India’s top multiplex chains bank on festive season to bring cheer back

Inox and PVR, the top multiplex operators in the country who reported results this week, both blamed a lack of good content for lackluster second-quarter performance, and said they are betting on the third quarter to put them back on a growth track.

“Q3 is crucial (for the companies),” said Karan Taurani, an analyst at Elara Capital.

Audiences have traditionally flocked to theatres during India’s busy festival season, which culminates in the Hindu festival of lights, Diwali, which will be celebrated on Monday.

Producers save the biggest films of the year for a Diwali release, and the industry expects them to do well during this period, but it may not be quite as festive this year.

“Even the Q3 releases, which happen to take place during the festive season, are somewhat muted and underwhelming in the response they are getting,” film producer and trade analyst Girish Johar said.

Occupancy rates at Inox were at 17% for the quarter, with PVR at 24%, analysts at domestic brokerage and research firm Nirmal Bang said, blaming the lackluster attendance on “poor consumer connect with the content released in the second quarter.”

In the first quarter, Inox reported a 29% occupancy rate, while PVR said its rate was 33.6% in the same period.

The two chains are set to merge in an all-stock deal and become the country’s largest exhibition company with 1,546 screens across 109 cities.

“We all know that occupancy is related to the content which we are showing. And we have some major challenges with the content in Q2,” Inox Chief Executive Alok Tandon said in an earnings call on Wednesday.

In addition, the rise of streaming services like Netflix and Amazon Prime during the COVID pandemic has combined with growing Bollywood fatigue among younger generations who view many of its movies as outdated and unfashionable.

“Ram Setu” (The Bridge of Lord Ram) and “Thank God” are the two main Bollywood releases scheduled for next week, both starring actors who have proven to be a hit at the box office in the past.