Whenever cinema halls open, they will lose peak annual occupancy of 30-38 percent which may not be achievable for both INOX and PVR due to the social distancing norms.
With no sign of theatres opening anytime soon, FY21 will be a tough year for multiplex operators like PVR and INOX.
Cinemas are in the third phase of unlocking and according to a research note by Elara Capital, there are no signs of theatres reopening anytime before first week of August. This means that after the complete washout in Q1FY21, cinemas will lose another month.
In addition, whenever cinemas open, they will lose peak annual occupancy of 30-38 percent which may not be achievable for both INOX and PVR due to the social distancing norms.
This is why it is estimated that occupancy will take a hit by 25-30 percent even after cinemas attain normalcy towards the end of the year, if at all, the note said.
INOX, PVR ended FY20 on a weak note
The two national multiplex chains reported losses for the fourth quarter of FY20.
PVR which reported a revenue decline of 23 percent YoY (year-on-year) saw box office revenue dropping 27 percent YoY. This was largely due to a sharp drop in footfalls by 29 percent YoY to 19.5 million as occupancy levels dipped from 38.6 percent in Q4FY19 to 30.6 percent in Q4FY20.
Track this blog for latest updates on the coronavirus crisis
Ad revenues declined 22 percent YoY.
For INOX, footfalls declined by 29 percent in Q4FY20 and F&B revenue dipped 24.5 percent at rs 933 million. As for ad revenue, INOX reported a decline of 20 percent.
Silver lining
Big ventures like Akshay Kumar-starrer Sooryavanshi, Varun Dhawan and Sara Ali Khan’s Coolie No.1, 83-The Biopic, starring Ranveer Singh, Kangana Ranaut’s Thalaivi, Lootcase and Chalaang are ready for release are still waiting for theatres to reopen.
During management call, PVR said that 95 percent of films will be theatrical releases only.
There are 59 movies in regional languages that are ready for release, 21 are in post-production and two to three Hindi movies are ready for release.
Elara also estimates that weekday occupancy is likely to jump as crowd will be well spread for viewing throughout the week as work from home will be the new normal for many.
It is expected that occupancy levels may be 45-55 percent for weekends and 25 to 30 percent on weekdays which will result in better utilisation of the property and also improve overall occupancy levels.
Follow our coverage of the coronavirus crisis here
