Multiplex revenues to cross pre-pandemic levels in 2022-23: Report

NEW DELHI: Revenues of multiplexes are set to cross pre-pandemic levels this financial year 2022-23 as more people are queuing up to watch movies after the pandemic-forced hiatus, said rating agency CRISIL Ratings. Their revenue is expected to rise to an all-time high of over Rs 6,000 crore, or 13-15 per cent above the 2019-20 level.

The sharp recovery in hall occupancy coupled with a troika of factors -- increased average ticket prices, higher spend per head on food and beverages (F&B) and the addition of screens -- are expected to script the growth story for the sector, the rating agency said in a report. The average ticket price is expected to be Rs 240-245, which is 20 per cent higher than the pre-pandemic level.

"Multiplexes have rebounded well from the pandemic setback and reported their highest-ever quarterly revenue and operating profit in the first quarter this fiscal. Occupancy has returned to the pre-pandemic level of 32 per cent, riding on some big-banner releases," said Naveen Vaidyanathan, Director, CRISIL Ratings. While there have been headwinds in the past two months stemming from social media outrage and boycott calls, the scene, Vaidyanathan said, may change in the coming months aided by the festive season and a strong content pipeline.

That should improve overall occupancy to 30 per cent this fiscal from 16 per cent in the last. While occupancy was back to pre-pandemic levels in the first quarter, it might drop a bit for the full fiscal 2022-23 as multiplexes continue to feel the heat from over-the-top (OTT) platforms.

The past couple of years has seen OTT gain significant traction, especially after theatres were impacted by the pandemic-induced lockdowns. "Lower occupancy impacts the profitability of multiplexes because of high fixed costs. Hence, while operating profitability will likely rebound to 16-17 per cent this fiscal after the losses of the past two fiscals, it will fall short of the pre-pandemic level of 18-19 per cent," said Rakshit Kachhal, Associate Director at CRISIL Ratings.

Above all, occupancy and quality of the content pipeline amid intensifying competition from OTT will be key monitorable, the rating agency said in conclusion.