.
Since, Bollywood movies are way too expensive to produce, Bhasi invested in a Malayalam film called Violin as an experiment. During the distribution of this film, Bhasi realised the gap in the cinema exhibition business, especially in the smaller cities.
Some can cry foul, the agri trader found his new passion – cinema exhibition. Around 2011, Bhasi started a three-screen multiplex in his hometown Angamaly, near Kochi.
While the average theatre occupancy in the country around that time was about 30-35 percent, Carnival's Angamaly reported 60-65 percent. Bashi has come a long way since then and Carnival has grown from three screens to nearly 500 screens with another 500 in pipeline.
In a conversation with Entrepreneur India, Dr. Shrikant Bhasi, Founder and Chairman of Carnival Cinemas shares his expertise on why India needs more multiplexes in second and third tier cities.
The Sino Sample
We often see Cinema experts and analysts comparing the Indian industry with Chinese film industry, especially, when it comes to the number game. Bhasi uses the same example to explain why we need more screens in the country.
“Look at the Indian population, that’s our strength. China stands next to us. But the country has 42,000+ multiplexes while we in India have 2400 multiple screens. Merely 2-4 per cent have access to these screen,” he said while adding that, “Go to tier III cities, with 2-3 lakh population, there is not a single theatre to serve this crowd. People travel 70-80kms to watch films.”
For an entrepreneur this is his market and these are the audiences Carnival is looking to capture.
However, even though for the country, where Bollywood along with Cricket are our unofficial religion, pulling this crowd to theatre is not an easy job to do.
This problem led Carnival to change its approach and improving its occupancy rates. “We simply thought of multiplexes as a place where one can bring the movie, take the collection and book profits. But with our first multiplex, we realised that it's a different game. It is not just cinema but an entertainment business where apart from the films, one can book profits on food and beverage stalls along with retail shops. If you miss one of them, you will incur losses,” he pointed out.
And hence, the company earlier this year, in partnership with Tea Villa Café, PayTm and Pepperfry, started the Carnival Select Lounge.
OTT – The New kid Around the Block
With rise of OTT players such as Netflix, Amazon Prime and ALT Balaji, content in India has spiced up a lot which has hurt businesses in the production and distribution end. However, the according to Bhasi this disruption was the need of the hour.
He shares, “OTT is good for the cinema industry to flourish. We don't see them as competitors as our way of exhibiting and their way exhibiting is totally different. So, for example, people with a good smartphone will watch movies like Padmavat or Baahubali Series in the theatre merely for the experience.”
Additionally, he also feels it is OTT players have improved the satellite value of Indian cinema and creating room for good content.
Talking about the multiplex business, he agrees that it is funds intensive and the stakes are very costly.
One has to lease the property for long term and invest in interiors, etc. Additionally and most importantly to run a multiplex the company needs at least 30 off licenses from local authorities.
This is why there are only a very few active players working in this domain. However, Bhasi feels the dynamics of the industry is changing and even private equity firms have expressed their interest to work with the industry stakeholders.
“With the change in the dynamics of the entertainment industry, there are a lot of PEs that are coming forward. It is a good business, the bottom line is very good. You have an EBITA which ranges from 15-18 percent, which is fairly good. So, I don't see any issue of getting PE funds,” he concludes.