Karnataka's Bold Move to Cap Movie Ticket Prices at Rs 200

The Karnataka government has sparked a significant debate with its draft notification proposing a uniform cap of Rs 200, taxes included, on movie ticket prices across all theatres and multiplexes. This initiative aims to make cinema more accessible to the masses but poses a potential threat to the profitability of major cinema chains, notably PVR-Inox.

Impact on Multiplex Chains and Premium Cinema Formats

With the average ticket price in Karnataka currently around Rs 260, the proposed cap would mean a nearly 30% price cut. This could significantly affect PVR-Inox, which operates 215 screens in the state. Premium formats like IMAX and 4D, which charge up to Rs 1,000 on weekends, may see delayed returns on investment, potentially stalling further expansion in high-end cinema offerings.

Financial Implications and Industry Backlash

Experts predict that the price cap could reduce PVR-Inox's consolidated average ticket price by 3.7%, dent revenues by 2.2%, and decrease EBITDA by 1.8% over FY26–28. The draft rule, now open for public feedback, has already stirred concerns among investors, as reflected in the dip in PVR-Inox shares. The cinema industry is likely to challenge this move, possibly through legal avenues, arguing that content quality, not ticket pricing, drives footfalls.

A Historical Perspective and What Lies Ahead

This isn't Karnataka's first attempt to regulate cinema ticket prices. A similar effort in 2017 faced legal challenges, leading to exemptions for premium formats. However, the current proposal eliminates all such exceptions, suggesting a flat rate across all screen types. As the government seeks to finalize the rule, the cinema industry braces for impact, with operators possibly relying more on food and beverage sales to maintain profitability.