Originally opened as the Eltinge 42nd Street Theatre, AMC Empire 25 situated in the heart of New York City’s Times Square, currently has 25 screens and exhibits the latest film releases from all across the world. Given its proximity to my office in the adjacent Hell’s Kitchen area, this theatre has been my go-to place to catch the latest Bollywood releases. Each time, I can’t help but be struck by its regal façade and complementary lights, which make you feel as if you are about to watch an expensive Broadway show, instead of a $15 film on a 70mm screen. It’s like the show has already begun and you haven’t even entered the theatre yet, let alone your screen, to be bombarded by the commercials that precede your movie experience.
American Multi-Cinema, or AMC, is the largest movie theatre chain in the world and in the United States. In all its theatres, you will find the usual amenities, food offerings, and if you were not smart enough to book tickets online in advance, long queues that will make you miss the trailers. AMC Empire 25 is the most unique in my opinion, as it has kept intact theatre architect Thomas Lamb’s creation, while it continues to fulfil its corporate ambition. Sometimes, I cannot help but wonder if a similar model would work in India, a land of billion-plus movie buffs. The more I think about it, the more I feel positive that while it wouldn’t solve all of Indian film’s industry problems, it would at least be the beginning of a positive change.
It is not unknown that multiplexes have forced the shuttering of thousands of single screens across the country.
Struggling to keep up with the required expenditure as their customers flock to the shiny new multiplex in town, the number of single screen theatres in India has reduced from almost 10,000 in 2009 to 6,000 by the end of 2015.
While this is still almost three times as much as the multiplex count, more single screens are expected to shutter down by 2020. The story of corporate giants eating away the livelihoods of small business owners is, by this point, a cliché.
But what if the two could come together and provide something completely new to audiences?
In investment banking, the concept of joint ventures has become very popular. Simply put, a joint venture (JV) is a business entity formed with the purpose of gaining from the other party’s technological expertise, geographical predominance and resources that a participating firm may have exclusive access to. The JV may be constituted of two or more parties, who retain an ownership stake based on the amount of resources they would be contributing and the benefits that they would be deriving from such a partnership. The entities retain the profits generated or bear the losses, again determined by how much of the JV they own. This partnership enables the participating firms to gain access to certain technologies and geographies, which they otherwise would have been unable to do. Aside of the JV, the parties continue to operate independently. The question here is, would the JV business model work between multiplexes and small screens?
According to a September 2016 Deloitte report, India’s screen penetration is only 6 per million, compared to 23 per million in China and 126 per million in the United States.
To put things in perspective, the Indian film industry produces almost 2,000 films a year – the highest globally; United States produces only about 700 films a year. As the rise of shopping malls in metropolitan Indian cities reaches its saturation, there is limited availability for multiplexes to expand any further in the big cities. In smaller Indian cities, infrastructural development is either completely lacking, or is coming up very slowly. This is a key impediment towards addition of screens there.
In such a scenario, the JV model could be attractive to both: the multiplex owners looking to expand but hindered by infrastructure unavailability, and the small screen owners who have the basic infrastructure in place, but are struggling to maintain it.
The joint venture model is more feasible than the outright acquisition of small screen theatres, as the larger corporations will not have to deviate from their business model, nor have to undertake a huge expenditure to turn the single screen into a multiplex.
Adding 3 or more screens could cost as much as Rs 25 million, an unnecessary expenditure in my opinion in smaller towns, where space is usually lacking and maintenance expenditures could be extremely high in the absence of low cost power. A full renovation of an existing single screen theatre, that restores the structure of the old theatre while providing a comfortable move experience should help bring the movie-enthusiasts back to the single screens, but under the banner of a known multiplex.
For many small-town residents, cinema is the only form of entertainment, and movie experience emulating the essential elements of the multiplex model, while retaining the old-time charm of single screens, should attract movie fans and hopefully spoil them for pirated movies.
I’m glad that its not just the new multiplex, but also the newly renovated former single screen theatres that provide my parents enough options to enjoy a movie every week, without worrying about getting an insect-bite. When my dad describes the corner of the theatre, where he would sometimes bunk school and watch a movie during his childhood, I am hopeful that single screens modernise, yet retain their charm, and more film buffs are able to reminisce their childhood movie experiences.
(Saumya Swaroop is an Investment Banker based in New York and in her spare time, loves to apply modern finance in unconventional fields.)