Movies are not Affordable Anymore… Blame the Popcorn!

• The Cost Conundrum

One of the primary reasons for the surge in F&B prices is the significant increase in operational costs associated with running multiplexes. According to Ajay Bijli, Chairman of PVR, the transition from single-screen theatres to multiplexes has introduced a host of new expenses. These include multiple projection rooms, advanced sound systems and fully air-conditioned foyers, all of which have increased operational costs by four to six times compared to the old single-screen setups. To cover these escalating costs, multiplexes have turned to their F&B offerings as a critical profit centre.

• The Evolution of the Movie-Going Experience

The movie-going experience has also been significantly redefined in the recent years. The simple pleasures of popcorn and Coco-Cola have given way to gourmet offerings like sushi, pizza and mezze platters, all of which come with a premium price tag. It’s no longer just about providing food for modern multiplexes; it’s about selling an upscale experience. Leading players like PVR Inox have invested heavily in upgrading their F&B offerings to cater to a more discerning audience that is willing to pay for these luxuries. The strategy here is clear: if you can offer something unique and luxurious, customers will be more willing to part with their money.

• A Calculated Gamble

While this strategy of inflating F&B prices has undoubtedly drawn criticism, it is a calculated gamble by cinema chains. They are banking on the idea that the enhanced movie-going experience—coupled with the exclusivity of the food offerings—will justify the higher prices in the eyes of consumers. So far, this gamble seems to be paying off, as evidenced by the growth in F&B revenues.

However, this strategy is not without its risks. As more consumers become disillusioned with the high costs associated with a night out at the movies, there is a growing threat that they might opt for more affordable home entertainment options. The success of this strategy will ultimately depend on the willingness of moviegoers to continue paying a premium for the experience that multiplexes offer. If they do, then the era of high-priced popcorn and cola is here to stay. If not, multiplexes might have to rethink their approach to keep the crowds coming in.

Do Multiplexes really have the Upper Hand?

The rising F&B prices in Indian multiplexes have become a hot topic of debate among moviegoers. While it’s easy to label these prices as simply exorbitant, a closer look reveals a host of factors that have driven cinema chains like PVR Inox to adopt this pricing strategy. In short, there’s a method to this madness.

• Necessary Legal Backing

In 2023, the Supreme Court of India ruled that cinema halls can set their own terms and conditions regarding the sale of food and beverages within their premises. This ruling effectively gives multiplexes the autonomy to price their F&B offerings as they see fit, without the need to adhere to market norms outside their doors. This legal protection has emboldened cinema owners to maximise their profits from concession stands, knowing that their control over this revenue stream is firmly backed by the judiciary.

• The Shift from Single Screens to Multiplexes

Over the years, the Indian cinema landscape has seamlessly transitioned from single screens to multiplexes. This has not only changed the way movies are watched but also how the business operates. Multiplexes come with much higher operational costs compared to their single-screen predecessors. Ajay Bijli, the Chairman of PVR,

• Changing Consumer Behaviours

The modern moviegoer’s expectations have evolved, with many now seeking a more luxurious and comprehensive experience when they visit the cinema. Thus, multiplexes need to offer more than just the traditional popcorn and soda—upgrade to gourmet meals & sushi—to maintain footfalls. Likewise, customers are willing to pay a premium for these enhanced offerings, encouraging multiplexes to further capitalise on this revenue stream.

Moreover, multi-screen theatres have cleverly leveraged their monopoly within the cinema environment to drive up prices. Once inside, customers have no choice but to purchase food and beverages at the prices set by the cinema, as outside food is strictly prohibited. This lack of competition allows cinema chains to charge higher prices without the fear of losing customers to alternative vendors.

• The Influence of Operational Challenges

Myriad operational challenges have further reinforced this strategy. Multiplexes often outsource their food stalls to third-party contractors who pay high fees for the privilege of operating within the cinema. These contractors, in turn, pass on these costs to consumers through higher prices. This outsourcing model, while beneficial for multiplexes in terms of guaranteed income, contributes to the overall inflation of F&B prices.

• Growing Pressure from OTT Platforms

Finally, the growing competition from over-the-top (OTT) platforms like Netflix, Amazon Prime and Disney+ Hotstar has also contributed to this end. With the rise of streaming services offering a wide array of content at a fraction of the cost of a movie ticket, multiplexes have had to rethink their value proposition. By enhancing the in-theatre experience through premium F&B offerings, multiplexes aim to differentiate themselves from OTT platforms and justify the higher costs of a night out at the movies.

While there are several factors that have given the cinema halls the upper hand, it remains to be seen whether this will continue to be the case for long.

To Go or Not to Go to the movies, that is the Question

There’s no denying that the sticker shock at the concession stand can put a damper on the movie magic. A tweet comparing the price of popcorn to an entire month’s OTT subscription went viral last year, sparking widespread debate about whether movie nights have become a luxury few can afford. The impact of these inflated prices on the movie-going experience is multifaceted, affecting everything from attendance rates to the overall enjoyment of a film.

• A Pricey Outing for Families

For many Indian families, a trip to the cinema has traditionally been an affordable and enjoyable way to spend time together. However, with the current pricing trends, a simple movie night can quickly turn into a costly affair. The price of snacks and drinks at multiplexes now often exceeds the cost of the movie ticket itself, with items like popcorn and soft drinks commanding premium prices. For instance, a tub of popcorn and a soft drink can set a family back by over ₹800. This steep pricing is particularly burdensome for families with children, who often expect a full cinema experience, complete with snacks and drinks.

The impact of these prices is clear: many families are opting out of purchasing food at the cinema altogether, or worse, choosing to stay home and watch movies on streaming platforms where the cost is much more manageable. This shift not only affects the family’s enjoyment of the movie but also contributes to a broader trend of declining cinema attendance, particularly among middle-class consumers who are most sensitive to price increases.

• The Luxury Experience: A Double-Edged Sword

Multiplexes like PVR Inox have justified their high F&B prices by positioning themselves as providers of a luxury movie-going experience. This involves offering gourmet food options, such as sushi, pizzas and specialty beverages as well as creating exclusive product offerings like offerings such as PVR Gold, PVR Director’s Cut, and INOX Insignia, which are all meant to enhance the experience of watching a film. While this appeals to a certain segment of the audience, it also alienates a large portion of traditional moviegoers who find these prices unjustifiable.

The emphasis on luxury has turned what was once a casual outing into an event that feels exclusive and, for many, financially out of reach. The availability of high-end food and beverages may improve the experience for those who can afford it, but this could also potentially alienate the customers who once formed the backbone of the theatre business—families and casual moviegoers.

Final Thoughts

While the soaring F&B prices in Indian multiplexes are certainly a cause for concern, they are not necessarily the beginning of the end. Instead, they are part of a larger, ongoing transformation in the way we consume entertainment. And the problem in hand can be split into two parts: future of multiplexes & success of this strategy in particular.

The future of multiplexes will depend on their ability to adapt to changing consumer preferences, economic realities, and technological advancements. If they can strike the right balance, they may continue to play a significant role in the entertainment landscape for years to come. If not, they risk becoming relics of a bygone era, overshadowed by the convenience and affordability of home-entertainment options.

The success of the pricing strategy in the long term will, once again, depend on multiplexes finding the right balance. While luxury experiences can continue to be a significant revenue driver, they cannot be the only focus. Multiplexes will need to ensure that they also offer affordable options that cater to a broader audience, preserving the inclusivity that has traditionally been a hallmark of the cinema experience.