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Covid-19 impact on the Movie theater industry

There is no more secret in this that with people locked inside their homes due to coronavirus, they are keenly waiting for the theatres to reopen. In order to fill in this void, the moviegoers are turning to online streaming platforms.

India ‘s prolonged lockdown due to the coronavirus pandemic has cut off revenue sources for the large cinema chains across the country. It is believed that unless the epidemic is not under control over the next three months, one of India’s largest cinema operators, PVR, is likely to run into problems without government assistance. Presently, the company is focusing on managing its liquidity rather than profitability in order to survive this situation.

The controllable costs like electricity and water bills have gone down but non-controllable costs like rent and most important agreements where PVR has “force majeure” clauses are still there while the company is earning zero revenue. Soon the large cinema chains in the country might need government assistance in terms of deferment of goods and services tax or wage subsidies for their survival.

The theatres have earlier rebounded against disruptions but coronavirus is different as it might affect their bargaining power too. But theatres are going to operate only if there are movies on the production line and if this production line breaks, it is going to be very tough for the theatres to survive.

A film usually generated 60-70% of its revenue from the theatrical release and the remaining 30-40% is earned through the OTT platforms. Presently, the quality and quantity of content are solid. So, it is believed that not more than 5-6 movies releasing on the OTT platforms would not have a significant effect on the industry. The social distancing norms might reduce the occupancy rate by 25-30% and this will result in loss of revenues. But the fact is that theatres usually see 60-65% occupancy in the weekdays so they might be prepared for low footfall.

There are guidelines being set for the theatres to reopen. Besides maintaining social distancing, the theatres need to implement new measures to maximize footfall.

But the question arises on whether the people will immediately flock to the theatres or not? This is yet to be seen in the coming months.

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