Thursday, December 21, 2006

Dark Days ahead for the Tamil Movie fan

From The Hindu : The Tamil Nadu Government has capped the ticket prices in theatres in the state. Rs 50 is the maximum that a theatre with AC can charge, Rs 10 is the minimum.

When will the people ( and therefore the Government) learn that the best way to counter rapacious pricing is not trying to fix the prices but increasing competition.

Here is my view of how the future for Tamil Theaters & Tamil Movie industry is going to play out.

These wonderful price controls ( assuming they stand legal challenges that will follow ) will lead to one or more of the following response

1) Supply will dry up. New theatres will not come up, old theaters will become marriage halls etc. If you have an option between investing in a movie theater where prices are controlled and say a mall/restaurant/shop where prices are not controlled, where would you put your money ? Does not take a genius to figure that

2) Quality of supply will fall. Would you as a theater owner not try cutting your AC cost by setting optimum temperature at 28 C? Since no new competitors will be entering the market, you can get away with this. Why should you repair half broken chairs ? or rid them of bugs ? Since demand will be greater than supply, you are always sure of selling your seat ( buggy/broken or not ) or why should you invest in the latest sound systems ?

3) Bundling will increase : You can no longer buy just a movie ticket. You have to buy a movie ticket + chips/pop corn + soft drink all for Rs 150 ( or what ever price) , all sold as a package. So you would need a new legislation to force unbundling. Also be prepared to pay more for parking

4) Black Market will increase : The theater owners will have a greater incentive to sell tickets in the black. So don't be surprised if soon the only way to buy tickets will be in the black.

5) Shorter movies would be screened : Theatres would prefer to screen shorter movies ( Mostly English ) as they can then run extra shows per day. So you would need to legislate to fix a minimum quota for Tamil movies.

6) Fewer Movies : Fewer theaters ( Assuming scenario 1 happens ), would mean fewer movies can be released. This directly benefits big budget movies as they will have the clout to get the theaters for their movies. Small budget movies will find it difficult to release. So movie making will get increasing concentrated in fewer hands, You will only have super stars & extras. You will find fewer people risking money on new directors/actors as the cost of failure is very high.

So in the end if you are a fan of the Tamil movie .. it is dark days ahead. So hold off the rejoicing and put on your thinking caps.

Addendum : On second thoughts, if I were a theater owner, I would convert my theater to free seating ( i.e first come , first served for seating) and charge a premium for reserved seating. and yeah you would now need to legislate to cap the cost on this service :) . Cap that, and I have the next service ready, you can only book tickets online, for which I will charge a premium and so on. This should buy me the few years needed to recover my investment and then bye bye to owning theaters and back to sand quarrying :)


askbabloo said...

Very good post.
Now that PVR and INOX are entering they will face an uphill task. I feel multiplex will stop playing tamil movies. anyway i am least affected because i dont watch tamil movies in theatres.

ram said...

I am not supporting the move as such, but on the other side, have you ever seen a case where competition has reduced the ticket prices IN INDIA. I would like to hear such a story. Somehow the fast growing country has a funny competition strategy. For eg, you can see the tariff plans of the various mobile companies, each of them having identical plans as the other. If the state provider bsnl was not there i am sure the tariffs would have been much higher now. The companies increase the tariff as if with understanding with others. This is not competition.

RJ said...

Thanks. Yes if the government manages to make these prices stick, you may end up with fewer Tamil movies in Multiples

Hyderabad has always had low priced tickets, with usually the latest sound systems etc, simply because we have always had tons of theaters to choose from. Contrast that with Bangalore, which had (I am talking about 1990s and early 2000s) horribly over priced theaters of pathetic quality.
One other example that readily comes to mind is cars, where prices have remained in check or fallen off, in spite of rising input costs
Proliferation Darshini's in Bangalore have kept the prices of tiffins in restaurants in check.
International Bandwidth prices fell when VSNL's monopoly status was removed
Cartels are always possible. The way to break cartels is to lower entry barriers, and not try to rig prices.