Getting the big picture right
The box office typically brings in three of every four rupees an Indian film makes. Overseas collections, home video rights, and ancillary revenues (which include television distribution rights) fetch a third of a rupee each.india Updated: Apr 08, 2009 21:07 IST
The box office typically brings in three of every four rupees an Indian film makes. Overseas collections, home video rights, and ancillary revenues (which include television distribution rights) fetch a third of a rupee each. Television and overseas revenue are growing at twice the rate of box-office collections, but ticket sales will remain the principal bread-earner for the Rs 10,000 crore Indian film industry for some time to come. This helps explain why two of Bollywood’s leading stars known for their public bickering are sharing the stage against “arm-twisting” by cinema screen chains. Why now? The last three months have been the worst quarter for the film industry in 2008-09. The biggest grosser, Chandni Chowk to China, made a niggardly Rs 25.4 crore in ticket sales.
The bad news for the film industry does not end there. Indian Premier League cricket, which gets under way in a fortnight, will tear away eyeballs from multiplexes. The recession is doing its bit as well: bids for home video and television rights are now a third of the rates a year ago. Stopping the release on new films to cinema chains is a desperate attempt to squeeze out rapidly diminishing revenue. The film producers’ guild wants more of the takings at the box office; stand-alone screen owners want to see cuts in payments to stars.
The current beggar-your-neighbour stand-off caps years of individual haggling between producers and cinema chains. And it points to the need for consolidation in the movie business. Adlabs Films, which is not party to this dispute, gains from spanning the entire food chain. It produces films, which it shows in its cinemas, on satellite television and through DVDs. That, however, requires scale; at its height, the stock market valued Adlabs at a jaw-dropping Rs 75,000 crore. It is the PVRs and Pyramid Saimiras that Messrs Shah Rukh Khan and Aamir Khan are up against. They stand to lose more in any face-off with Bollywood. The long-term odds, however, seem to be stacked in favour of the distributors. Foreign investment is flowing more into this side of the business than into content creation. Time Warner’s Chandni Chowk to China was, after all, Studio Hollywood’s most ambitious assault on the Indian box office.