Understanding the revenue model of a Multiplex As we can see that the Net Box Office contributes maximum revenue for a multiplex, around 50%-60%. This refers to the revenue generated from the sale of tickets for the movies net of the various taxes and distributor share. Before understanding the revenue calculation from box office, let’s familiarize ourselves with a few terms: • Footfalls: Footfalls are the actual number of tickets sold or the number of viewers who have come to watch the movie. • Gross Collections: The collections from sale of tickets before deduction of various taxes. • Net Collections: The collections from sale of tickets after the deduction of GST Distributor share: The Distributor of a movie has a claim in the proceeds of a movie. The amount of collections that goes to the distributor per week is called the Distributor share. The percentage share is high in the first week and reduces in the subsequent weeks. Here’s an example for better understanding: The Box office collections of a multiplex depends on various operational factors such as: (1) Number of screens (2) Conversion of single screens to multiplexes (3) Expansion to other cities based on the situation of retail real estate (4) The occupancy rate of theatres which is determined by the footfall or the actual ticket sales (5) Average ticket prices Food and beverage Food and Beverage sold at the multiplexes contribute around 25% of the revenue for multiplexes. These branded outlets at multiplexes sell their products usually at a very high margin. Multiplexes aim to increase the F& B revenue by taking measures such as: • Expanding the menu • Deployment of latest technology to ease the buying process • Introducing live counters • Increased Point of sales distribution Currently the F& B sales attracts 18% GST in lieu of the service tax and VAT that was previously levied. Advertising revenue Advertisements contributes 8% to 12% of the revenue of multiplexes. This includes in-cinema advertising as well as other promotional activities. In cinema advertising means the advertisements shown to us during the screening of the movie. With the advent of digitization, the advertisers can target their audience on the basis of geography, linguistics and social status. Other promotional activities such as various kiosks or placards set in the multiplex premises also account for advertising revenue. Other sources of revenue Apart from this, there are various other sources of revenue for the multiplexes as well. This means the money earned when the exhibitor (multiplex owner) is also the producer/ co-producer of the movie. Based on the terms of the agreement, this income can be (1) Theatrical or (2) Non-theatrical. Theatrical revenue refers to the income raised by distribution of the movie. In this case the exhibitor is only the distributor. Whereas non-theatrical revenue refers to the revenue from satellite rights, overseas rights, music or video rights.