‘Avengers: Endgame’ Saves Multiplex Operators In A Quarter Of Bollywood Duds

The fictional superheroes who prevented the universe from vanishing turned out to be box office saviours for multiplexes in India.

If not for Avengers Endgame, India's two largest multiplex operators—PVR Ltd. and Inox Leisure Ltd.—would have had a dismal first quarter as star cast-driven Bollywood movies didn't live up to expectations. Tiger Shroff-starrer Student of the Year 2, and Kalank, with Alia Bhatt, Varun Dhawan, Sanjay Dutt and Madhuri Dixit, crashed at the box office, according to box-office collection numbers from trade analyst Taran Adarsh quoted by Emkay Global.

Salman Khan's Bharat failed to deliver to the extent it was expected, according to Rahul Jain, analyst at brokerage Yes Securities.

The fate of these big-banner projects not delivering numbers proves that the dynamics of the movie industry have changed, with audiences preferring content-rich movies over mega-starrers, he said.

That comes when multiplexes face a challenge from video-streaming services like Netflix and Amazon Prime Video. Thanks to the cheap data boom, Indians can now watch everything—from exclusive web series to movies—on their phones and televisions, making quality even more crucial.

While Bollywood's net box office collections dropped 2 percent in the quarter ended June, Hollywood numbers rose 39 percent because of Avengers: Endgame, Emkay Global said in a note.

Good performance by regional movies like Lucifer and Maharshi helped.

Avengers: Endgame was a big success and Bharat did quite well, and the quarter is ending with the success of Kabir Singh, Kamal Gianchandani, chief executive officer at PVR Ltd., said in an emailed response to BloombergQuint.

Depesh Kashyap, analyst at Equirus Capital, said in a note, that high advertising rates of Bharat may compensate multiplexes for the flattish ticket revenue growth despite the movie not meeting expectations. Ajay Devgan-starrer De De Pyaar De and Shahid Kapoor's Kabir Singh managed to strike a chord, he said. Still, the brokerage expects a flattish or a marginal decline in ticket revenue in the first quarter.

Here are earnings expectations from two brokerages:

Emkay

• Factors in a modest footfall increase of 6 percent for Inox Leisure Ltd. and PVR in FY20 due to high base of FY19.
• After a strong FY19, first quarter of FY20 did not see unexpected strong performance by any Bollywood movie.
• Hopes for some unexpected blockbusters in FY20, which should offset the high base.

Goldman Sachs

• Growth outlook for multiplexes remains fairly robust.
• Regulatory environment for multiplexes remains uncertain.

A subdued first quarter came after multiple successes in the three months through march. Simmba, Uri: The Surgical Strike and Gully Boy aided ticket sales of multiplexes.

PVR is optimistic about the July-September period. With the festival season setting in, the second half looks promising with a few releases from big-ticket Hindi and non-Hindi language entertainers, Gianchandani said.

Kashyap, however, is cautious. Big releases in the ongoing quarter must perform in line with forecasts to deliver growth as the base from last year is quite high. There are high expectations from Super 30, Mission Mangal and Spider-Man: Far From Home, he said.