As Akshay Kumar’s Bell Bottom hits cinema, Elara Capital predicts 50% recovery in a few months but ad revenue to take the longest to recover

• After 18 months of dry spell, Akshay Kumar’s Bell Bottom is all set to hit the theatres tomorrow.
• Elara Capital shares what this return of movies could mean for the cinema industry.

Due to the pandemic, India’s cinema industry has suffered through a severe drought for more than 18 months now. Bollywood movies like Bhuj: The Pride of India, Sheershah, Toofan and Mimi, which could have been big successes on the big screen, had to be released on Over-the-Top (OTT) platforms.

However, the cinema industry has a lot to rejoice for Akshay Kumar’s Bell Bottom is all set to hit the theatres tomorrow across 1,500-1800 screens. Before COVID, a big-ticket Bollywood movie was released at least across 4,000 screens in India.

According to Elara Capital, Bell Bottom’s collection assumptions are on the lower side -- almost 65%-70% lower than earlier films of Akshay Kumar which reported a lifetime Box Office of Rs 180-200 crore. This is primarily due to night curfew in most states, Maharashtra not being open for movies yet, low consumer sentiment and 50% occupancy cap.

As per the trends in other markets, Elara Capital further revealed that the audience is now comfortable going to cinemas for good content. Regional films (Punjabi and Telugu) have opened up to full house with a 50% occupancy cap in the first weekend and has seen healthy occupancy numbers on weekdays too. This trend indicates signs of Box Office coming back to 50% of pre-COVID collection on an overall basis in near term.

“We believe this is a very promising sign as these numbers are only post 2-3 weeks of cinema opening in India post second wave and despite multiple restrictions. Hollywood content has not fared well primarily due to Maharashtra’s curfew on cinema, as the latter contributes almost 35%-40% of Box Office for English content,” said Karan Taurani, Senior VP - Research Analyst, Elara Capital.

“We maintain our view that over the next six to nine months, larger films across genres will release and collections for these too will breach towards 60% of pre-COVID primarily helped by 1) larger portion of population (middle and upper middle class) being vaccinated with two doses and 2) relaxation on restrictions (night curfew), 3) uptick in festive season towards Diwali/Christmas and 4) more screens being allowed to open; this is in line with our view that India will surpass global Box Office trends as globally Box Office has breached towards mere 40%-45% of pre COVID collections, despite 90% of the screens being open since last six months,” added Taurani.

Elara Capital’s report on Media and Entertainment industry further predicts that the overall revenue may to revert to 80% of pre-COVID (FY20) in FY23, with a recovery in FY24, which may see revenue moving toward 110-120% vs pre-COVID (FY20).

“We expect ad revenue to take the longest to recover due to high exposure to local advertising whereas other revenue metrics (F&B & convenience fee) will follow footfall recovery trends. Less impact from the Third Wave and faster recovery in ad spend by FY23 will be key monitorable driving upgrades in the near to medium term, in our view,” reads the report.

So far, Disney + Hotstar has bagged the highest number of big-ticket releases.

Elara Capital is optimistic that Akshay Kumar's Bell Bottom will set the ball rolling and encourage more producers to return to theatrical release.