What should be the fair price of popcorn in the cinema-hall? If that is a facile question for a state government to ask, after nearly two decades of the multiplex revolution in urban India, the Maharashtra government certainly does not think so. Last week, it ruled that movie-goers need not fork out more than the MRP of any eatable they consume inside cinema theatres. The government has also “allowed” cine-goers to carry their “own eatables” inside multiplexes. The decision sent shares of multiplex operators tumbling, with PVR Ltd and INOX Leisure Ltd — the state’s two major multiplex chains — diving by 14.1 per cent and 14 per cent, respectively, on the NSE index.
The movie-going experience is not confined to what happens on the big screen. Cinema halls have modified their menus to the extent that many are at par with snack bars, even restaurants. The pleasures of movie-watching are many a time combined with a relaxed eating-out experience at the theatre. Over the years, the economics of multiplexes has come to reflect this changing culture. The prices of the food items in these complexes are usually higher than that at retail outlets. But much like in a restaurant or any other eatery, they have been a function of an economic negotiation between the buyer and the seller. Of course, like all economic negotiations, the price of food and drinks in cinema theatres has been a contentious issue. In April, the Bombay High Court ruled that the prices of eatables in theatres should be regulated. However, it is also true that this friction has never robbed multiplexes of patrons. Revenue from food and beverages constitutes the second largest source of earning for the owners of these cine-complexes, after box-office sales.
Pushing multiplexes to sell food products at cheaper prices could have a radical impact on their pricing dynamics. It could lead to cine-halls making tickets more expensive. The regulatory zeal could also have the unfortunate effect of pushing back the multiplex revolution in the country — one that flowered because the urban consumer wanted a change from dingy movie halls with uncomfortable seats, unhygienic food and toilets. According to a FICCI-KPMG Media and Entertainment Industry Report, there has been a 9 per cent increase in the number of screens in the past few years. But given the recent tendency of state governments to implement populist schemes, the Maharashtra government’s move could well be replicated in other states. The state government would do well to rethink the measure.
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