New Delhi Chief Minister Arvind Kejriwal announced a yellow alert on Tuesday and ordered closure of cinema halls in the city.
The shutdown of theatres in Delhi will spell bad news for the big screen business with the market being a significant contributor to film releases especially Hindi films.
"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," said Kamal Gianchandani, President, Multiplex Association of India and CEO of PVR Pictures.He said that while they fully understand the need at government’s end to take necessary preventive measures, they request 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% can be reintroduced at cinemas," he added.
Analyst Karan Taurani, Senior Vice-President, Elara Capital, said that Delhi accounts for nine to 10 percent of a movie's box office business.
For the new release 83 starring Ranveer Singh, the market so far contributed 10 percent to the film's overall business.
However, the closure of theatres in Delhi will not only impact the box office collections of 83 but will also delay the upcoming movie release pipeline.
Film trade experts expect a negative impact on upcoming Bollywood releases including Shahid Kapoor-starrer Jersey scheduled to release on December 31 and Akshay Kumar's Prithviraj which will hit theatres on January 21.
Makers of Jersey took to Twitter on Tuesday to announce that the film's theatrical release has been postponed.
In an official statement, the makers said, "In view of the current circumstances and new covid guidelines we have decided to postpone the theatrical release of our film Jersey."
Taurani said that delay in content is a big negative for exhibitors. "Hindi content is generic in nature so producers will hold back the release of their films. And this will be a huge dampener for multiplexes like PVR, INOX," he added.
In the first half of FY22, around 8.6 percent of PVR's screens were in Delhi with 68 screens situated in Delhi out of the total 855 screens. As for INOX, the multiplex had three percent of its screens in Delhi in 2020.
In addition to impacting movie earnings and delaying new releases in theatres, Delhi shutting down theatres could lead to the closure of cinema halls in other markets as well.
"Other states could follow suit. Mumbai could be one such market as the COVID-19 cases are increasing there," said Taurani.
Theatres in Maharashtra are still operating at 50 percent capacity. The shutdown of cinemas in the state will be a big blow to the exhibition business as Delhi, Uttar Pradesh, Punjab along with Maharashtra contribute 40-45 percent to India's box office business.
Delhi's order of shutting down theatres comes after fresh curbs were announced by various states including night curfews.
So far, night curfews have been announced in markets including Karnataka, Maharashtra, Delhi, Haryana, Gujarat, Uttar Pradesh, Madhya Pradesh, and these markets together contribute almost 65 percent of Hindi box office business.
"The situation is dynamic as a film like Spider-Man (No Way Home) did compelling numbers and decent film like 83 has reported poor collections as the sentiment took a big hit in last 10 days. Due to changes (new COVID guidelines) in the last few days has beaten down the business of 83," said Taurani.
While 83 was expected to collect Rs 65-70 crore during the first weekend, the film manage around Rs 44.4 crore in the first three days of its release.
Taurani sees all aspects of the exhibition business getting impacted due to fresh curbs and the closure of cinemas in Delhi.
"This will have an adverse impact on windowing terms (window between a theatrical release and its launch on a streaming platform) which is 4 weeks currently and was supposed to go back to 6-8 weeks by March next year. Consumer sentiment to step into cinemas will also be impacted. Footfalls for medium to small films is currently down in the range of 30-60 percent versus pre-Covid levels," he added.
While he thinks that the unlocking will be faster this time for theatre chains, it will be a big challenge for exhibitors if the current situation for theatres sustains beyond 2-3 weeks.
"It will push the recovery process by 3-6 months. We were expecting the recovery to happen by March but because of the current situation, it could be delayed till Diwali. Even if one state is shut content will not flow," added Taurani.