Multiplex operators have urged mall owners to sharply reduce the rentals or get into revenue-sharing agreements, as restrictions to contain the spread of COVID-19 had severely impacted their revenue and profitability. The lack of good content in the future would also lead to revenue loss adding to their woes, they asserted.
“With a substantial reduction in revenues, but no real change in our fixed costs, the bottom lines do not look safe as and when we reopen,” said Shirish Handa, chief business development officer, INOX Leisure Ltd. “Hence, till the business stabilises, a revenue-share based approach is the most suitable option for multiplex and mall owners to tide over this tough phase.”
INOX recently posted a first-quarter loss of ₹52 crore.
“Even after lifting of the ban, multiplexes will still bear the brunt due to lack of saleable and attractive fresh content. Multiplexes have to depend on good content, and it looks very uncertain in the immediate short term, resulting in deep revenue losses,” he added.
With cinemas closed for more than 100 days in a row, film producers and studios have opted to digitally release content on OTT platforms.
About 20 movies, which were ready to be released in cinemas, have been sold to Netflix, Amazon Prime and Hotstar, resulting in an immediate content crisis. Films featuring top draw stars like Amitabh Bachchan and Akshay Kumar, which are generally box office hits, will now be screened on digital platforms and not see a theatrical release.
Multiplexes have plans to attract more customers through promotional offers, but will become ineffective in the absence of new releases, multiplex operators said.
Multiplexes bring in new customers, who also shop and grab a meal, and are seen as crucial to a mall’s success.
Occupying about a tenth of a mall’s space, multiplexes draw a large share of footfalls. In smaller malls, they occupy about a fourth of total retail space and are treated as key anchor tenants.