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December 18, 2008

"Multiplex business is recession proof"

Extracts from Economic Times' interview with Ajay Bijli, CMD of multiplex operator PVR.
I, like some of my peers in the industry, hold the view that the entertainment industry is largely recession proof. It is mostly dependent on the supply of good content. At the beginning of the year, during the Indian Premier League (IPL), production houses delayed releasing their movies, that was when footfalls in multiplexes witnessed a drop. Again during the terror attacks in different cities, movie buffs didn’t feel safe enough to go to multiplexes. But in the last few months it has become clear that whenever good movies have been released, movie buffs have come to the multiplexes. The recent release Rab Ne Bana De Jodi is a case in point.

I think it’s not economic slowdown that has affected sales of tickets, it is the quality of content which governs footfalls generated in the multiplex. Fortunately, India is still a growth story and to a certain extent the slowdown is more psychological than real. Hence, I do not see the slowdown, as I would like to call it, having any impact on the entertainment industry. I believe that the Indian entertainment industry will continue to grow in healthy double digits.

...Multiplexes are now expanding to smaller town and cities, the collection base for the entire industry is bound to grow. If we look at the international trend, single screen theatres have given way to multiplex because of the business dynamics. The days when a 1,000 plus seating capacity theatre could be run profitably are shrinking. With multiple entertainment options emerging, both out of home and in home, the shelf life of movies are getting shorter. Instead of single screen theatres coming up mostly it is multiple screens being built and that too in a family entertainment complex like a mall. The idea is to have one stop entertainment hubs.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in