Are OTTs impacting multiplex business?

The rise of video streaming services in India with over 40 players offering tens of thousands of hours of content is enabling access to unprecedented amount of content giving enough reasons to people for avoiding visits to a theatre.

Multiplexes such as PVR Cinemas, Inox and Cinemax, however, are rapidly expanding despite the availability of endless content to consumers through these OTT apps.

Low screen density

According to a report by Prabhudas Lilladher, the impact of OTTs on multiplex business is highly overplayed as screen density remains low in India despite the rapid expansion plans of the three large players in the industry.

“Low screen density (8 screens/million population), increasing content diversity (no language is more than 14% of releases in 2018) and unviable single screen economics provides a huge fertile ground for growth in multiplexes,” the report stated.

The screen share of multiplexes has in fact risen from about 9 per cent in 2009 to over 31 per cent in 2018.

“The threat from OTT is overplayed due to eight-week exclusive window for theatricals and diversity of content available on both platforms,” the report said.

OTT regulation and local taxes

The report also highlights the potential regulation of OTTs as a boon for multiplexes. Few states like MP, Kerala and TN have imposed local body tax (LBT) which is over & above the prevailing GST rate. This can set wrong precedent if other states follow suit, thereby creating a contagion risk.

“ Industry profitability and capital efficiency is set to improve as M&A activity is more or less over as top four players have cornered about 79 per cent of the multiplex screen count and share of premium screens and high margin non-ticketing revenue is also on a rise,” the report said.

Domestic and overseas theatricals, which is about 75 per cent of the film exhibition market grew by 8.9 per cent to Rs 13,200 crore in 2018. Wide diversity is expected to drive CAGR to 9.8 per cent over 2018-2021, benefiting multiplexes, as per the report.

[“source=thehindubusinessline”]