PVR, Inox Stare At Losses As Star-Studded Bollywood Films Fail To Shine At Box Office

The underperformance of Bollywood films this year is likely to negatively impact the revenue of multiplex operators such as PVR and Inox Leisure, brokerage firm Emkay said in a recent report.

Poor reviews and subpar content have resulted in most movies not seeing any significant collections beyond the first week of release, the report titled Bollywood blockbuster performance concerning, authored by analyst Naval Seth, revealed. 

Following this, Emkay has revised revenue estimates downwards by 11-12 per cent for PVR and Inox after factoring in the weak second quarter box office performance. The downgrade came on the back of lower footfall in the second quarter of the current fiscal along with a revision in the average ticket price and spending per head.

But what is driving the audience away from Bollywood films, even the ones with their beloved stars?

Content Trumps Star Power

Films of Bollywood stars have been witnessing weak first-day and weekend collections post-Covid. The jolt of the poor performance of Hindi films is clear in instances like actor Aamir Khan reportedly deciding to forgo his fees for Laal Singh Chaddha after the film bombed at the box office. 

Movies getting mixed to negative reviews from film critics and the adoption of over-the-top (OTT) platforms after Covid has impacted footfall in multiplexes, Emkay noted.  

The content of movies has taken precedence over star power in recent times. Earlier, movies with weak content but backed with star power did well but that seems to have changed now, the report observed. Weak content is also likely to adversely affect advertisement revenue recovery for multiplexes, it added.

“Historically, Bollywood films have seen decent collections even when the content was weak, given the strong fan following of superstars. That seems to have changed with time, with content now being the primary driver. Most movies released in the last 2-3 quarters have gotten mixed to negative critic reviews, indicating that weak content is the primary factor for the poor performance. In the past as well, there were instances where Bollywood underperformed for a couple of quarters before bouncing back, which makes us believe that it would be repeated this time as well,” Emkay said.  

If Bollywood content remains subpar, the audience's willingness to visit multiplexes might remain muted, resulting in a downward revision to the estimates, the Emkay report said. 

Rise Of Regional Cinema

While Hindi movies are struggling to grab eyeballs, it is regional cinema that has been steering the box office collections post-Covid. Most of it can be credited to the stellar performance of two regional films—RRR and KGF Chapter 2. Not only did these films do well in their respective states, but they also managed to cumulatively collect Rs 630 crore in Hindi, a record for regional films, the report said.

“While the strong collections of these films can also be attributed to the past track record of the filmmaker (Baahubali) and the popularity of the first part (KGF - Chapter 1), the performance of movies like Pushpa in the Hindi hinterland indicates that customer preferences are evolving,” Emkay noted.  

Regional content with positive and strong reviews has received acceptance from Hindi-speaking markets but it may not sustain as Bollywood would remain the mainstay for collections in the non-South markets, the report stated. 

“We believe that a turnaround in Bollywood’s fortunes is critical for sustaining box-office collection growth, as the performance of regional movies (South and non-South) beyond their core markets is generally sporadic in nature,” it said. 

The brokerage has a buy call on both PVR and Inox Leisure shares for target prices of Rs 2,340 and Rs 695 each, respectively.