Tax and multiplexes make India’s single-screen cinemas unviable
In the heart of south Mumbai stands the historic Liberty cinema, which in its glory days attracted the city’s elite in droves as they flocked to see the latest Bollywood releases.
Housed in an impressive art deco building, with interiors of thick red carpets and teak and cedar wood, the cinema, which first opened in 1949, stopped regular screening of Hindi films in October 2012.
As a cinema with a single screen, it is one of the victims in Mumbai, and wider India, of the rise of modern multiplex venues in the country, making it increasingly difficult for them to survive.
“With the advent of multiplexes and because of taxation … it has become unviable,” says Nazir Hoosein, 73, the owner of Liberty. His late father, Habib Hoosein, had built the cinema. Single-screen cinemas “are closing down left, right and centre”, he says. “The writing is on the wall. We’ll be all right because we’re changing direction.” Mr Hoosein is passionate about the preservation of the historic venue and he has changed tack to host film festivals, plays and stand-up comedy acts, which he believes will “eventually” make it profitable again.
In its last years as a regular cinema, profitability was unattainable, he explains, as modern multiplex cinemas – with plush seats and a wide range of food on offer, often housed in shopping malls – became the venue of choice for the upmarket cinema-goers it used to attract.
“I can put it to you very simply: my daughter would go to a multiplex; my driver’s daughter would come here because we were charging between 100 (Dh6) to 150 rupees and a multiplex is twice that amount as a minimum,” Mr Hoosein says.
On top of that, high taxes of 45 per cent in the state of Maharashtra are eating into revenues. Multiplexes were given a five-year tax holiday on this duty, Mr Hoosein explains.
“In this day and age, 45 per cent is too high because it’s 45 per cent of your turnover. What’s left goes to the man who made the film, it goes to the man who distributes the film, and it goes to the person like me who exhibits the film, so what we got at the end of the day was a peanut, and this is an expensive cinema to maintain.”
Figures from the Film Federation of India published show that the number of single-screen cinemas in the country fell from 13,000 to about 10,000 over a five-period to 2012. They are continuing to shut down.
“Single screens continue to face challenging times with many shutting down in 2013,” according to a recent report by KPMG and the Federation of Indian Chambers of Commerce and Industry. “Players are making attempts to compete with multiplexes by improving the movie-watching experience. Most players are making renovations around improving technology systems, seating and air conditioning, parking spaces, quality of food and beverages.”
Just a few weeks ago, the New Empire cinema, another historic Art Deco showcase in Mumbai, closed down because of dwindling business and heavy losses.
Nearby, Hasmukh Mota, is the manager of the New Excelsior single-screen cinema. It has invested in digital technology and has an enormous curved screen. But Mr Mota explains the cinema, which charges between 80 and 150 rupees and often only sells about 5 per cent of its 1,101 seats for each screening, is loss-making.
“Business was very good until around 2000,” Mr Mota says. “There used to be large queues.” He explains that archaic laws in Mumbai mean that such cinemas are in some cases not allowed to close down and be repurposed, for example, as retail, because the land was originally awarded on the condition that it would be used for a cinema.
“Otherwise, most of the single-screens in Mumbai would close down,” he says.
The Metro Cinema in Mumbai, a single-screen venue which opened in 1938, closed in 2005 and then was renovated to become a multiplex with six screens, now boasting large reclining seats, live cooking stations, and the option of having food and drink delivered to the viewer’s seat.
Multiplex cinema operators explain that cinema-goers are becoming more demanding and that the growth of the economy is fuelling demand for their growth across the country.
“Effectively the new age cinemas are coming up and the old age cinemas are giving way. It’s more like a life cycle process for any product,” says Pramod Arora, the group president of PVR, one of India’s biggest chains of multiplex cinemas, which plans to expand by between 60 and 90 screens a year in the country over the next three years.
“The product comes up in a new avatar. In terms of cinemas, many revolutions have happened in the industry which the single screens cannot adapt to. If you look at a single-screen cinema, it does not offer you any choice. Because of the economic constraints, because it does not offer any choice and you do not have many consumers coming to them, they are not able to afford any maintenance and they’re more of a safety and security hazard in most of the places they exist today.”
He adds that the use of real estate for single-screen cinemas simply does not seem to be viable in a country where land is hard to come by in its major cities.
“Anybody who owns a single screen cinema does realise today that the real estate he is sitting on is much more dearer than what he is able to make from single screen cinemas.”
In the Grant Road area of Mumbai, there are a number of shabby old single-screen cinemas, which show old Hindi films using film reels and charge prices between 10 and 25 rupees, mainly attracting labourers.
Abdul Rehman, the assistant manager of one of these, Alfred Talkies, says that the venue – originally built as a theatre – barely attracts 100 people to each screening of a film, although it has a capacity of 900 seats.
Multiplexes and the growth of television and the widespread availability of DVDs and movies on smartphones are among the factors behind the decline, he says.
He adds that the business is running at a “total loss” and the government should give such cinemas a tax break because they are “catering to the lower segment of the market”.
“We are at a dying stage,” Mr Rehman says.
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Updated: May 3, 2014 04:00 AM