While PVR Inox struggles, small-town cinemas are drawing crowds. Here's why

Mint

05-06-2025

Mumbai: On Sunday afternoons, the sprawling factories that make earthmovers, cars, heavy machinery and industrial goods in Chakan, near Pune, are largely empty. Gleaming yellow earthmovers, fresh off the assembly line, line the dusty roads.
This is Chakan's MIDC Phase-II, home to factories of the biggest auto and industrial manufacturers in India. And in the midst of the factories owned by Bajaj, Tata and Hyundai lies a strange white dome fronted by a low, grey façade. Enter and you're greeted with a velvety red carpet and double doors into a domed theatre with a curved screen and roughly 90 velvet seats.
This outlet of the Mumbai-headquartered Chhotu Maharaj theatre chain is showing the Marathi film Gulkand. Its 30-odd franchises span big cities such as Ahmedabad and Varanasi as well as smaller towns such as Titilagarh (Odisha), Naharlagun (Arunachal Pradesh) and Sihora (Madhya Pradesh).
Despite a historic high in 2023, India's films business is struggling, particularly in the Hindi language. Fewer films are releasing, and fewer still are recovering their investment. Multiplex chains are unable to draw audiences to what was once the primary pastime of the country: watching the week's release on the big screen. Exhibitors and filmmakers blame each other for the decline in footfalls.
But, in the middle of the doom, a clutch of exhibitors is betting on India's fascination with the big screen. They are opening theatres in smaller towns and cities in districts where no quality screens exist for tens and, sometimes, hundreds of kilometres.
Apart from Chhotu Maharaj, these include Miraj Cinemas, MovieMax, NY Cinemas and The Connplex, among others. Most are focusing their efforts on urban clusters in West, North and East India, where single screens have died but new establishments have failed to emerge.
What are India's small-town cinema chains doing right? And is there a lesson here for the market leaders of India's film and cinema industry?
For the masses
What was once a mass medium has increasingly become a premium experience to be enjoyed on occasion. Film producers and those in the cinema business say that instead of going out to watch films regularly, most Indians are hooked to online entertainment, such as the endless content on OTT platforms and videos on YouTube and Instagram.
Revenue from filmed entertainment fell in 2024 and became more concentrated: more than 70% of box office collections for the calendar year came from just 10 films, whereas more than 1,800 films had been released in theatres, as per consulting firm EY.
Cinema owners initially said this shift in consumer behaviour was temporary—a hangover from the strict lockdown mandates of the pandemic years. However, five years later, it is clear that catching the latest film on the big screen is no longer the primary entertainment option for the masses.
'Filmmaking has become more difficult, and it has become more arduous to get audiences to come into theatres in large numbers because there are so many other platforms," actor Shah Rukh Khan said at the Indian government's flagship WAVES event in Mumbai in May. 'I still believe that the call of the day is: a lot more theatres, simpler theatres, cheaper theatres, in smaller towns and cities, so that we can showcase Indian films in whichever language to a larger majority of Indians for cheaper rates."
Compared to about 90,000 in China and 40,000 in the US, India, with the world's largest population, has just under 10,000 big screens. Many districts, especially outside of southern India, have few or no options for people looking to catch the latest Friday release in a theatre that is high quality and affordable.
On one end sits PVR Inox, with average ticket prices of over ₹250 per person and pricey snacks, but a top-notch experience. On the other end are single-screen and local theatres, often poorly maintained and unlikely to run most of the films released in the country, including Hollywood imports and 3D or IMAX format titles.
This is the gap that small-town and affordable movie theatre chains are looking to plug.
Consider NY Cinemas, a small-town affordable multiplex chain co-owned by Hindi film actor Ajay Devgn. The company launched operations in 2017 with four cities in Uttar Pradesh that lacked a top-quality multiplex: Kanpur, Ghazipur, Hapur and Raebareli. This is because the state government offered tax incentives and rebates to cinema chain owners willing to open screens in areas earmarked for entertainment facilities. 'We revived these former cinemas then (by opening an NY Cinema) and they are all still profitable centres today," Rajeev Sharma, group chief executive of ADF Group, which owns NY Cinemas, told Mint in an interview.
Today, the multiplex chain has spread across smaller towns and tier-II and III cities in North and West India.
Others, such as Chhotu Maharaj in Chakan's MIDC industrial area, offer a more standardized single-screen experience, with (relatively) clean facilities, air conditioning and cheap snacks, advertised as a 'dine-in' experience.
he Connplex, another chain based in Gujarat, calls itself a 'miniplex' with smaller theatres and fewer seats per screen compared to larger multiplex chains such as PVR Inox. What's more, these theatres can double up as venues for other events. The miniplex chain is planning an SME IPO.
Apart from setting up shop in under-served cities and towns, these cinema chains aim to offer a premium movie-viewing experience at par with national chains like PVR Inox, at ticket and food prices anywhere between 30% and 50% lower. In fiscal year 2025 (FY25), the average ticket price for PVR Inox was ₹259, unchanged from the year before but up from ₹233 in FY23. Ticket prices in chains such as Chhotu Maharaj, MovieMax and Miraj Cinemas are often below ₹200 per person, even for movies in high demand on the weekends.
PVR Inox's struggles
Despite the shortage of theatres, why are cinema chain owners, especially the market leader, struggling? Much of the trouble lies in the high cost of operations and uncertainty in the business of films.
'National chains are not profitable in India right now because the capex (capital expenditure) required is huge," The Connplex's co-founder, Rahul Dhyani, told Mint in an interview. 'The cost (of setting up a cinema) can go anywhere between ₹8-40 crore and ticket prices of ₹200 will not sustain the cinema. The content pipeline is also uncertain, and even if the content comes, it may not be good," he added.
The past fiscal year has been an exceedingly difficult one for PVR Inox. In FY25, it reported a 5% drop in total income to ₹5,875 crore while losses after tax grew more than 8x to ₹280.9 crore. The company's management blamed the unreliable supply of films.
'Performance of Bollywood and Hollywood films was below expectations, leading to a 9% drop in the overall gross box office collection of the company. There were 14% fewer releases, no major superstar films, and several postponements," PVR Inox managing director Ajay Bijli said in an investor call in May.
However, the company's numbers show the deeper problem: moviegoers are simply not showing up. Its average occupancy rate—the number of seats available across theatres that were occupied—was just 16% for FY25. In contrast, this number for PVR (pre-merger) stood at over 36% in 2019, while it was at 28% for Inox (the two companies merged in 2023).
Last fiscal year, sales of movie tickets, food and beverages, and ad inventory all fell across the board after performing well the previous year. Meanwhile, PVR Inox's average ticket price remains high at ₹259, although it did not change from the previous year. It has also been selling movie tickets for ₹99 each on Tuesdays as part of a weekly offer.
To an extent, PVR Inox's troubles stem from the business model it has built for itself. Positioned as a premium experience, it occupies some of India's priciest locations, including large malls in the top three-four metros of the country. This means it struggles to keep up with rent, utilities and common area maintenance costs.
In contrast, its small-town focused regional rivals have found ways to bring down their upfront costs and diversify income streams.
First, most of these operators are expanding via franchisee, offering to (sometimes) operate the location and agreeing to a revenue share. This allows companies such as The Connplex to cut the capex required on their part at a new location significantly.
'The landing cost of one of our cinemas is ₹1.5-2 crore, compared to the average of ₹8-10 crore for a national multiplex chain," The Connplex's Dhyani said. 'So, we get a return on our (upfront) investment in 18-24 months."
In real estate, landing cost implies the total investment made upfront in setting up a shop, cinema or mall.
Industry executives that Mint spoke to said a larger, premium cinema located in a top-of-the-line mall in a large metro can take up to five years to break even. What helps, said Dhyani, is making the cinemas smaller and ready for uses other than screening movies. 'We open 7,000-10,000 sq. ft cinemas with 75-100 seats. These auditoriums can be booked for live sports screenings, comedy shows, even corporate events," he added.
In contrast, auditoriums in a PVR Inox often accommodate up to 250-300 seats, even more in some locations. While the company has been hosting live screenings of cricket matches and allows private screenings of films, it is not generally open to other forms of entertainment.
Newer rivals are trying to ditch the traditional multiplex model for an all-encompassing entertainment centre with multipurpose theatres. Chowk, for example, is a to-be launched chain of entertainment centres in North India that combines theatres with sports facilities and banquet halls, eschewing non-revenue generating areas like a cinema lobby. 'This increases the revenue generating area of the entire project," founder Nilesh Kumar said. 'We will use prefabricated structures, and the estimated landing cost will be ₹20 crore, much lower than that of a mall."
The need to cut fixed costs is not lost on PVR Inox. The management told investors in the earnings call cited earlier that it was aggressively controlling them and planned to open new screens in a 'capex-light model".
Small-town limits
However, industry executives say there is a limit to the small-town business opportunity.
'In smaller cities, there is lower disposable income and fewer places to go to with family and friends in a hygienic and secure environment," NY Cinemas' Sharma said. But fewer people in these towns will have three-four hours to kill and spontaneously decide to spend it catching a movie. These outings are usually planned with the family.
Sharma added that the best way for an affordable cinema in a small town to make money is to ensure people in the area make it a habit to walk in and watch movies.
'We have also gone to towns with just a population of 200,000 and we have run such locations profitably," he said. 'In our kind of business, we run a show even if one-two people come in to watch because people should get used to coming to the cinema anytime."
Yet, India's film industry, especially in the Hindi language, is in dire need of more screens in as many cities and towns as possible. As films lose their audience to online entertainment, a clear divide has cropped up. On one end are 'big budget' films, usually a mix of action, fantasy and mythology, and fronted by a big star designed for the big screen. On the other end are 'OTT films', often comedies or dramas, with no big star, which are deemed too small in stature to draw audiences out of their homes. But, as streaming platforms cut their content costs and consolidate among themselves, they are buying fewer such films. Consequently, fewer films are getting made, and those that release in theatres have massive pressure to perform at the box office.
Smaller, affordable and widely available theatres can help set this right.
'We have very few theatres for the size of our country," Bollywood actor Aamir Khan said at the government's WAVES Summit in May, echoing Shah Rukh Khan. 'Our biggest hits, over the years, have had a footfall of 30-35 million people. In a country which is recognised as a film-loving country, only 2% of the population watches our biggest hits in theatres. Where is the remaining 98% watching?"