EXCLUSIVE: Telugu Industry Designs New Roadmaps For Exhibition Sector, Ticket Pricing And All Details INSIDE

Media Quick View (Exhibitors) – Structural changes proposed in south cinema – Neutral impact for multiplexes for now

What are these proposals made by Telugu Producer Guild ?

As per Telugu Producers Guild , Telugu movie producers will be halting film shoots from 1st Aug,2022, due to issue of high fees
being paid to stars/actors in South in the recent past, which has led to lower ROI (return on investment) for the former
(producers). They have also proposed a smaller release window (4 week) and a large window (8 week) for small/medium and
large budget films respectively; pre COVID release windows were same for all type of films (6-8 weeks). Another proposal is on
ticket prices, as they are proposing differential ticket prices for small/medium/large budget regional films in the range of INR 125/175/300 for multiplexes; ticket price range for single screens are ~30% lower vs multiplexes.

Why were these proposals made ?

The South India market is very sensitive to ticket prices and that’s one of the reasons single screens drive 70-75% of Box Office
revenue there; hike in ticket prices over last one year in many states have augured well for large budget regional content like
KGF, Pushpa and RRR; however, it has hampered prospects for small/medium budget films, as consumers are not willing to
experiment and view the latter on high ticket prices. Thus, the Producer Guild has taken this decision to treat small/medium
budget films differently (lower ticket prices and lower release window), as their footfalls have declined anywhere in the range
of 60%-65% vs pre COVID, as compared to large budget regional films whose footfalls are down 20%-25% vs pre COVID.

What is the potential size of Telangana/AP state?

AP/Telangana state is the largest market in India, having a pan India Box Office revenue share of 14% (including Hindi films)
and a screen share of 19% (including single screens). The above proposals are only for Telugu cinema (AP/Telangana), which
contributes one third of Box Office revenue for regional market; it contributes ~12-14% of overall Box Office revenue market.
Within multiplexes , PVR/INOL both combined have a Box Office market share of ~12-14% in this market (Telugu); in terms of
screen share – AP/Telangana account for 3%/21% screen share for PVR/Inox both put together.

Impact analysis of above announcement

Regional cinema has been very critical for exhibitor success in the recent past due to multiple large films doing well in the dubbed version (Pushpa, KGF, RRR); outperformance of regional content has also led to stiff competition for Hindi content, which too has negatively impacted collections. In terms of Q1FY23 alone, regional dubbed films contributed 55% of total Hindi Box Office (this was more like one off as both large ticket regional films released in Q1 and Hindi films reported a dismal performance), hence they remain to be extremely important; we believe regional dubbed content will continue to contribute ~15-20% of Hindi Box Office every quarter over medium to long term, due to acceptance from North/West India states. We hope the shooting issues are resolved soon, as prolonged delays in shoots will have a negative impact on exhibitor content
pipeline. In terms of release window, we believe there is no impact of the same as large budget films are ones which do well in
Hindi circuit, whose Window is proposed to remain same at 8 weeks; in terms of ticket prices too, cap for ticket price on large
budget films is INR 295, which is higher than multiplex’ current ATP (INR 225-250). PVR/INOL have reported ATP growth of 15-
20% vs pre COVID levels; relaxation of ticket price cap in South is also one of the reasons for the same. We will monitor the situation for the film shooting halt over near term; maintain our long-term positive stance on exhibitors despite expectation of near-term weakness due to lower Hindi Box Office revenue (weak Q2FY23).

Exhibit -1 – ATP across South states post change in recent past

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