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A decade after its entry into the Indian market, Mexican movie chain Cinepolis, which has a network of over 5,000 screens across 13 countries, is pushing the pedal on its growth in India. Cinepolis India reached the 300 screens mark this month, and now has set an ambitious target of opening 100 more screens in the country by 2018. Javier Sotomayor, MD, Cinepolis India, speaks to Forbes India about the multiplex chain’s decade-long journey in India and its expansion strategy for the country. Edited excerpts: Q. Cinepolis has been in India since 2007, and has just reached the 300 screen milestone. Was it a conscious strategy to go slow on the expansion? When we came here in 2007, we overestimated the pace of growth we could achieve. Those were India’s boom years. Shopping centres were being built and we had set an ambitious target of building 1,000 screens in five years. Then reality hit us and the market. It took us two years to open the first cinema, by 2009 end. And by that time, we revised our strategy. As of now, we have 303 screens operating in 43 cities and now we want to reach 400 screens by 2018 [Cinepolis’s closest competitors PVR and Inox have around 579 and 472 screens respectively]. I believe we are on track to reach there.
Q. How has the company scaled since the first screen became operational? If asked whether we are satisfied with the way we have expanded in the country, I would say yes. We are the third largest in terms of box office collections in the country. We have been consistently growing faster than competitors. We see huge growth potential in the country. We are here for the long term. We also have a strong pipeline of screens. But we are also dependent on the shopping centres becoming a reality. As of now, we operate through three brands—Cinepolis VIP for the luxury segment, Cinepolis for the premium segment and Fun Cinemas, which is in the affordable premium segment.
Q. What is the strategy for the next 100 screens? Our strategy is to be represented in the top 60 cities in the country. It includes metro, tier 1 and tier 2 cities. Places where we will expand include Mumbai, Delhi, Bengaluru, Hyderabad, Chennai, Thiruvananthapuram, Muzaffarpur, Guwahati, Bhubaneshwar and Kolkata.
Q. What is the current revenue which Cinepolis generates in India? India contributes ten percent of revenues and 11 percent of attendance to our global total. India is the second largest territory for Cinepolis in terms of attendance, after Mexico [65 percent]. Over the past five years, our revenues have grown at a CAGR of more than 30 percent in India.
Q. How much market share does that translate to? It is important to highlight that with these 303 screens within the multiplex arena, our market share is 15 per cent, ticket share 16 per cent and box office share is 18 per cent. Plus, on average, we have lesser seats than our competitors. Not because auditoriums are smaller, but because we offer more leg room. Average seat per auditorium is 400 for us, and 420 for competitors.
Q. Which are the strongest markets for Cinepolis in India? Those have to be Hyderabad and Bengaluru. We have a pretty strong presence in South India. Almost a third of our footfalls come from the South. The South Indian industry is quite developed. So the frequency of attendance in the South is higher than the frequency in the North or any other region. It is very interesting. Yes it has its challenges, but India is a great place to be in.
Q. Isn’t capping of ticket prices a hurdle in increasing revenues? It is definitely a challenge. We need to work with the local government to find an optimal solution to this…In our business, flexibility in pricing is very important, even within the same week. It is a part of the nature of our business.
Q. What are some of the challenges for a multinational cinema chain to operate in India? Well, it took us a lot of time to understand the particularities and complexities of this country. You cannot assume India is one territory. It is completely different operating in Punjab compared with, say, operating in Kerala; in every sense, from programming to government relationships to licences. We have faced the challenge of the pace of development of shopping centres in the past. But India is one of the highest consumers of cinema in the world. That coupled with a large population makes India an exciting and important market to be in.