New Delhi:

Do they spend the evening separately? No. They drive down to the nearest multiplex, which has four small halls, two of which are playing the latest Hindi films, with the other two featuring Hollywood films. There are gaming rooms too. The parents watch the latest Bollywood blockbuster, while the kids take in a Hollywood flick and spend the rest of the time playing video games. The evening is rounded off with a good meal at the restaurant housed in the same complex.

There are a number of families like the Chopras, starved of attractive entertainment options and with rising disposable incomes, who want to spend a greater proportion of their expenditure on entertainment.

About two decades ago, an outing to the local cinema hall was an attractive entertainment option. Bit in the past decade or so, average occupancy in Indian cinema halls has fallen considerably due to high entertainment taxes and the onslaught of cable television. This has led to a further decline in the quality and maintenance of cinema halls in the country, leading to an even greater number of people preferring to watch television or films at home.

In the nineties, cinema halls started shutting down or converting to business premises and shopping complexes. In 1997, the first multiplex, PVR Anupam, comprising four small cinema halls, gaming rooms, restaurants and music rooms, opened in New Delhi. It soon went on to become extremely popular, spawning several similar complexes in metros and mini-metros.

Initially, multiplex projects were started in the metros due to the availability of an assured audience. More recently, multiplexes have begun proliferating in smaller towns and cities, spurred by a growing consumer base and higher disposable incomes. The main cities in this list are Pune, Baroda, Indore, Ahmedabad and Jaipur.

Identifying the cash cow
State governments have begun to realise the revenue-generating capacities of multiplexes, as entertainment tax and sales tax are state taxes. Maharashtra, for instance, has offered extremely attractive sops to would-be developers.

Multiplexes constructed in the Mumbai Metropolitan Region will get a 100-per cent tax exemption for four years, while for the rest of Maharashtra the exemption period is five years. These projects will also get facilities such as stamp duty relief (if located outside municipal limits) and power at the industrial rate for five years.

Typically, the multiplex model is built around a primary anchor — movies. The revenue flow, however, does not centre on a single anchor. The income-generating channels in a multiplex may include box-office collections, rent from display systems, restaurant rentals, food and beverage collections, product launch rentals and promotions by companies.

In multiplexes, the other revenue streams are often larger than box-office collections, but movies are the main pull of such complexes. Hence overall returns are correlated to box-office contributions.

The primary reason for the popularity of this business model has been the escalating cost of movie distribution. Multiplexes act as a hedge, with multiple revenue streams around self-owned content.

All over the world, major movie production houses and media conglomerates, including 20th Century Fox, Paramount, United Artists, Columbia-Tristar/Sony and Warner Bros, operate multiplexes.

Now playing in India
The major players in India are Inox Leisure, a fully-owned subsidiary of Gujarat Flurochemicals (promoted by Pawan and Vivek Jain) and the Delhi-based PVR group. Other players include the Runwal group and Manmohan Shetty, owner of the well-known Adlabs Theatre.

Inox Leisure is setting up eight multiplexes, including four in Mumbai and one in Vadodara (these will open on 18 October 2002) and others in Hyderabad and Bangalore. Inox’s flagship multiplex will be located at Nariman Point, Mumbai’s main business district. The multiplex, which will cover an area of 1 lakh sq ft and include the Piramal-promoted Crossroads shopping mall, is expected to open in June 2003.

In Kolkata, Inox Leisure is building two multiplexes — one at the Saraf group’s shopping complex at Elgin Road, and another at City Centre at Salt Lake City. In Bangalore, the company has signed a deal to set up a six-screen multiplex in a mall being developed by a Portuguese company in the city’s main Brigade Ground area.

In the south, cities like Hyderabad and Bangalore are fast becoming hot destinations for multiplex developers. Reports suggest that Inox is planning to lease deals in the upcoming shopping malls in the central Banjara Hills and the Begumpet area in Hyderabad, while the PVR Group has zoomed in on a five-screen location in a posh residential suburb of Bangalore.

Though Karnataka does not have a subsidy policy for multiplexes, operators find the cosmopolitan metro an attractive market. An added incentive is that the state government offers a total entertainment tax waiver for Kannada films.

More recently, in the western region, the PVR group clinched a deal for a massive eight-screen cinema multiplex located in the Phoenix Mills Compound in central Mumbai. The multiplex will include entertainment facilities and a shopping mall.

Of all these, Pune could well become the city of multiplexes in another five years. In the past one year, the Pune district entertainment tax office has received 41 applications for constructing multiplex complexes in and around the city.

And entertainment won’t be the same again.