Large mall developers plan to shrink multiplex spaces in their future projects as cinemas no longer attract big crowds and generate enough revenues throughout the year.
Multiplexes used to generate 10% of the footfall of a mall, which has reduced to 6-7%, forcing the developers to rethink the strategy, industry executives said.
“With alternate forms of entertainment, we are looking for rationalising cinema space in the mall,” said Sriram Khattar, vice chairman and managing director, rental business, at DLF.
Multiplexes pay a minimum guarantee amount to mall operators every month and share revenue. In 2023, they were able to breach the minimum guarantee threshold in 8-9 months, but this year they have managed it only in 4-5 months.
“In Southern India, cinemas still fare better than other parts of the country because of four regional languages,” said Muhammad Ali, CEO, retail, at Prestige Group. “Having said that, we still have to rethink the space allotted to multiplexes as competition from OTT has led to a decline in occupancy level. The share for entertainment and gaming and F&B is going up as people are focusing on experiential retail and physical activity.”
In a mall, 10% is occupied by cinema and 10% by food & beverages brands while about 5-6% was occupied by entertainment and gaming companies.
The dynamics are, however, changing for future projects.
“In our future malls, space for cinemas is reduced to give that space to other revenue generating businesses. Lack of content is the biggest reason for cinemas not being able to be the crowd puller they used to be,” said Harsh Vardhan Bansal, cofounder of Unity Group, which operates half a dozen malls in Delhi and Punjab.
Increasing acceptance of streaming platforms as a potent source of entertainment across languages, high ticket prices in multiplexes, poor performance of several films at the box office, and better alternatives in the form of high margin businesses such as gaming and food court are a few fundamental reasons mall owners may not be finding business sense in multiplex business.
Till date, the net box office worldwide collection of Indian films in 2024 is Rs 7,811.8 crore, which is considerably lower than 2023’s box office collection of Rs 13,161.2 crore, according to early reports from Sacnilk, a firm that tracks box office collection data of Indian films.
Occupancy levels in multiplexes have not recovered from pre-pandemic levels. It is estimated that average occupancy level has fallen to 25.8% from more than 30% in the years before the pandemic.
“Occupancy in cinemas is decreasing. Mall owners may find it more lucrative to collaborate for food courts, gaming zones and retail chains,” said Girish Wankhede, an independent movie trade analyst. “Cinemas used to be the anchor or showrunner for malls. But with increasing cyclicality of cinema business, which impacts footfalls, mall owners have found that there is regular patronage for food courts and gaming zones.”
DLF is looking to more than double its retail portfolio and add about 5 million sq ft of retail space in the next 5-6 years with an investment of about Rs 3,000 crore. “Going forward we will focus on premium experience,” Khattar said.
The company has planned malls in Gurgaon and Goa and high streets in Gurgaon in addition to retail space in its upcoming residential and commercial development.
Watching films in theatres is no longer a Friday ritual but more of a conscious choice weighed against other avenues of entertainment outside theatres, experts said.
