Analyzing the Impact of Evolving Viewer Tastes on Indian Cinema, Single Screens, Multiplexes, and Entertainment Stocks
Source and Citation: Analysis based on the article “Not Theatrics, Meaningful Content to Drive Fortunes of Film Industry” by Rajesh Naidu, ET Bureau, published on Mar 18, 2024. (Naidu, 2024)
TLDR For This Article:
- Theatre footfalls fell 9% to 900 million in 2023 from 994 million in 2022. (Naidu, 2024)
- Gross box-office collections grew 15.3% for single screens and 13.7% for multiplexes. (Naidu, 2024)
- Southern films grossed ₹5,200 crore, while Hindi films collected ₹5,300 crore in 2023. (Naidu, 2024)
Analysis of this News for a Layman
Post-pandemic audience preferences are changing the Indian film industry. The Ficci-EY media and entertainment report shows declining theatre attendance and rising box-office revenue. 2024 (Naidu)
Theatre attendance fell 9% to 900 million in 2023 from 994 million in 2022. This decline is due to several factors, including the higher cost of movie tickets compared to streaming services and social media. The high Netflix viewership of the Hindi film “Animal” shows that audiences are now willing to wait for films to release on streaming platforms after their theatrical run.
Despite lower footfalls, gross box-office collections—ticket sales revenue before taxes—have increased. Multiplexes grew 13.7% and single screens 15.3%. In the years after the pandemic, the industry was still recovering, which contributed to this growth.
Single screens have grown gross box-office collections faster than multiplexes. This suggests theatregoers are more selective about what they watch. They will pay more for well-made, big-budget films with mass appeal or engaging mid-budget films, whether shown in single screens or multiplexes.
South Indian films’ success in Hindi is another trend. In 2023, southern films earned ₹5,200 crore, nearly matching Hindi films’ ₹5,300 crore. This suggests that Hindi filmgoers are accepting non-Hindi content as long as it’s entertaining.
The rise of streaming platforms has also influenced audience tastes. These platforms now host meaningful and niche content, previously reserved for multiplexes. Instead of a weekend tradition, watching a movie in a theatre is now based on its entertainment value.
Impact on Retail Investors
Retail investors should consider the following points when evaluating the impact of these trends on their investment decisions:
- Focus on content-driven production houses: Companies that consistently deliver engaging and entertaining content across various genres and languages may be better positioned to attract audiences to theatres and generate higher box-office collections.
- Diversification across platforms: Investing in companies with a presence in both theatrical and streaming platforms could help mitigate risks associated with the shifting audience preferences and provide exposure to the growth potential of both segments.
- Regional cinema’s rising prominence: The success of southern films in the Hindi-speaking market highlights the importance of regional cinema. Investors should consider companies with a strong regional presence and the ability to cater to diverse audience tastes.
- Long-term perspective: While short-term fluctuations in stock prices may occur based on the performance of individual films, investors should maintain a long-term outlook and focus on companies with a proven track record of delivering quality content and adapting to changing market dynamics.
- Macroeconomic factors: Investors should also consider the overall economic environment, consumer spending trends, and regulatory policies that may impact the entertainment industry as a whole.
Impact on Industries
The shifting audience preferences and the evolving landscape of the Indian film industry have implications for various related industries:
- Film production and distribution: Production houses and distributors that can consistently deliver engaging content across genres and languages are likely to benefit from the increased demand for quality entertainment. Those that rely heavily on star power or formulaic content may face challenges in attracting audiences to theatres.
- Multiplexes and single screens: While multiplexes have traditionally been associated with a premium viewing experience, the success of single screens in generating higher box-office collections suggests that content, rather than the venue, is becoming the primary driver of audience decisions. Both multiplexes and single screens will need to focus on providing a compelling cinematic experience and partnering with content creators to attract audiences.
- Streaming platforms: The growing popularity of streaming platforms as a destination for meaningful and niche content may lead to increased investment in original programming and exclusive digital releases. This could create new opportunities for content creators and talent in the industry.
- Television and cable networks: As audiences shift towards streaming platforms and selective theatre-going, traditional television and cable networks may face challenges in retaining viewership and advertising revenue. They will need to adapt their content strategies and explore synergies with digital platforms to remain relevant.
- Advertising and brand partnerships: The changing audience preferences may require brands to reassess their advertising strategies and partnerships in the entertainment industry. They may need to focus on collaborations with content creators that resonate with their target audiences across different platforms.
Long Term Benefits & Negatives
Long-term benefits:
- Increased focus on content quality and innovation, leading to a more diverse and engaging cinematic landscape.
- Growth opportunities for regional cinema and non-Hindi content, catering to a wider audience base.
- Potential for increased collaboration between theatrical and streaming platforms, creating a more integrated entertainment ecosystem.
Long-term negatives:
- Possible consolidation in the industry, with smaller players struggling to compete with larger, well-established production houses and platforms.
- Potential for increased piracy and unauthorized content sharing, as the demand for quality entertainment grows across platforms.
- Risk of homogenization of content, as creators may focus on tried-and-tested formulas to ensure box-office success, potentially limiting creative experimentation.
Short Term Benefits & Negative
Short-term benefits:
- Increased revenue for production houses and distributors that can deliver content that aligns with current audience preferences.
- Potential for higher ticket prices and improved profitability for theatres, as audiences are willing to pay more for quality entertainment.
- Growth opportunities for streaming platforms, as they continue to attract subscribers with a wide range of content offerings.
Short-term negatives:
- Volatility in box-office collections and stock prices of entertainment companies, as the success of individual films becomes more unpredictable.
- Challenges for theatres in attracting audiences consistently, given the increased competition from streaming platforms and the selective nature of theatre-going.
- Possible delays in film releases and production schedules due to the ongoing impact of the COVID-19 pandemic and any future disruptions.
Companies Potentially Affected by Shifting Audience Preferences in Indian Cinema
The article discusses changing audience preferences in the Indian film industry post-pandemic. Here’s a breakdown of how different companies might be affected:
Indian Companies That May Gain:
Production Companies with Strong Content Focus: Companies known for high-quality films, across languages, could benefit. Examples include:
- Nestlé India Ltd (NESTLE): They have a strong presence in the entertainment sector and produce quality content. A shift towards good content could benefit them.
- Ajay Devgn Ffilms Ltd (ADFL): Known for diverse and engaging content, they could see increased box office success.
- South Indian Production houses like Yash Raj Films, Sun TV Network (SUNTV): The article highlights the success of South Indian films. These companies could see continued growth.
Multiplex Chains with a Focus on Premium Experiences: Companies that offer a differentiated experience beyond just the movie, like:
- PVR Ltd (PVR)
- INOX Leisure Ltd (INOX): These companies could benefit if audiences prioritize a more luxurious cinema experience.
Indian Companies That May Lose:
- Production Companies Reliant on Star Power: Companies that focus on big-budget films with A-list actors, without strong scripts, could see a decline. It’s difficult to pinpoint specific companies due to the dynamic nature of the film industry, but the article suggests a move away from solely star-driven movies.
- Single Screens Reliant on Low-Budget Films: If audiences prioritize high-quality content, single screens that rely on a constant stream of low-budget movies may struggle.
Global Companies Potentially Affected:
- Hollywood Studios Reliant on Big-Budget Spectacle Films: The article suggests a preference for well-made content, not just big-budget effects. This could affect studios like:
- Walt Disney Company (DIS)
- Warner Bros. Discovery (WBD) if their films rely heavily on special effects over story.
Global Companies That May Gain:
- Streaming Services with a Strong Content Library: Companies like:
- Netflix (NFLX)
- Amazon Prime Video (AMZN) could benefit as audiences seek out high-quality content at home.
It’s important to note that these are potential effects based on the news article. The actual impact will depend on audience behavior, film quality across genres, and how companies adapt their strategies.