Multiplex chains renegotiate rentals, capex terms as business dives

livemint.com:

The cinema business model was fairly straighforward, before covid and streaming platforms upended it: multiplexes would lease a large space in a mall on rent, build theatres and screen movies. Elections and cricket extravaganza IPL have further complicated the movie business, prompting multiplexes to rethink their strategy. Multiplex chains that have seen their business hit new lows over the past few months, with big Hindi language releases having reduced to a trickle and few hits in Hollywood and other local languages such as Tamil or Telugu, are trying to convince mall developers to agree to a partnership model where they can co-invest in new theatres.

Further, revenue terms are being renegotiated. Instead of lease rent, theatre chains want to share revenue based on how well a film does. Further, while some properties, signed a couple of years ago, are coming up as planned, others are waiting for the business to improve.

“The general terms that chains are asking for, given the current state of the business, are partnership models where they (multiplexes) can co-invest in cinemas along with developers and a certain portion of the capital expenditure is demanded upfront. Multiplexes are also asking for costs of lobby finishing or seats, in some cases," Anuj Kejriwal, CEO and managing director, ANAROCK Retail, said. Kejriwal added that several properties are not getting signed unless developers feel the locations are great and the overall rents have dipped by 15-30% over the past six months.