Mumbai: A dispute between single-screen theatre owners and producers in Telangana over revenue sharing has exposed the growing financial stress in India’s theatrical business, with exhibitors saying weak box-office collections and rising operating costs have made the current fixed-rental model unsustainable.

The Telangana Exhibitors Association has instead proposed a percentage-based revenue-sharing model, which has received support from some producers while others have yet to formally communicate their acceptance.

“It is an existential crisis for single-screen theatre owners,” said Vishek Chauhan, CEO of Roopbani Cinema, a single-screen theatre in Bihar. “On the one hand, they pay a fixed fee to distributors irrespective of the performance of films. On the other hand, they do not have a say in the choice of films they want to showcase or even in the number of shows,” he explained.

“Exhibitors that are part of national chains have more favourable terms, as they follow the percentage model to the hilt,” Chauhan added.

India has close to 5,000 single screens, of which 70% are in South India, according to trade analysts. Telangana accounts for 10-11% of the single-screen capacity in South India.

In a fixed-fee business model, a single-screen theatre owner must pay a fixed amount to distributors irrespective of a film’s performance. Given the high fixed costs of running theatres and the uneven box-office performance of films, theatre owners are facing significant losses.

Trade analysts said the Telangana Exhibitors Association has proposed a staggered revenue-sharing model, offering distributors 60% of the box-office collections in the first week, 50% in the second and 40% in the third week of a film’s run.

In 2025, the Indian film industry shut 124 screens, mostly single screens, even as 225 screens were added mostly in multiplexes, according to the Ficci-EY 2026 Media and Entertainment report. “Industry discussions indicate that in Hindi-speaking states, some towns now open screens only for a few days a week or when there are major film releases,” it noted.

Meanwhile, producers are also under pressure from soaring star remunerations and fewer releases from top actors due to pan-India ambitions, industry analysts said.

“A key reason for weak box-office revenues in the Telugu and Kannada markets is the pan-India ambitions of stars and filmmakers in these industries,” said Ramesh Bala, a movie trade analyst based in Chennai. “As a result, stars have not only reduced the number of films they release each year but have also increased their fees. These developments have put producers in a vulnerable position.”

The FICCI-EY report noted that pan-India films will increase pressure on regional content to scale up in both narrative and production values. “Large-scale, multilingual releases are increasingly dominating screens, often compressing theatrical windows for mid-budget and regional-language films,” it said.

The gross box office of southern films fell to Rs. 6,000 crore in 2025 from Rs. 7,000 crore in 2024, according to the report.

Analysts said even though single-screen theatre owners have promised not to raise ticket prices, they are threatening to shut down if their proposal is not considered seriously.

Producers have also pointed to the timing of the proposal, which coincides with the release of the big-budget pan-India Telugu film Peddi early next month.