Leisure & Entertainment (L&E) Industry Overview
The Global amusement and theme park Industry is expected to generate revenue of $32 billion by 2017. The Indian Amusement park and FEC industry is pegged in the range of 2,500-4,000 Crores. The Indian L&E Industry is expected to be around 10,000 Crore by 2020, The Industry is expected to grow at 10-15%.To serve a population of 1.2 billion there are only approximately 120 amusement parks and 200 FEC’s.
Assuming 70 screens generating revenue of Rs. 1cr each a year is approximately 2% of the total industry revenue size. Industry size assumed to be Rs. 3,200 Cr. About 40% of the revenue is generated by Theme park/Amusement park/Water parks. Majority of remaining revenue generated by FEC’s, bowling alleys & others, The remaining revenue generation is done by stand alone 5D theaters.
Evolving Indian 5D Theater Industry
The First 5D Theater opened in India in 2007/2008 since then the Industry has seen rapid changes and entry of new cinema chains and manufacturers. Initially most of the equipment was imported and no adequate after sales service was available but now exist several world class indigenous manufacturers of 5D cinema equipment. Most of the Indian companies today source their equipment from Indian manufacturers. Unlike in international market, where 5D theater is an extension of an amusement or theme park, in India it is more in a stand alone format. Presently there exist more than 10 Cinema chains in India with 60-70 screens across 30 cities in both Tier I & Tier II with most of the 5D theaters located in shopping malls.
Franchising in Entertainment Industry
Franchising is an arrangement whereby a trademark owner allows the use of his trademark along with a standardized manner of presenting the goods & services under the mark. Franchise agreement defines exactly how the franchisor expects the business to be run, in terms of its set up & functioning of the administration, day-to-day operations of the business, the manner of conducting research & development policies, so as to keep up their reputation for which they are well-known. In exchange, the franchisee provides capital and also pays certain royalty for the use of the mark.
The Issue with one center presence is one center facility will have limited manpower & organizing to serve a larger customer base; However with multiple center one can target new customers. The solution in such cases is to have “branch” centers – either company owned or Franchise. This appears to be the cheapest and easiest manner of doing so, while also ensuring that the branch continues to provide the same quality of service as is associated with the name of the parent company.
Franchising is a low cost source of funds which helps to maintain market leading position in the business with entry / presence in multiple markets simultaneously. It creates last mile customer service points to maintain the High-quality customer service and short-response time with new customer acquisition & also service delivery.
