Omicron threat: Uncertainty looms large for multiplexes again

Just when the multiplex industry had started seeing some signs of recovery with box-office successes like ‘Spider-Man: No Way Home’ and ‘Pushpa: The Rise’, fears of Omicron variant spreading as well as rising cases of COVID-19 might not go down well for theatre operators like PVR and INOX. The Arvind Kejriwal government has already ordered a shutdown of cinema theatres and multiplexes after the Covid-19 positivity rate in the capital rose to 0.68 per cent on Monday. Experts say that other states could follow suit if such a trend continues.
 
This leaves makers of new releases like the Shahid Kapoor-starrer ‘Jersey’ and ‘The King’s Man’ slated to release on December 31 and big-banner films like SS Rajamouli's ‘RRR’ and Akshay Kumar’s ‘Prithviraj’ in the lurch.
 
According to analysts, Delhi contributes around 8 per cent of the total revenue of Bollywood but it could be worse if neighbouring states like Haryana and Uttar Pradesh also announce a shutdown. “Delhi government’s decision to shut down Cinemas in Delhi while enforcing the ‘yellow’ alert of the Graded Response Action Plan (GRAP) has caused massive uncertainty and could lead to irreparable damage for the Indian film industry. The period since March 2020 is undeniably the most challenging period faced by Indian cinemas in their long history,” Kamal Gianchandani, President, Multiplex Association of India.
 
After a shutdown of 18 months, cinemas were finally allowed to reopen later this year. “After being allowed to reopen, cinemas have already demonstrated an ability to operate safely for the public and employees via usage of enhanced ventilation systems, enhanced hygiene, and other safety protocols. Not a single outbreak of Covid-19 anywhere around the world has been traced to a cinema,” he said. He added that cinemas should get equal treatment with comparable industries and institutions. “Instead of closing the cinemas, we would urge the Delhi Government to consider introducing “double vaccination requirement” to enter cinemas, as is the case in some of the other states (including Maharashtra). Alternatively, the seating capacity restriction of 50 per cent can be reintroduced too,” he added.
 
According to Elara Capital, night curfews could also hurt multiplex revenues. States like Karnataka, Maharashtra, Delhi, Haryana, Gujarat, Uttar Pradesh and Madhya Pradesh have already imposed night curfews and they contribute almost 65 per cent of the Hindi box office revenues, says Karan Taurani, senior vice president, Elara Capital. “It will have a big negative impact on consumer sentiment and adverse reaction for cinema/dine-in based players as they see highest occupancy during night, especially during the festive season (New Year and Christmas). This will create panic within the producers who will decide to yet again delay their release dates given the uncertainty on timings/restrictions,” he added.
 
He said that a film like 83 has reported poor collections as the sentiment took a big hit in the last 10 days. Made on a budget of Rs 125 crore, the box office collection of the film in the first three days stands at Rs 47.4 crore. He adds that this will also have an impact on windowing terms (four weeks currently and was supposed to come back to 6-8 weeks by Mar’22), distributor share arrangements, consumer sentiment to step into cinemas. Footfalls for films were anyway down by 30-60 per cent vs pre-Covid levels.
 
“We don’t expect valuations to breach or go below Mar’20 levels as the situation may be able to reverse also sharply ; just as we have seen unlock post wave 2 was much faster as compared to wave 1 and given the low severity of the variant for now, similar could be the case for exhibitors. Exhibitors also have a healthy cash balance post the capital raise rounds last year, can sustain for next 6 months even if there is a complete shut down for cinemas for next 2-3 months (highly unlikely for now),” Taurani adds.

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