Restriction On Cinemas Could Lead To Irreparable Damage

The Multiplex Association of India (MAI) issued a statement on the Delhi government’s shut down on cinemas amid the spike in Covid-19 cases following the emergence of the Omicron variant. In an official release, MIA President Kamal Gianchandani said that the Delhi Government’s decision to shut down Cinemas in Delhi while enforcing the ‘yellow’ alert of the Graded Response Action Plan (GRAP) has caused massive uncertainty and could lead to irreparable damage for the Indian Film Industry.

"The period since March 2020 is undeniably the most challenging period faced by Indian cinemas in their long history. After being allowed to reopen, cinemas have already demonstrated an ability to operate safely for the public and employees via the usage of enhanced ventilation systems, enhanced hygiene, and other safety protocols. Not a single outbreak of Covid-19 anywhere around the world has been traced to a cinema", the statement read.

The MAI instead suggested alternate methods to counter the surge of cases by introducing 'double vaccination requirement' to enter theatres and going back to the seating capacity restriction of 50 per cent. "While we fully understand the need at Government’s end, to take necessary preventive measures, we would request that cinemas should get equal treatment with comparable industries and institutions. Instead of closing the cinemas, we would urge the Delhi Government to consider introducing a “double vaccination requirement” to enter cinemas, as is the case in some of the other states (including Maharashtra). Alternatively, the seating capacity restriction of 50% can be reintroduced at cinemas. We call on the Government to recognize the unique social, cultural and economic value of the Indian film industry, and to provide the support it so desperately needs to survive this unprecedented period", the notification read.

The MAI represents more than 11 cinema chains and operates more than 500 multiplexes across the country, with around 2,000 plus screens. It is a nationwide group of cinema operators that informs, educates and advocates on behalf of the cinema exhibition sector.

Karan Taurani, SVP – Research Analyst (Media, Internet & Consumer Discretionary), Elara Capital also agrees that the restrictions will have a negative impact on the consumer sentiment and adverse reaction for cinema/dine-in based players as they see the highest occupancy during the night, especially during festive (NyE and Christmas). "This will further create panic within the producers who will decide to yet again delay their release dates given the uncertainty on timings/restrictions. This will also delay the recovery path for exhibitors; we believe even if one state were to shut down cinemas, it will be a big negative as this is unlike a restaurant wherein few outlets can be open; and revenue loss for a particular state is a permanent loss," he comments. 

However, valuations will not breach or go below Mar’20 levels as the situation may be able to reverse also sharply; just as we have seen unlock post wave 2 was much faster as compared to wave 1 and given the low severity of the variant for now, similar could be the case for exhibitors. "Exhibitors also have a healthy cash balance post the capital raise rounds last year, can sustain for next 6M even if there is a complete shut down for cinemas for next 2-3M (highly unlikely for now)," adds Taurani.