Press Release

Beyond The Box office ZNMD and Shah Rukh Khan’s Ra.One, to be released this October, has also been bought by Star India for a high price.

14 September 2011

Beyond The Box office

Eight weeks after its release on July 15, multiplexes around the country haven't been able to take off Zindagi Na Milegi Dobara, Zoya Akhtar's stylish road movie starring Hrithik Roshan and Katrina Kaif and an ensemble cast including Farhan Akhtar and Abhay Deol. The film, released by Excel Entertainment and Eros International, has already raked in more than R145 crore at the box office, and counting. Though several films have released since, multiplexes have retained at least two-three shows of ZNMD to cater to a repeat audience. But even before the film's release, producers recovered at least half the production costs from satellite, music and overseas rights.

“We learnt our lessons from the meltdown of 2008 and films are being monetised much better,” says Kamal Jain, CFO, Eros International. “The industry is trying to keep costs at a minimum by undertaking several steps. For instance, we are selling satellite rights ahead of the film's release, we are also opting for a co-production model where the stars often opt for a profit-sharing model instead of charging high fees so that costs are spread out,” he adds. Jain points out that most satellite and other rights of movies Eros is producing this fiscal, including Mausam, Ra.One, Rockstar, Desi Boyz, are sold pre-release, thus ensuring at least half of the returns on the cost of production. Sometimes films are sold to broadcasters even before the film goes into

production, depending on the star cast,

director and so forth.

As it turns out, reliance on the box office has reduced to an extent, and insiders point out that though box office revenue is the prime contributor, many new avenues of monetisation have opened up. The box office contributes around 50-60% to revenues, while cable and satellite rights, music, overseas, digital rights contribute the rest and are growing. Says Pritie Jadhav, COO, P9 Integrated: “Box office revenue is still a principal contributor for any movie. However, the new avenues of monetisation have only helped the studios/producers to make more money. As per a study, the overall revenues for films at the box office fell 20% in the past three years from $2.3 billion in 2008 to $1.85 billion in 2010. Thus, as we move into the future, the contribution of revenues from theatrical to new mediums will reduce, while the share of cable and satellite rights will increase.”

Right from the time 2009’s biggest hit, 3 Idiots, was sold for R30-35 crore to Sony, broadcasters have been paying hefty sums for film deals. The buzz is that after Hrithik Roshan's crowd-pulling performance in Zindagi Na Milegi Dobara, the satellite rights of his upcoming film, Krrish 3, which is yet to go on the floors, have already been picked up by Sony. The satellite rights for Shah Rukh Khan’s Ra.One, to be released this October, has also been bought by Star India for a high price.

Ashesh Jani, partner, Deloitte Haskins & Sells, feels the success of movies does not only depend on box office collections now. “Music of the film plays a very important role. There have been instances where a film has turned out to be a huge hit because of its songs and music. Music is released much ahead of the film’s release and if the music sounds promising, it pulls audiences to the theatres,” he adds. Last year's December release, Tees Maar Khan, produced by UTV, was ensured of a good opening because of a hit Katrina Kaif item number. For producers, besides the sale of cable, satellite and music rights and DVDs, Internet and mobile phone downloads are emerging as potential money-spinners, point out analysts.

Amrita Pandey, senior VP, international distribution and syndication, UTV Motion Pictures, feels even five to six years back the dependence on the box office was around 80%, which is now down to 50-60%. "If the Indian theatrical space has grown, other streams have grown too, like overseas, for instance. We are selling our films in new territories, new countries and that has added to revenues in a big way. We do need to exploit satellite and overseas rights further," she adds.

Pandey also points out that if some avenues have grown, others like home video have shrunk. So, for a major film that would earn revenues of R4-5 crore from the home video sector four-five years ago, it's down to R2 crore now. "Mobile downloads and Internet are small now, but should grow at a huge pace in future," she adds.

There are other avenues like merchandise that studios are just beginning to tap into. Says Jadhav of P9 Integrated: “Merchandise for Bollywood films is unfortunately still at a very nascent stage. It is used more as a promotional tool rather than a monetisation option. However, with superhero films like Ra.One and Krrish sequel in the offing, monetisation from this source is looking favourable.”

Movie merchandise is a lucrative but largely untapped category, says Mudit Khosla, CEO, Seventymm, which has launched Bollywood theme T-shirts and merchandise around movies like Band Baaja Baraat to Delhi Belly. Merchandising is the emerging lucrative source for generating revenue for the films, agrees Jani of Deloitte Haskins & Sells. “Everything from soft toys to watches, merchandise sales have added to the revenues of films,” he adds.

Analysts say Bollywood filmmakers and producers are considering making the shift to online movie distribution via the Internet, believing that it has the potential to become a serious source of revenue for screening Hindi films. Industry experts even claim that by doing this, producers will be able to put an end to piracy. Recent movies released on the Internet did decent business in the initial weeks.

Jani points out that television is seen as particularly lucrative, with the number of channels mushrooming from just five in 1991 to 550 by August last year. “The country is also poised to become one of the biggest markets for direct-to-home (DTH) satellite pay TV market in the coming years. And combined with home video and audio rights, producers of films are exploring newer markets which, incidentally, have turned out to be better than expected,” he adds.

There is an increasing demand for content from new media like Internet and cellular phones and this avenue is fast catching up, says Jadhav. Going forward, Jadhav points out that ancillary monetisation avenues like satellite (especially pre-selling of movie rights) and Internet and mobile phone downloads could very well double their contribution to the producer than what it is doing today. The producers will increasingly collect table-profit due to these pre-selling, she adds. Analysts say ringtones, hello tunes, downloads on the Net/mobile phones and online streaming of videos is adding to a film’s income. Digital music is also going to be a major contributor as it surpasses the sales of CDs and other media. As Jain of Eros puts it: “It’s up to us to monetise films better, there is no dearth of avenues.” With promotion and marketing costs mounting, producers are already looking at social network sites or YouTube to promote films and cut on costs further, but that’s another story.

Source: Financial Express

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