As footfall in cinema continues to dip and competition from OTT platforms grows stronger, mall developers are rethinking the space allocated to cinema in their upcoming projects. The once pivotal role of cinema in malls is now being reassessed as consumer preferences evolve.
Declining Cinema Footfall
The proportion of mall visitors drawn to multiplexes has declined significantly. From around 10% in previous years, it now stands at only 6-7%. This drop signals that cinemas are no longer the major footfall drivers they once were, forcing developers to rethink their strategies for upcoming mall spaces.
Revenue Struggles in the Cinema Industry
Cinemas traditionally operate on a revenue-sharing model with mall operators, paying a monthly guarantee. While multiplexes exceeded their minimum guarantee in 8-9 months of 2023, this year has seen a drop, with cinemas only meeting expectations in 4-5 months. The reduced revenue is a clear indicator that cinemas are struggling to maintain profitability.
Impact of OTT Platforms
According to industry experts, the rise of OTT platforms is a significant factor behind reduced cinema occupancy rates. With more viewers opting for streaming services over traditional cinema, multiplexes are seeing a steady decline in foot traffic. Muhammad Ali, CEO of Prestige Group’s retail division, highlighted this shift, noting that new segments such as food and beverage (F&B), entertainment, and gaming are becoming increasingly popular.
Changing Focus in Mall Design
Developers are now focusing on reimagining the layout of malls to accommodate changing consumer interests. Historically, cinemas occupied about 10% of mall space, but developers are now reducing this allocation in favor of more profitable categories like experiential retail, which offers a combination of entertainment, food, and physical activities. Harsh Vardhan Bansal, co-founder of Unity Group, emphasized that cinemas’ inability to draw large crowds, mainly due to a lack of compelling content, is forcing this shift.
The Rise of Experiential Retail
As OTT platforms dominate entertainment consumption, mall developers are adapting to new consumer demands. The growing interest in experiential retail—like F&B zones and entertainment facilities—reflects a broader trend of transforming malls into lifestyle destinations that cater to a variety of customer needs. These changes suggest that the future of malls may be less about cinema and more about diverse, interactive experiences that cannot be replicated online.
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