India Cinema Seeks Policy Reset Amid Rising Costs, Plummeting Footfalls

Shrinking Market, Rising Costs

The Indian cinema exhibition industry is calling for a significant regulatory overhaul, grappling with escalating operating costs and a sharp decline in audience attendance. A new EY study, commissioned by the Multiplex Association of India (MAI), positions the sector as a vital but increasingly vulnerable part of India's media and entertainment value chain. Despite cinemas remaining culturally significant, their economic performance has diverged sharply from national GDP and broader M&E sector growth.

EY's analysis reveals that India's theatrical revenues have contracted at a compound annual rate of 0.2% between 2019 and 2024. This occurred even as India's GDP expanded by 6.6% and the M&E sector grew by over 5% annually. Gross theatrical revenues slipped from ₹19,100 crore in 2019 to ₹18,746 crore in 2024, with revenue per screen decreasing by approximately 5% during the same period.

Audience Drain

Footfalls paint an even starker picture. Total admissions plunged by 41% from 1.46 billion in 2019 to 860 million in 2024. The number of Indians visiting cinemas annually is estimated at fewer than 150 million, signifying that theatrical exhibition now serves a limited market segment.

Operational Challenges

Structural limitations exacerbate the industry's plight. India possesses fewer than 10,000 cinema screens, averaging about seven screens per million people, significantly lower than international benchmarks. Screen density has decreased since 2018, primarily due to single-screen theatre closures. Major multiplex chains have also reduced investment by about 12% since 2019.

Content and Competition

On the demand side, a feedback loop exists between content quality and audience engagement. Over half of surveyed cinemagoers cited declining content quality as their primary reason for avoiding theatres. Producers, in turn, point to a scarcity of compelling scripts. Furthermore, shortened theatrical windows—now as brief as four to eight weeks before films appear on streaming platforms—are reshaping audience behaviour, with about a third preferring to wait for an OTT release.

Cost Pressures and Tax Hurdles

Persistent cost pressures remain a critical concern. Multiplexes face higher electricity tariffs comparable to commercial rates. Ticket pricing is further restricted by state-level caps and a Goods and Services Tax (GST) structure that imposes an 18% levy on tickets priced above ₹100. This GST threshold has remained unchanged since 2017, despite cumulative inflation exceeding 40%.

Policy Recommendations

The EY report advocates for policy considerations to address these issues. Recommendations include rationalizing GST thresholds, granting industry status to cinema exhibition to reduce input costs, enabling greater flexibility in ticket pricing, and fostering longer theatrical windows through industry consensus. The potential for cinemas to diversify revenue streams through live events, sports screenings, and community activities during non-peak hours is also highlighted.

The MAI emphasized that these findings are intended to inform discussions with policymakers, acknowledging that the sector is undergoing fundamental structural change. The association, representing over 11 cinema chains with more than 550 multiplexes and approximately 3,000 screens, asserts that while digital platforms are altering entertainment consumption, cinemas remain economically and culturally vital. Their future viability hinges on regulatory adaptation to evolving market realities.