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Multiplexes: Entertainment for real - Views on News from Equitymaster
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  • Sep 25, 2001

    Multiplexes: Entertainment for real

    Multiplexes, a new concept in movie exhibition is fast catching up in India. Multiplex embodies the luxurious amenities of the modern day theatre, multiple screen choices, state of the art technology, ergonomic seating, eye-catching architecture and top of the line additional recreation facilities like cafes, gyms, shopping malls and food courts.

    There are 13,000 movie theaters in India, the second largest in the Asia pacific region. However, that is insufficient to meet the entertainment needs of the country’s population who can afford watching movie atleast once in every three months. As against this China, which ranks first in terms of number of screens in the Asia Pacific region, has around 67,000 screens on last count.

    High entertainments taxes in India have, till recently have adversely affected the economics of running a movie theatre and hence a major disincentive for expansion of theatre capacity in the country. The entertainment taxes in India range anywhere between 50-120% varying across different States. The prevailing rate of entertainment tax in Maharastra is 37.5% of the ticket revenue.

    The state government of Gujarat, Rajasthan and Uttar Pradesh has passed a resolution exempting multiplexes, commissioned before FY02, from entertainment taxes for next 5-7 years. The Maharastra also recently announced complete waiver of entertainment tax for three years and partial waiver for another two years for new multiplexes.

    Added to that there has been a relaxation in the import duties of film equipment in the last budget, which has also led to acceleration in multiplex projects coming up in the country. Last year itself around 40 multiplexes were built in India and more than 600 are in the pipeline. The new entertainment tax concession for multiplexes given by the Maharashtra government is expected to spur fresh investments worth Rs 5 bn in the sector over the next two years, adding an estimated 200 screens and an additional 50,000 cinema theatre seats. The concept of multiplexes is not only limited to metros, it is fast spreading to smaller towns and metros like Ghaziabad, Noida, Amritsar, Lucknow, Meerut and Agra where a number of projects have been announced.

    The expansion of multiplexes is destined to drive box office spending in the Asia Pacific region in the next five years. Multiplexes are destined to become one-stop shops that promise entertainment. While cinema halls may have been the pivots around which the phenomenon of film watching has sprung up, multiplexes now offer fantasy on a scale surpassing the celluloid.



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