The business of multiplexes

The business of multiplexes

Carnival Cinemas has taken the multiplex concept to tier 2 and 3 cities, changing the face of cinema viewing in these locations. But that’s not all. The company is aggressively looking to scale up and touch 3000 screens by 2018, through both organic and inorganic routes

S Meera

PV SUNIL, CEO, CARNIVAL

Cinema, next to, or on par with cricket, is the most important source of entertainment in our country today. As a result, the cinema viewing experience and technology have also been evolving. While on one hand theatres have better video, audio and seating arrangements, on the other, theatre complexes have become multiplexes, where more than just cinema is served. Restaurants, shopping and even day care facilities for parents to leave their children in, as they watch a movie complete the movie viewing experience today.

But while this seems to be the norm in the metros and large cities, it doesn’t hold true for the rest of the country, where old world cinema halls continue to be the sole means of entertainment. Realising this, Shrikant Bhasi, chairman of Mumbai-based Carnival Group ventured into cinema business in 2010 with the aim of opening multiplexes in Kerala and select tier II and tier III cities across the country. The first theatre with three screens came up in Anagamaly near Cochin (in Kerala). Seeing the tremendous response it received, the company then opened multiplexes in Tamil Nadu, Andhra Pradesh and Karnataka as well. Currently, it operates 24 screens in Kerala and plans to have around 60 screens more (in Kerala) by the year-end.

Acquiring to expand

“The vision of our group is to provide entertainment to those in smaller cities. But, to have good access to distributors, we need to have a presence in metros as well. Hence, in July 2014, we acquired HDIL’s multiplex chain Broadway with 33 screens,” explains P.V. Sunil, the CEO.

For the year 2014, the company had a vision of setting up 300 screens. And, to speed up the process, it acquired Broadway and Big Cinemas (Reliance), thus bringing 252 screens under its umbrella.  A third acquisition of Glitz Cinema of Stragaze Entertainment Pvt Ltd led Carnival to expand its number of screens to 354 across the country. “Consolidation is the trend at present. We plan to get aggressive in an organic way and open around 200 screens in Madhya Pradesh, Gujarat and Orissa,” he cites. The company is also looking for sites in upcoming malls across the country to achieve the group’s vision of setting up 1,000 screens by the next fiscal.

So, what determines an acquisition?  Typically, Carnival looks at their presence. For example, if they are present only in metros, it does not go ahead because its vision is to primarily reach out to the audience in smaller cities. “Second, we see their past records and do a background check, and then we see to it that there is a scope for improvement that would bring us more profits,” he adds. A major challenge in growing through acquisitions lies in integrating the acquired company, adopting their systems and software, and retaining the manpower “On an average, for each acquisition, we devote the first eight to ten months streamlining these processes,” he says. While the company started with 60 people at the first multiplex, it has now grown to over 4,500 employees across the country.

Beyond cinema

For Carnival, cinema experience is not just about good screens. It provides an entertainment zone for the families to enjoy a movie supplemented with good food and other activities. “We are now focusing more on end-to-end customer services and we are introducing pick up and drop services at our theatres,” explains Sunil. Such strategies have become crucial, especially in under-developed, yet fast emerging tier-2 and tier-3 cities.

With expansion, Carnival felt the need to have an experienced team so it roped in people with similar experience and retained people from the acquired companies. “We hold various activities to keep the team motivated as they are our strength,” he explains. Looking for talented and experienced people is an ongoing exercise. A centralised team in Mumbai supervises operations across the country.

Growing screens

Carnival group’s larger vision is to have 3,000 screens by 2018. Apart from acquiring screens and expanding into upcoming malls, Carnival is also planning to foray into Middle East and South Asian countries soon. “While expanding is one of the plans, we do not see growth only in terms of number of screens but also in terms of quality of services we provide, based on the response from the audience,” he adds. Three years from now, Carnival aims to be the market leader in India and acquire a sizeable share of the market abroad.

Currently, Carnival Group has funded its activities through a combination of debt and equity. However, going forward, it will be on the active lookout for external investments. “Content is what drives the entertainment industry. If the content is not good there will be no audience in theatres. Once content attracts audience, we must ensure that we give them a good cinema experience with world class facilities,” says Sunil. The company’s key growth driver is its willingness to serve the best to the audiences, as they deserve the best (It doesn’t differ in its gamut of services offered in metros and smaller cities). The other key drivers lie in arriving at the right price point (of tickets) for each movie release, showing good content and deciding on division of shows as a part of this strategy. In terms of growth optimisation, it seeks to maximise the F&B and advertising revenues, and keep the operational costs low.


WHAT NEXT?

Through organic growth, open around 200 screens in Madhya Pradesh, Gujarat and Orissa

Also look for sites in upcoming malls across the country to achieve the group’s vision of setting up 1,000 screens by the year end and 3,000 screens by 2018.

Foray into Middle East and south Asian countries

Big Cinemas Carnival Cinemas Debt and Equity Entertainment

Meera Srikant has been working with publishers and publications since 1993, writing and editing articles, features and stories across topics. She also blogs and writes poems, novels and short stories during leisure. Writing for The Smart CEO since 2010, she is also a classical dancer.