PVR-Inox has decided to shut down 50 screens in the coming 6 months.Image Credit source: PTI
At the time of COVID, when people were at home, then OTT platforms like Netflix and Prime Video arranged for the entertainment of the people. But after this, when the theaters reopened, a large number of people did not reach the theatres. This had an impact on many big films as well and Bollywood films got shelved one after the other. Now the same OTT is trying to destroy the business of malls across the country. Let us understand how…
Actually, movie theaters are integrated in most of the malls of the country. But the concern of the companies running shopping malls is now that the footfall (movement of people) in movie theaters is decreasing. This is also affecting their revenue. The condition is even such that many malls developers are now reducing the space given to movie theaters in malls.
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Malls earn income through revenue sharing
Cinema operators running in malls enter into revenue sharing agreements with companies running shopping malls. In such an agreement, the mall operator gets a guaranteed minimum rental income from the movie theater company. At the same time sharing from the revenue of theater companies.
In such a situation, now when the movement of people in movie theaters is decreasing, it is affecting their revenue. Due to this, malls operators also have to bear heavy losses.
The footfall of theaters decreased so much
PVR-Inox, the country’s leading company operating movie theaters, says that before COVID, the number of visitors reaching movie theaters in the financial year 2019-20 was 1.68 crore. In the last financial year 2022-23, it has come down to 1.4 crores. Hence PVR-Inox has decided to shut down 50 screens in the coming 6 months.
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Will things improve after July?
Due to low occupancy of movie theaters, companies are not able to reach the limit that they can share revenue with malls. Because of this, malls are getting only the guaranteed minimum rent. Now since July, with the release of several films one after the other, both theater companies and malls are expected to improve their income.
Harsh V. Bansal, co-founder of Unity Group, says that the occupancy of theaters has been 27 percent in the last three months. By May this year, it has reached 40 percent. We are able to do revenue sharing at 40 percent occupancy.