Chennai's Cinema theatres Unsustainable

Late last year, the venerable Kamadhenu cinema theatre in Chennai's Mylapore area screened a movie for the final time. After the curtains came down on the JK Riteesh starrer 'Nayagan,' the 50-year-old theatre became a marriage hall. Like dozens of others before it, Kamadhenu's existence as a movie hall, especially one with a single screen, had become unsustainable in Chennai, a city renowned for its film industry. While Kollywood and its Mumbai counterpart Bollywood grow at a healthy pace, the movie halls which exhibit the films they produce are fading into the sunset.

According to a recent report by FICCI and consultancy firm KPMG, India's film industry grew by over 17 per cent during the last four years and had combined revenue of nearly Rs 11,000 crore in 2008. On the other hand, the two most important centres of Indian cinema have lost dozens of movie halls each in recent years. Chennai has just 60 of them left, with its Mount Road entertainment corridor the worst hit. Mumbai has only 87 movie theatres, excluding multiplexes.

"There came a point where selling the theatre space to real estate developers was a much better business than running cinemas on Mount Road," said S Sridhar, secretary, Tamil Nadu Theatre Owners' Association.Only three out of the 13 movie halls on Mount Road remain. The rest, such as Alankar, Anand, Saffire and Wellington have given way to malls or office complexes. Vidhani RV, the secretary of the Single Theatre Owners' Association in Mumbai, said there are restrictions on the conversion of movie halls into other businesses. "Closed theatres here are being used as warehouses for odds and ends."

One of the reasons that operating movie halls in Chennai has become an unattractive proposition is that people are avoiding the trouble and expense of traveling to the city centre. They'd rather watch films at a neighbourhood cinema, hire movies or turn to direct-to-home television service providers, opines SVRM Ramanathan, president, Chennai Cinema and Film Exhibitors' Association. The surviving theatres in Chennai are adapting to survive but turning themselves into multiplexes to maintain an average sustainable occupancy rate of 40per cent. "Multiplexing a theatre actually reduces its seating capacity by putting in more screens and other recreational facilities in the place of seats," Ramanathan explained.

Another factor driving multiplexing is the increasing use of cars and need for space to park the vehicles. Typically, a parking lot for 100 cars occupies 30,000 sq ft, while a 500-seat theatre occupies only about 4,000 sq ft. "Achieving 40per cent occupancy in a 500-seater is not possible today. Only a multiplex which can survive on low occupancy and capacity by charging high rates can survive," according to Sridhar of the theatre owners' association.

Six major theatres have become multiplexes so far and two more are expected to make the change soon. In Mumbai, Vidhani said, multiplexing is not an easy option because of a rule that a theatre can be converted into a multiplex only if it houses a minimum of three screens. Vidhani is bitter that while producers recover costs from satellite rights and the home video segment, exhibitors and distributors are left to bear the brunt. He estimated the box office loss from Bollywood films at Rs 360 crore in 2008 despite investments in film industry growing.

"The losses are borne by film distributors and exhibitors. Only six of the 216 Bollywood movies released last year made profits at the box office." Vidhani says. According to Rajesh Jain of KPMG, profitability has taken a hit because of higher break even points and rising talent costs, but there is backing from private equity investors and other organised funding agencies now. But TN entertainment trade magazine editor R Ramanujam is of the view that break even for traditional theatre businesses can take 12 years and big investors are still skeptical about how the audience will respond. "It's a wait and watch period for the exhibition business now." Jain says.

A Televisionpoint.com News.