Production
Indian production houses such as Eros, Reliance and UTV8
along with joint ventures of foreign media houses such as Fox and Viacom 18 have brought in increased sophistication across the industry value chain through processes such as stricter financial discipline, regular audits, scientific methods for marketing and distribution and developing new talent. In addition, they continue to explore additional monetization channels to tap latent demand for Indian films. Production houses are getting involved right from the scripting stage till release for large budget films to control costs, where as they continue to directly source quality smaller budget films from independent producers.
Investments made by the industry in developing talent9 seem
to have paid off as evidenced by the rise in the number of bankable stars.
Source: KPMG in India Analysis and industry interviews Source: KPMG in India Analysis and industry interviews
Revenue split – 2011 Revenue split – 2016P
08. Industry discussions 09. FICCI KPMG 2010 Report
Companies such as Eros Intl have led to integration of sub entities that enabled creation of proficient production film content and an interdependent relationship between all parts of the film value chain. This has resulted in a completely new dimension of how films are marketed and distributed. Content is now being monetized across several platforms creating additional revenue streams for the producers and enabling the consumer enjoy and experience content through multiple channels in a customized manner. Indian film entertainment was never linked to corporate environment and had limited association with potential investors. Change brought by corporatization has revitalized confidence amongst all investors and shareholders who have validated their interest in this space
- Kamal Jain
CFO Eros International Media Limited
“
“
There is an increasing trend towards opting for co-productions in the Indian market as it seen to provide a win win situation for both the production house and the studio. Each get’s to leverage his strength – the production house get’s to focus entirely on the task of producing a good quality film with the studio simultaneously exploring and implementing the best distribution and marketing strategies for its release
- Apoorva Mehta
CEO Dharma Productions (P) Limited
“
10. Economic Times – August 2011 11. Press releases
12. Koimoi – January 2012
13. Industry discussion 14. Business Standard – August 2011 15. Boxoffice India
© 20
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While production houses such as Eros and Reliance10 already
have some presence in regional markets, others have also started evaluating similar opportunities for further expansion. Besides mitigating the risk of dependence on Hindi cinema alone, the industry expects the 1000-film strong regional cinema to be a growth driver for several years into the future. Some examples of the expanding footprint of Hindi and Hollywood studios are:
Taking a cue from their Indian counterparts, foreign studios such as Fox, Disney, Viacom 18 are also exploring opportunities in the regional space. Besides the traditionally strong Tamil and Telugu market; Bengali, Malayalam and Bhojpuri markets are being watched closely by these players. Disney’s recent acquisition of UTV is expected to provide them a strong opening in these markets. With growing confidence levels, regional film budgets have also displayed a rising trend.
Distribution
Larger film budgets supported by aggressive marketing campaigns and promotional tactics have further increased the stakes for distributors going into 2012. Traditional distribution territories (Bombay Area, Delhi-UP East-Punjab and Rest of India) are getting redrawn with large producers now preferring to deal on a specific state or city basis. As the GDP in key cities and states in India has increased steadily over the past few years and there is growing importance of having local presence, there are larger opportunities for producers to unlock the complete potential of a given geography.
With the commercial success ratio of films remaining roughly 15 percent to 17 percent12, larger film budgets and reduced
distribution territories the business case for early entrapment of cash-flows through widespread releases is clear. While small budget films continue to struggle for screen space, the number of domestic and international screens for big budget films has more than doubled in the last year. Medium budget films have also observed a steady growth in domestic screens. The industry expects this number to increase further
as producers and distributors aim to shorten the recovery cycle of cash-flows and mitigate the risk of piracy.
A similar trend has also been observed in regional markets such as Tamil Nadu where the number of domestic screens is estimated to have tripled in the last couple of years. However, most other regional films continue to open on a much smaller scale due to a limited target audience.
While Hindi films continue to do well in the conventional international markets of US, UK, Canada and Middle East, previously untapped territories in Latin America, Western Europe and Pakistan are also opening up. 2011 observed a strong “Go-East” phenomenon with Indian films doing well in Taiwan, South Korea and China. Big budget films such as Ra.One and Bodyguard opened simultaneously in 50 countries.
2009 film ‘Three Idiots’ had a 29 weeks theatrical run in Taiwan collecting over INR 3 crs in 2011. Buoyed by the success of the film, it was released with subtitles in 230 screens in South Korea and across 900 screens in China with dubbing in Mandarin. The film had over USD 1.5 million14 of
print and advertising expense in the country equivalent to that of a Hollywood release. Distributors are also looking to release the film in Russia, Italy and a few other European nations14
Despite the emergence of new territories, the total number of films released overseas continues to be small. Overseas theatrical releases are limited to a few high budget films primarily based on star power and the ability to invest in marketing activities. “Ra-One” was released in about 1100 prints13 outside India and is expected to break the record set
by “My Name is Khan”. Some production houses have also started monetizing ‘repeats’, where old films are sold on a standalone or bundled basis in new territories. UTV15 has sold
terrestrial TV rights on a limited-run deal of five popular films to a Seoul based media firm. UTV has also struck a limited- term deal for non-exclusive telecast rights in non-Indian languages for 13 films with Zee Network in overseas territory. Production
Studio11 Regional Market Activity during the year
Eros Tamil Co-production with Photon Katha
Eros Punjabi Co-production with Jimmy Shergill Production
Reliance Tamil StudiosPartnered with Vensat and Annapurna
UTV Tamil Co-producing Muran, Announced
Mugamoodi, Re-making Delhi Belly
Fox Star Tamil Forayed into co-production with
Engaeyum Eppothum
Average number of screens for theatrical release13 Big Budget Medium Budget
Market 2010 2011 2010 2011
Domestic 1200 2500-3000 600 1000+
International 250 400-500 100-120 100-120
To minimize the piracy effect and also to garner huge collections in the first week end itself, the Film-makers in Tamil Cinema want to exploit maximum screens during the opening. Star category films are being released in about 350 screens instead of 120 screens a few years ago. 60 percent of domestic collections come from first five days. Other films continue to release with 80-90 prints
- Thyagarajan Govindarajan
Vice President Tamil Film Producers Council
Similar to Hindi cinema, the overseas market is limited to a handful of A grade films in regional languages. While Punjabi continues to do well in pockets of US, UK and Canada; there are few established markets for Bengali films. Some Bhojpuri films have been sold in Fiji and Mauritius. Malayalam films, on the other hand, continue to perform well in Middle East due to their strong Indian diaspora. Telugu films have strong traction in the US market. Besides their base in US, Canada and South East Asia, Tamil film producers are developing markets in France, Germany and Netherlands16
Shemaroo Entertainment released “Super K”, a 95 minute animation film on Yahoo! Movieplex. Similar to Studio 18’s “Striker” last year, this could be watched for free by viewers. The producers tied up Parle G, Zica, RobinAge, Diamond comics, Magic Holidays, Wow Retail, My FM, Radio One and Global Advertisers associate for the first ever exclusive online release of this genre of children’s animation film. Most of the publicity was done through Facebook and Twitter.17
In keeping with this trend, it is highly likely that going forward we will see more releases on alternate platforms such as i-pads, internet and television in the coming years. Paid models for releasing films to international audiences online are already being evaluated by the industry.