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Karnataka govt announces Rs 200 price cap on movie tickets; experts sceptical

The move is aimed at giving a boost to regional cinema, but industry watchers feel abysmal screen density ratio and infrastructure issues should be addressed first

By Shruti Venkatesh Forbes India Staff
Published: Mar 16, 2017

I love a good story, be it through advertisements, movies or an entrepreneur who dared to think differently. I believe in bringing in fresh perspectives -- to a corporate profile or a Facebook post -- like new wine in an even newer bottle. I graduated with a journalism degree from the Xavier Institute of Communications. My weekend rituals involve watching Bollywood movies and reading up on style trends.

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In a move that will delight both, moviegoers and the Kannada film industry, the Karnataka government on Tuesday announced a price cap of Rs 200 for movie tickets in the state. It joins Tamil Nadu (Rs 120) to fix a maximum price for a cinema ticket. However, despite the noble intention of giving a fillip to the regional film industry – the government has also made it mandatory to screen Kannada and regional language films in one screen in each multiplex between 1.30 pm and 7.30 pm – multiplex owners are not enthused with the development as it is likely to have an adverse impact on their revenues. Multiplexes usually depend on high ticket rates on weekends to increase their collections. 

“Going by the current trend of ticket pricing in multiplexes, the move to cap tickets at Rs 200 will have a considerable impact on the revenues of key players in this space. Rental arrangements based on revenue shares with real estate owners will also take a beating,” Rakesh Jariwala, partner and segment champion – Filmed Entertainment, Media and Entertainment, Ernst & Young India – tells Forbes India. Despite repeated attempts, the spokespersons of PVR, Inox, Cinepolis and UFO Moviez were not available for comment.

While Hollywood and Bollywood films get a lion’s share when it comes to screen space, regional films are often relegated to the back burner. The move to cap ticket prices is one of the attempts to address the problem. “For a long time, it was felt that because of Bollywood and Hollywood films, regional films don’t get adequate slots in theatres, which is why some producers demanded protection from the government,” says Rajkumar Akella, MD, theatrical, India at comScore, a global media measurement and analytics company. “A lot of mid- to low-income groups found the existing ticket rates (Rs 200-450 per ticket) unaffordable.”

However, Akella adds that “while the concerns are genuine, this move may not have the desired impact because the authorities haven’t been able to get to the core of the issue – which is lack of infrastructure”. The screen-to-population ratio in India is abysmal when compared to other countries. India has just 6.5 screens per 1 million people. In comparison, China has 23, Spain has 84 while the US has 123 screens for 1 million people.

Flexible ticket pricing is not uncommon in India. Multiplexes levy different prices (less than Rs 200 in Karnataka, says Akella) on weekdays to avoid losing on footfalls and reach a wider audience. “Therefore, the bigger issue to address is the screen density problem. Having different kinds of infrastructure to cater to different kinds of income groups and cinema is a more scientific way of addressing the issue of under-representation of regional cinema,” he tells Forbes India.

Experts say they won’t be surprised if Karnataka emerges as a trendsetter in this regard. They feel there is a possibility of more states opting for price capping as it will make cinema more affordable for the masses. But Akella reiterates that “unless we look at the bigger issue, it could actually turn out to be counterproductive”.

For instance, in Tamil Nadu, multiplexes try to recover the costs by charging more for food and beverages. Jariwala says in this case too, “multiplexes may have to evaluate other means of increasing revenues to compensate for the loss in ticket revenue, including increasing ad inventory, levying higher parking charges, increasing on-premise advertising avenues, and hiking up the food and beverages rates to make good the losses”.

“In markets where there is a ceiling, it has given way to black-marketing,” says Akella. And while on one hand the production costs are going through the roof, on the other, the shelf life of movies has come down to 2-3 weeks. So for a movie like Baahubali or a 2.0, it is difficult to recover costs and make profits.

Instead of price-capping, a wider industry consultation to evolve more comprehensible and justifiable policies is needed, believes Akella.

Besides the price cap, the government has made it mandatory to screen Kannada and regional language films – Tulu, Konkani, Beary, Kodava and Banjara – in one screen in each multiplex between 1.30 pm and 7.30 pm. It also announced that a film city will be set up in Mysuru to promote the regional film industry. The announcements were based on the recommendations submitted by a 14-member committee headed by SV Rajendra Singh Babu, filmmaker and chairman of Karnataka Chalanachitra Academy, last year.

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