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  • Regional cinema is backbone of World Cinema: Supran Sen

    Regional cinema is backbone of World Cinema: Supran Sen

    NEW DELHI: “Regional cinema is the backbone of World cinema. It has reached new heights today. Apart from that, regional cinema contributes a lot to Film Festivals around the globe.”


    Inaugurating a one-day seminar on World Cinema via Regional Cinema in Jaipur, Film Federation of India Secretary General Supran Sen said 15 awards were bagged by Tamil cinema alone in the 2010 National Film Awards announced recently, apart from a large number of awards to other languages. Though regional cinema suffered from lack of huge budgets, it had the right kind of stories and ideas.


    The seminar was organised by the Jaipur International Film Festival and the Central Circuit Cine Association and was dedicated to filmmaker Mani Kaul who had grown up in Rajasthan, and music director Dan Singh, both of whom passed away recently.
    Around 70 film distributors/producers/directors and young filmmakers participated in the workshop.


    Sen said South Indian cinema was an excellent example of the achievements of regional cinema. Everyone is also aware of the popularity of Bhojpuri cinema. Super stars of Bollywood are now acting in Tamil, Bhojpuri and Kannada films. On the other hand, actresses from South India are ruling Bollywood, which also makes remakes of famous South Indian films. Thus, regional cinema makes contribution from the idea and story to the star cast in Bollywood.


    But several speakers expressed regret that Rajasthani cinema was not showing much progress, despite some incentives like tax free exhibition or subsidy of up to Rs 500,000 for filmmakers in the state.


    It was hoped that the state would increase the subsidy from Rs 500,00 which was very meagre.


    Lack of unity among filmmakers from the state was another reason given for the slow rise of Rajasthani cinema.


    Bollywood is also in many ways a regional cinema since it comprises films produced in a regional language.


    Films produced in foreign countries succeed because of special effects and other new techniques.


    Serials based on Rajasthan/Rajasthani culture were enormously popular and filmmakers could learn a lesson from this.


    There was a general complaint that filmmakers are asked to submit their films in VCD/DVD format to the state government for tax exemption. But this was risky before the release of a film since it could lead to piracy.
     

  • GECs vow on Bolly-busters to up viewership

    From time immemorial movies have served as an extra value pack to general entertainment channels. While fiction remained the staple diet for the lot, movies dished up the programming lineup, especially on weekends, as an eagerly awaited dessert.

    The design was to attract additional viewership that went beyond the traditional eyeballs (target group), evidently flocking onto the respective channels to prey on their regular dose of fiction.

    While the trend continues even today, freshness and contribution from movies as a genre towards the Hindi GEC is significantly scaling up more effectively. Channels are pursuing hard to pocket big ticket movies and persistently locking in air-time for them within the smallest time-gap from their theatrical release. This means, for some, accessibility on TV could be just four weeks after the theatrical release while for a few the availability would be six-seven months post hitting the plexes.

    Take  for instance the Ranbir Kapoor-Katrina Kaif starrer Ajab Prem Ki Ghazab Kahani. Colors premiered the movie in December 2009, just a month after its theatrical release. The movie garnered a 7.45 TVR (C&S 4+, HSM), contributing 50.2 GRPs to the channel. On the other hand, Aamir Khan’s 3 Idiots was on Sony seven months after its release and was a table turner for the channel as it earned 91.8 GRPs (10.88 TVR) to make Sony the third Hindi GEC for that week.

    Says Viacom 18 CCO and head international business Gaurav Gandhi, “Big ticket movies always act as a differentiator to boost channel viewership while helping audiences at that point in time to sample other properties. Thus, it broad bases the typical GEC audience and draws in an entire family viewing.”

    Elaborating further, Star India EVP marketing and communications Anupam Vasudev says, “TV channels now-a-days aim to show movies earlier, shortening the window gap, because of the recency effect on the viewer‘s mind. And because it adds to the content variety, it plays a strategic role in fulfilling consumer requirements.”

    A complete change in the cost recovery model for movies has also accelerated the eagerness of channels to showcase such products within a shorter window span. Besides quoting huge satellite right prices for their movies, producers have found other avenues like home video and DTH to exploit and monetise their products; and the modes are available even if the movies have crashed or performed average at the box-office.

    “Since piracy is always at an all-time high, broadcasters think ‘why wait’ and ‘why not’ make the movies available to the audience as soon as they can!”, Gandhi adds.

    Consider this: average box office  office performers such as All The Best, De Dana Dan and Atithi Tum Kab Jaoge along with the box office disaster Veer managed to do favourably well on television with each grabbing an above 3 TVR.

    All The Best on Zee TV earned a 4.23 TVR during its premiere, fetching 25.2 GRPs for the channel; De Dana Dan on Star Plus got 3.97 TVR and 26.9 GRPs; Atithi Tum Kab Jaoge on Star Plus did 3.32 TVR and fetched 16.6 GRPs while Veer got a 3.55 TVR to earn 23.1 GRPs for the same.

     

    Top Bollywood Movies aired in GEC during 2010 in HSM Mkt
    Rank Channel Programme TVR% GRPs
    1. Sony Entertainment TV 3 Idiots 10.88 91.8
    2. Colors Ajab Prem ki Ghazab kKahani 7.45 50.5
    3. Zee TV All the Best 4.23 25.2
    4. Star Plus De Dana Dan 3.97 26.9
    5. Star Plus Wanted 3.95 27.5
    6. Star Plus Veer 3.55 23.1
    7. Star Plus Atithi Tum Kab Jaoge 3.32 16.6
    8. Star Plus Paa 2.85 19.4
    9. Colors Do Knot Disturb 2.45 13.1
    10. Zee TV Kambakkht Ishq 2.22 11.6
    11. Colors Toh Baat Pakki 2.2 9.4
    12. Sony Entertainment TV Dil Bole Hadippa 2.14 15.5
    13. Star Plus My Name is Khan 2.14 15.5
    14. Colors Kites 2.14 12.4
    15. Colors Whats your Raashee 1.37 10.5
    Source: TAM | TG: CS 4+ yrs | Period: Jan to July 2010

    “TV provides free viewing even to flop films. So people who chose not to pay high ticket prices at multiplexes for such movies will anyway watch the film on TV thereby upping the viewership base,” says a top media planner on conditions of anonymity.

    But does this mean that movie premieres, especially the big tickets, always pull in mass eyeballs? Not really. Industry players believe that the TV viewership success of a movie is the functionality of its content and the rigorous promotion that the channel performs. And therefore, a low marketing push for box office hits like My Name Is Khan (Star Plus) and Wanted (Star Plus) on TV did just average as they drew in 2.14 TVR and 3.95 TVR respectively.

     

     

     

    Top Bollywood Movies aired in GEC during 2010 in All India Market
    Rank Channel Programme TVR% GRPs
    1. Sony Entertainment TV 3 Idiots 8.55 72.1
    2. Colors Ajab Prem ki Ghazab kKahani 5.59 37.6
    3. Zee TV All the Best 3.16 18.9
    4. Star Plus De Dana Dan 2.96 20.0
    5. Star Plus Wanted 3.04 21.2
    6. Star Plus Veer 2.75 17.9
    7. Star Plus Atithi Tum Kab Jaoge 2.5 12.5
    8. Star Plus Paa 2.24 15.2
    9. Colors Do Knot Disturb 1.8 9.6
    10. Zee TV Kambakkht Ishq 1.65 8.6
    11. Colors Toh Baat Pakki 1.63 7.0
    12. Sony Entertainment TV Dil Bole Hadippa 1.68 12.2
    13. Star Plus My Name is Khan 1.74 12.6
    14. Colors Kites 1.61 9.3
    15. Colors Whats your Raashee 1.05 8.0
    Source: TAM | TG: CS 4+ yrs | Period: Jan to July 2010

     

    3 Idiots, on the other hand, went  through an aggressive marketing process. The movie certainly grabbed a historical share of the viewership in the Hindi GEC space but the push also came in from meticulous promotional initiatives. Sony devised strategic promotional activity with the cast of the film and infused it into the programming of the channel which helped in further driving up the viewership.

    Also, interestingly, as part of the promos, Sony offered viewers the chance to enter a competition to win one of the iconic chairs from the movie and the response received was the highest ever from any movie competition on the channel.

    Broadcasters affirm that, even though exorbitantly priced, movies can recover the prices paid by them if the products are promoted rightly so as to grab advertiser’s attention. This is because such premieres not only summon a spike for the channel, but is surely a boon for the advertisers too who associate with them. “When advertisers walk on board as sponsors, the deals include multi-week promotional campaigns on the channel’s other properties – fiction, non-fiction, events – exhibiting a visible sponsor label. Also, due to expanded viewership from such premieres, the advertisers get more exposure,” says Gandhi.

    Adds Filmy business head Rajeev Chakrabarti , ”Big ticket movies premiered on GEC channels are strategic programming spikes around which channels attempt to garner viewer and advertiser’s attention. The networks pay a very heavy price towards acquiring these titles and ultimately, the frequency and viability of such big-ticket ‘premieres’ need to justify the cost-to-reward ratio in line with the business objective.”

    The window-gap between a movie’s theatrical release and TV broadcast has also shortened because the maximum collection that it garners is within the first two-three weeks at the plexes.

    Says a media planner, “Eight years back, about 200-300 prints of a movie were circulated and it took about six months to complete full national coverage. But today with the advent of multiplexes, 500-1000 prints of movies are released and it takes just two-three weeks for theatrical recovery.”

    Talking about placements, Mediaedge:cia India MD T Gangadhar informs that movies are strategically placed for weekend viewing because GECs are frail on fiction during this part of the week.

    Zee TV marketing head Akash Chawla, however, believes that movies must be chosen on novelty factor and should only act as new-audience-attracters rather than GRP boosters.

    “The primary challenge for a Hindi GEC is to maintain consistency and not become dependable on movies. Putting up movies in the programming schedule to just get numbers without encashing them to generate maximum revenues is not part of our strategy,” he says.

     

  • Multiplex operators post weak recovery in FY’10

    The multiplex operators were up against the wall in FY’10. The first quarter was gobbled by a bitter row with the film producers, freezing fresh movie content from the Bollywood studios. Revenues went for a toss as they tried to source alternate content and tapped regional language movies.

    The bruise didn’t disappear in a hurry as the revenue-share arrangement increased their content costs. The release window shortened as film producers had to find space in the clutter. The situation worsened as most of the movies bombed at the box office.

    Corrective measures were taken and the major players hiked ticket prices while their expenses also deepened. Revenue for the fiscal jumped but operating profit took a knock.

    Revenue soars

    The combined turnover of the five listed cinema exhibitors stood at Rs 13.73 billion in FY’10, up 21.47 per cent over the earlier year. The major reason was hike in the ticket prices and some blockbuster movies in between (like 3Idiots, Ajab Prem Ki Gajab Kahani etc).

    Reliance Mediaworks, Fame India and Cinemax saw maximum growth in revenues, jumping 39.5 per cent, 28.7 per cent and 25 per cent for each of them. Inox Leisure saw a moderate 12.6 per cent growth, while PVR had a measly 3.2 per cent increase in its income.

    Higher expenses as distributor payout increases

    Multiplex operators had to cough out more to the film distributors due to the new revenue share agreement.

    Though the companies kept control over personnel costs, their interests in organic and inorganic growth led them to invest to build or acquire properties. This resulted in increase in expenses.

    Expenses in the fiscal stood at Rs 13.59 billion, up 24 per cent, from Rs 10.98 billion in FY09. (Disclaimer: All expenses figure are on approximate basis barring PVR, as the companies have not given the expenses for the exhibition segment separately.).

    Fame India, Reliance MediaWorks and Cinemax had seen over 30 per cent increase in their expenses during the fiscal, compared to the year-ago period.

    Inox saw a 16.5 per cent rise in expenses over the year-ago period, while PVR kept the expenses under control with just over one per cent increase over the earlier year.

    At the operational level, all the exhibitors had a bad year as between the two fiscals, their profit narrowed by 58.3 per cent in FY’10 over the year-ago period. The FY’10 operating profit stood at Rs 179.09 million as compared to operating profit of Rs 429.69 million.

    The companies who suffered the most were Fame India (down 80.3%), and Cinemax (down 64.07%). However, Reliance MediaWorks, which had suffered an operating loss from the exhibition sector during FY’09 (Rs 454.56 million), increased the losses by nine per cent to Rs 495.37 million in the fiscal 2009-10.

     

     

    The cinema exhibitors are expected to put up a better show in FY’11 with an increase in ticket prices and, hopefully, more successful movies.

  • 2009: Bollywood’s Bad Year

    2009: Bollywood’s Bad Year

    For most observers, 2009 was year of mixed fortunes for Bollywood. While the industry took efforts to globalize and some of its talent got global recognition in the form of awards, it had a lean year on the domestic front.

    A multiplex strike and a drought of hits got the industry into a tizzy. The saving grace was the end of the year Xmas release, the Raj Kumar Hirani-directed Aamir Khan starrer 3 Idiots that went on to become the highest grossing Hindi film ever with a gross collection of Rs 3.15 billion and counting.

    The year‘s highlight was the aggressive moves by the Anil Ambani-owned Reliance Big Pictures into Hollywood. Reliance Big and American filmmaking icon Steven Spielberg locked the first phase of financing, sealing an amount of $825 million that would allow the joint venture to make six films annually for global audiences.

    Reliance Big Pictures also signed script development agreements with Nicolas Cage‘s Saturn Films, Jim Carrey‘s JC 23 Entertainment, George Clooney‘s Smokehouse Productions, Chris Columbus‘ 1492 Pictures, Tom Hanks‘ Playtone Productions, Brad Pitt‘s Plan B Entertainment, Jay Roach‘s Everyman Pictures, Brett Ratner‘s Rat Entertainment, Julia Roberts‘ Red Om Films and Ron Howard‘s Imagine Entertainment.

    Karan Johar‘s Dharma Productions and Shah Rukh Khan‘s Red Chillies Entertainment finalised an arrangement with the Murdoch owned Fox studios in the middle of the year for the then under-production My Name Is Khan.

    Under this, Fox Star Studios would be marketing and distributing the film in India, while Fox Searchlight Pictures (which was responsible for the marketing of Slumdog Millionaire and Avatar) would handle the American release. US major studio Twentieth Century Fox would coordinate the release outside the US and India.

    The real biggie was the winning of globally renowned awards by Indian talent – namely AR Rahman, lyricist Gulzar and Resul Pookutty. Rahman pocketed so many awards for his music and songs for Slumdog Millionaire that he probably has lost count of them.

    Two Oscars (one jointly with Gulzar for the song Jai Ho), a BAFTA, a Critics Choice Award, a Golden Globe, and three Grammy nominations, among several others. Pookutty, on the other hand, walked away with a Golden Globe and a BAFTA award for his involvement in the film as a sound engineer.

    2009 was the year when the global financial turmoil took its toll on Bollywood, forcing production houses to scale back. Adding to its woes were the general elections, cricket bonanza IPL which forced audiences to stay glued to their TV sets, and the multiplex faceoff between exhibitors and distributors.

    The second quarter between April and June was rocky. First, were the general elections which were held in five phases between 16 April and 13 May when people were busy with electing a new government. Naturally, people avoided going to the movies.

    Then there was a two-month multiplex strike from 4 April to 5 June that witnessed a virtual drought of movies. Though single-screen theatres remained open, films released in that period were hardly worth a mention.

    IPL season 2 played between 10 April and 29 May was shifted to South Africa because of the elections but that did not deter cricket buffs who watched the matches late in the evenings and into the nights. Result: footfalls in theatres for the evening and night shows dipped drastically. The swine flu scare also added its bit to keep moviegoers away.

    “Last year has been a tough one because of a couple of reasons. First, for three months there were no releases which caused a dent and a lot of movies bunched up that further ate into one another‘s revenues. Then, because of the abundance of movies, audiences declined,” observed UTV Motion Pictures CEO Siddharth Roy Kapur.

    Estimates are that about 140 films were released during the year. Attempts at releasing differentiated cinema were made with titles such as Delhi 6, Luck By Chance, DevD, Quick Gun Murugun, Rocket Singh, Wake Up Sid among many others. But they failed to strike moviegoers‘ fancy and did average to poor business at the box-office.

    Even star power did not help: the Akshay Kumar starring Chandni Chowk to China, Blue, Kambakt Ishq, Tasveer left the cash coffers relatively empty. As did Dil Bole Haddipa (Rani Mukerji, Shahid Kapoor), Luck, All The Best (Sanjay Dutt), Kaminey (Shahid Kapur), What‘s Your Raashee (Ashutosh Goawariker director), Aladdin (Amitabh Bachchan) and Main Aur Mrs Khanna (Salman Khan) and London Dreams (Salman Khan). No amount of fancy cinematography, visual effects or involvement of international artistes such as Kylie Minogue could save the much hyped and big budget Blue.

    Says trade analyst Amod Mehra, “For some years now, the concept of a ‘media hit‘ has come in, and so Dev D, Wake Up Sid and Kaminey were termed as hits, though the numbers just did not add up.”

    According to Indiantelevision.com only four films – apart from the biggy 3 Idiots– could be termed successes: New York, Ajab Prem Ki Ghazab Kahani, Wanted and De Dana Dan.

    In trade parlance, a super-hit must gross at least thrice the money for which it has been sold. This year, only 3 Idiots, besides two Hollywood films 2012 and Avatar could be termed super hits.

    It may be noted that the year 2008 had seven blockbusters while 2007 and 2006 tied with six grossers each.

    On a cost-to-profit ratio, 3 Idiots and and Yash Raj Films‘ New York did well. On the footfalls front, Wanted, the Hindi remake of the Telugu blockbuster Pokkiri, took the lead, especially at single-screen theatres.

    Other films like Paa, All The Best, Raaz- The Mystery Continues and Wake Up Sid did average business. The Hindi version of Oscar winner Slumdog Millionaire managed to make a small profit while the English one fell flat.

    Yash Raj Films and Eros Entertainment came out with four films each in Hindi of which all bombed or did average business at the box-office.

    On the film production front, film making companies like Studio18 desisted from releasing any films, focusing instead on cleaning up their acts while others slowed down their production schedules.

    Eros reached a milestone when its Marathi film Mee Shivaji Raje Bhosle Boltoy set the cash registers ringing. It was the overseas distributor for De Dana Dan that dished out commendable business.

    In the period of financial woes, satellite movie channels and filmed entertainment owners found a business model in syndication. The big deals swung during this period were movies from UTV and Eros. A few outright purchases were also made by Sony, Star and Zee Group.

    Multiplexes, who will have to dish out more towards content cost in relation to their revenue share after their new pact with the producers, have been bruised for two straight quarters in the fiscal. But with Bollywood churning out a few hits towards the end of the year, the plexes are sitting happy and expect revenue buoyancy in the last two quarters of the fiscal.

    The industry will have to face challenging times in 2010. Single-screen theatres have not done enough to attract audiences. As far as multiplexes are concerned, rising ticket and food prices have meant that moviegoers are becoming choosy about the film they would like to spend to watch.

    Hence, it is quite likely that the era of many blockbusters in a year might well be a thing of the past. The industry is likely to see fewer big hits, some releases with minor profits, some breakeven and most that will possibly bomb.

    Additionally, film makers will also have to take a hard look at costs. The trend towards multi-star films, rising star (whether in front of the camera or behind) fees, high marketing investments have made recoveries from ticket sales extremely difficult. Of course, they will also have to take care not to bunch releases close to each other; something which could prove difficult, though not impossible.

    Observers believe 2010 could prove to be a landmark year for Bollywood internationally. A lot will depend on how My Name is Khan does at the box-office globally. If the international distribution experiment by Fox delivers for the US studio, it could well pave the way for Bollywood to break into Hollywood film audiences.

  • ‘Consolidation in the multiplex sector will happen when the real value of the business is captured’ : Cinemax India senior vice president business strategy Devang Sampat

    ‘Consolidation in the multiplex sector will happen when the real value of the business is captured’ : Cinemax India senior vice president business strategy Devang Sampat

    Cinemax India Ltd entered into the multiplex business with a cluster approach, concentrating on Mumbai and the Maharashtra market. Running a cinema chain with 76 screens, it has a load of 40 screens in Mumbai and 18 across rest of Maharashtra.

     

    The thrust now is to build a national footprint with focus on locations that would give it an advantage. The expansion plan is to have 300 screens over a period of three years.

     

    Facing a slowdown, the immediate task is to add 60 screens in FY‘11 with an investment of Rs 1 billion. Cinemax will also push digital technology and expand its gaming zones.

     

    Cinemax has plans to raise funds but is not in a hurry. Promoted by real estate developers, it has an asset bank and can leverage it to raise debt. The company has a debt of Rs 750 million and the debt to equity ratio is 1:2.

     

    Cinemax is not keen on film distribution as it is a risky business. But it is readying to enter into film production and is waiting for the right script.

     

    In an interview with Indiantelevision.com‘s Sibabrata Das and Ashish Mitra, Cinemax India senior vice president business strategy Devang Sampat says consolidation will take time as average occupancy needs to rise from 24 per cent to 32 per cent and profit margins improve.

     

    Excerpts:

     
     
    Cinemax had indicated earlier that it would expand its screens to 300 over a period of three years. Has the economic downturn affected the growth plans?
    There is a slowdown for all multiplex operators as the mall developers are not pacing up. We will be taking our total number of screens to 100, from 74 in the year-ago period (earlier guidance was addition of 40 screens during the fiscal). We have closed down three screens in Faridabad as the mall wasn‘t taking off. But we are not revising our three-year target of 300 screens.
     
     

    Are you scaling down your investments in the short run?
    For the current fiscal, we are investing Rs 600 million. We will be adding 60 screens in FY‘10 and our investment requirement is Rs 1 billion.
     
     

    Will you be raising funds for this?
    We will take a call in December. We are not in a hurry and will raise money when we need it. With the promoters being real estate developers, we also have an asset bank which we can leverage.
     
     

    Wouldn‘t you like to retire some of the high-cost debt?
    We have a debt of Rs 750 million. The debt to equity ratio is 1:2. There is room to leverage and we are not facing any fund constraints.
     

     
    Cinemax has concentrated its multiplexes in Mumbai and Maharashtra. Will the spread out now be more national?
    Initially when we ventured into the business, we took a cluster approach in Mumbai. Now during the course of our expansion, the focus will be on going to good locations. In the multiplex business, location is king.
     
     

    ‘We will definitely get into film production. We are ready and are waiting for the right script. We feel this will complement our exhibition business‘
     

     
    Will you look at acquisitions or you feel the industry is not ready yet for consolidation?
    The industry has an average occupancy rate of 24 per cent. Unless this goes up to 32 per cent, the real numbers don‘t come up. The profit margins stay low. Consolidation will happen when the real value of the business is captured. Being real estate developers, the promoters decided to foray into multiplex as part of their retail business. The capital cost for Cinemax will, thus, be comparatively lower and the promoters have a better understanding of locations.
     
     

    How could Cinemax achieve operational break-even during the quarter when film producers froze fresh Bollywood content to multiplexes?
    This was primarily due to three reasons. Our presence is predominantly in Mumbai and Maharashtra. Secondly, there were some Marathi films that released during this period and they fared well at the box office. Thirdly, we own some properties, reducing the impact of the expenditure on lease rentals.

     

    We expect to clock Rs 2 billion this fiscal, up from Rs 1.54 billion a year ago.
     
     

    But the first quarter turnover was weak?
    We expect contributions to come from the new properties in the third and fourth quarters. The existing properties should give us a revenue of Rs 500 million in each quarter. Don‘t forget that the Khans (Salman, Shah Rukh and Aamir) will make their appearance from the third quarter onwards. As for profitability, we will maintain the same percentage as the last fiscal.
     
     

    Do you see a change in the revenue mix in the near future?
    We expect the Food & Beverage (F&B) segment to contribute 20-22 per cent in FY‘11, up from 18 per cent. Advertising income should go up from 8 per cent to 10 per cent. Currently, box-office collections account for 69 per cent of our total revenues and gaming zone and others six per cent.
     
     

    Having entered into film distribution, is Cinemax also looking at venturing into production?
    We will definitely get into film production. We are ready and are waiting for the right script. We feel this will complement our exhibition business.

     

    We distributed two films – Kismat Konnection and Singh Is Kinng. We managed to break even. But this is a risky business and we are not keen on it.
     

     
    What are the digital steps Cinemax is taking?
    Digital technology helps reduce piracy and enables 3D viewing. This will lead to an increase in the share of Hollywood movies released in India and, in turn, to higher ticket prices. We have introduced digital technology in 24 screens.

     

    We are also looking at augmenting our revenues from gaming. We have introduced gaming zones in six places and are planning to expand it to our other theatres.
     

     

    Does Cinemax have plans to set up cinema theatres overseas?
    We have no such plans.
     
  • ‘Global animation studios will set up shop in India for captive backend facilities’ : Ronald D’Mello – Maya MD and CEO

    ‘Global animation studios will set up shop in India for captive backend facilities’ : Ronald D’Mello – Maya MD and CEO

    Two years back, Maya Entertainment Ltd. was in trouble with two of its business verticals in the red. What followed was a restructuring and the education vertical since then has seen exponential growth to post over Rs 1 billion in FY‘09.

    The studio business has also grown and Maya is in the midst of releasing its first animated movie, Ramayana The Epic.

    Promoted by Bollywood filmmaker Ketan Mehta, the company went through an ownership change. Enam Securities holds 45 per cent stake, Bhukhanwala Holdings 20 per cent and Intel Capital, with three rounds of funding, around 12 per cent.

    The company faces new challenges as it scales up and plans to raise funds.

    In an interview with Indiantelevision.com, Maya MD and CEO Ronald D‘Mello, who is preparing for a new innings, reflects on how the company managed to turn around in the last two years.

    Excerpts:

    When you took over as CEO of Maya Entertainment Ltd, there was a need to restructure the company. What are the measures you took?
    There were substantial corporate hygiene issues which threatened the very structural stability of Maya as a company. In November 2007, we engineered a major restructuring exercise in our education vertical, risking almost half of our business, to eliminate conflict of interest positions of some of the key executives and employees of Maya, the group which went on to form a competing business. Thankfully, the exercise not only resulted in a clean and transparent Maya but also laid a strong foundation for substantial growth.

    On the studio side, the challenge was both on business development and internal operational disciplines which we were able to overcome.

    Did this mean that the key management of the education business changed?
    We terminated 13 educational franchise centres in north India which collectively contributed to 50 per cent of our turnover. The result was extremely satisfying. We were able to grow the education vertical billings by over 300 per cent over the last two years to make it an over Rs 1 billion activity in billing in FY‘09. In terms of number of franchise centres, we grew from 38 ( at the end of the restructuring exercise in 2007 ) to 70 by June 2009.

    We consolidated our position in animation education to become the largest player in career-oriented animation education. We created an Advisory Board comprising the stalwarts of animation industry to build a constant interaction between industry and academia so that the courses we offer are suited to industry needs. We converted the outlook of our courses from software to creativity- focussed. We also created a product ( MAAC Junior Toon Club ) for young students in the age group 7 to 14 as a creative enrichment platform to integrate with art and craft curriculum of schools across India. Association with IGNOU for degree program in animation and VFX was also a feather in our cap during this period.

    And on the studio front?
    We went on to have the most productive year in FY‘09 where the total output between international service work, own IP and domestic service work was amongst the largest in Indian animation studios.

    When you joined two years back, animation was on a high-growth curve. Did that help Maya ride the tide in any way?
    All industries go through highs and lows. Challenge is to get the best out of it when the industry is on a growth curve and to pro-actively future proof your business for industry lows. We did have the benefit of industry highs as much as everyone else in the segment did. But our growth probably outperformed industry and competition.

    are the challenges the Indian animation industry faces today as the global economy is in the midst of a downturn?
    I would rather not get too influenced by the downturn in global economy as it is the ‘uncontrollable” factor all are faced with. In isolation, I see Indian animation industry far slower than the hype it has created for itself. If we believe the global animation and VFX consumption numbers at over $60 billion, what India has managed to get in terms of service outsourcing is abysmally low even if you assume content production constitutes 10 per cent of the global animation consumption pie. Also, the demographics of India population indicate a good future for more youth friendly animation, gaming and VFX content.

    Unfortunately, most of the early entrants in Indian animation production space lack a long term strategy to sustain market penetration and growth over a longer period of time. Even the development of talent has suffered due to this short term approach. If you see the IT sector and how it grew over the years, you will find sustained long term stay over decades by some of the dominant players to make India the hub of IT services and create a large industry today.
    ‘Indian animation studios may not be in the position of strength, both creatively or in market reach, to be up on the value and risk chain on co-productions‘

    Several companies have ventured into animated movies for the domestic market as a scale up strategy. But most of them have flopped at the box office. How do you think this is going to impact the business?
    This is what I meant by short term approach. If anyone thought of producing an animation movie thinking it would be a huge success, it is a wrong base to start with. Animation movies, like any other movies, are not free from the risks familiar to film producers. Moreover, you have the task of playing in an unestablished segment of viewership. I am afraid it would take few more movies to fail and learnings from those taken, before we see the domestic industry evolving in animation. Till someone takes that risk and has a sustained agenda to create this segment, it would be hard to imagine the domestic industry to mature.

    In a period of hype, even Disney entered into a joint venture with Yash Raj Films for an animated movie Roadside Romeo when one thought they didn‘t require a local partner to aid them in what they are best at. Since the movie bombed, this may discourage international companies making animated movies for the Indian market. Are we entering a different phase of the business cycle?
    I don‘t think any international studio considers failures as end of the road. I am sure Disney and Yash Raj Films have drawn considerable learnings from their first attempt which will only help them to make it better next time, both in terms of content creation and market exploration.

    Is getting into co-production arrangements for international movies and TV series a more viable business model?
    It all depends where you place yourself in the value and risk chain. If you are the last man standing in the chain, no international co-production can change the game for you. I am afraid, Indian studios may not be in the position of strength, both creatively or in market reach, as of now to be up on the value and risk chain on co-productions. Hence, it may be a while before it happens to its spoken potential.

    What are the steps you took at Maya to prepare the company for producing an animated movie?
    Ramayana The Epic, Maya‘s first animated film, was already in its baby steps when I joined. We decided to provide a development budget to the director and team so that the idea can be taken to a script, few key character designed and a three-minute sample fully animated and composed sequence developed. At the end of this exercise, we were fully convinced that the team can deliver an astounding product and decided to move on.

    What is the budget for Ramayana and how have you de-risked the project?
    We would have loved to have some co-producer coming in through its production phase. But the overall economic slowdown and Indian film ( specifically animation films ) sector dampness did not help us. The film is now complete and being shown to potential distributors.

    How much does Maya depend on outsourced projects? How does it scale up its studio business?
    Maya is predominantly a service studio, barring the first IP we produced over the last year. I cannot really comment on the future strategy for the studio scale up as it would be now left for Maya board to drive the company.

    Are there too many animation companies fighting for too small a pie?
    The pie is big, but someone needs to take a really long term view of the potential and have sustained existence to bear the desired fruit. Meanwhile, I see international animation producers and studios setting shops in India for captive backend facilities which will open new avenues for talent.

    How tough is it for the small-sized animation companies to raise capital and survive?
    Raising capital is dependent on the industry perception, company fundamentals and overall investment market climate. I presume in the present scenario it would be difficult for an animation production player to raise funds as none of the above three are in favour. Education industry will attract investor interest for businesses which have good fundamentals and clear future focus.

    Is Maya planning to raise funds? How much, how and for what?
    Yes, we have been on it since last year. But I can‘t give you more details.

    You are quitting Maya at a time when it has still to grow. What do You think is the future of such companies?
    I suppose I cannot comment on this. I am sure Maya will be able to attract the next anchor and drive the business forward.

    You are quitting Maya at a time when it has still to grow. What do You think is the future of such companies?
    I suppose I cannot comment on this. I am sure Maya will be able to attract the next anchor and drive the business forward.

    How tough is it for the small-sized animation companies to raise capital and survive?
    Raising capital is dependent on the industry perception, company fundamentals and overall investment market climate. I presume in the present scenario it would be difficult for an animation production player to raise funds as none of the above three are in favour. Education industry will attract investor interest for businesses which have good fundamentals and clear future focus.

    Is Maya planning to raise funds? How much, how and for what?
    Yes, we have been on it since last year. But I can‘t give you more details.

    You are quitting Maya at a time when it has still to grow. What do You think is the future of such companies?
    I suppose I cannot comment on this. I am sure Maya will be able to attract the next anchor and drive the business forward.

  • Bollywood under stress as producers, plexes fight over revenue share

    The corporatisation of Bollywood helped clean ‘underworld‘ connections to a certain extent but it also created two new power centers – the producers and the multiplex owners.

    While both the moviegoer and the industry welcomed the advent of the multiplex, the euphoria didn‘t last for long. With the amount of business the multiplexes were doing, big-time producers wanted a raise in the revenue-share. The revenue-sharing topic has always been a matter of attention every time a Yash Raj banner film or one from a reputed banner came up for release.

    Till then multiplexes were passing on only 48 per cent to distributors when it should have been more, given the tax break. The Chopras, with some alleged arm-twisting, managed to get 2 per cent more even pre-Fanaa but this still left multiplex owners with a much higher profit margin than single-screen theatres.

    Recent revenue-sharing story

    The recent tiff between the producers and multiplexes started as early as February. While the producers were insisting on a 50 per cent revenue share for the first three weeks, the multiplexes were offering 50, 40 and 30 per cent revenue share for the same.

    After several failed discussions, the producers decided to go on strike and from 4 April they stopped giving release rights of new big-budget movies to multiplexes.

    After a month-long silence, both parties met on 5 May but nothing fruitful came out of the meeting.

    Not seeing any chance of the ice thawing, producers decided to release films in single-screens and independent multiplexes from 29 May. One of the films that were to be released was Vashu Bhagnani‘s Kal Kissne Dekha, the debut film of his son Jaccky.

    Later at a meeting held on 18 May, there was an underlying feeling that things would be sorted out at the meeting with the presence of multiplex owners like PVR‘s Ajay Bijli and Cinemax‘s Rashesh Kanakia along with Adlabs‘ Anil Arjun who have, prior to this, never attended any meeting besides Fame India‘s Shravan Shroff, Inox Leisure‘s Deepak Ashar and Fun Cinemas‘ Atul Goel. Representing the United Producers and Distributors Forum (UPDF) were Mukesh Bhatt, UTV‘s Ronnie Screwvala, Yash Raj Films‘ Sahdev Ghei, Eros International‘s Nandu Ahuja and Studio 18‘s Aman Gill.

    While the 50:50 revenue sharing terms for the first week were agreed upon, the bone of contention was the second and third week. The UPDF wanted terms which were a notch higher than the 42.5 and 32.5 per cent respectively. This meeting too didn‘t yield any result.

    On 23 May, the core committee of the UPDF met at the Yash Raj Studios where Yash Chopra, Vidhu Vinod Chopra, Aditya Chopra, Aamir Khan and Shah Rukh Khan met the rest of their fraternity to reach a consensus on the situation. The outcome was that they should not succumb to the multiplexes‘ demands, if any. The situation looks grim and to say the least has resulted in a deadlock. It was this day when Bhagnani backed out from releasing his film in single-screens fearing loss.

    On May 26 both parties met again. Just when they were getting closer to agreeing on the revenue-sharing terms, the issue of distribution strategy reared its head.

    Multiplexes want the content for all their properties, thus increasing the burden of print cost on the producers and in turn hampering the success of smaller films. Producers are now on course to chalk out their own distribution strategy for films which is the norm worldwide.

    “Giving the multiplexes the right to distribute films will kill the distribution business. If multiplexes think they can do distribution, then they should pay minimum guarantees. Moreover a big budget movie and a small budget movie cannot have the same distribution strategy,” says producer Harry Baweja of the Producers and Distributors Forum.

    Overview

    The disagreement between the two parties is being skeptically looked upon by industry professionals in the chain.

    Says 24 Karat Multiplex CEO Padam Sacheti, ” The strike period is a bane for us. It is loss all the way. I suggest both parties should keep their egos aside and work towards resolving the issue.”

    Though producers do not face any immediate financial losses, the release dates for several big budget projects have been disrupted. These include UTV‘s Main aur Mrs Khanna and Kaminey, Kal Kissne Dekha, Boney Kapoor‘s Wanted, Eros International‘s Aladin and Sajid Nadiadwala‘s Kambakkth Ishq. Almost Rs 2.5 billion has been blocked due to the delay in the release of these films.

    Says UTV Motion Pictures CEO Siddharth Roy Kapur, “Well I think films will release at some point or the other, hence for the producers there isn‘t really any loss technically. Delay doesn‘t hamper big films. It is only that the money gets blocked. The real time to worry would be when a lot of films will have to be released in rapid succession once the strike is lifted. Till that time there isn‘t any loss that the producers are incurring, I think the loss is primarily with the multiplexes, because every week that they lose, is a week lost in revenue.”

    The losses are indeed hurting multiplexes hard. “I would assume the loss to be to the tune of Rs 150,000 to Rs 200,000 a day per cinema,” says Fun Cinemas COO Vishal Kapur. “Talking about the occupancies, if earlier we would do 35 to 40 per cent of the available capacity, we are currently doing about 15 per cent,” he adds.

    The upcoming T20 world cup is also likely to hamper new releases and even if the strike is called off, big films will release July onwards.

    “It has been our stand for some time now. If there is no resolution soon, UTV will start releasing its big and small films in single theatres and non-national multiplexes from July onwards. We are working on the dates of releases of these films and they would be announced shortly,” says Siddharth Roy Kapur.

    Multiplex owners are mum on their losses due to the content blackout. But according to Indiantelevision.com estimates, the losses are close to Rs 2 billion. It is difficult to put a figure to the losses incurred by film producers due to the deference of their releases, some of whom have borrowed at exorbitant rates. The industry has also to figure out a smooth release window after the row between the producers and plex owners end.

    “A fatigue element seems to be building up. Both the parties are under financial stress and an amicable settlement would ease some of this pain. But there are structural issues that have to be sorted out on a long-term basis so that the revenue pie grows for all the stakeholders,” says an analyst who has been tracking the sector.

     

  • ‘We are seeing the beginnings of a global iconic brand in the IPL’ : Unni Krishnan – Brand Finance India Managing Director

    ‘We are seeing the beginnings of a global iconic brand in the IPL’ : Unni Krishnan – Brand Finance India Managing Director

    The Indian Premier League (IPL) is set to revolutionise the cricketing economy, draw in a new bunch of younger audiences with the T20 format, reinforce India’s superpower status, create club cultures, and build market values that are in line with the English Premier League (EPL).

     

    Just two years into birth, the IPL is enjoying a brand value of $311.44 million (IPL brand value of $240.72 million and IPL brand value to BCCI of $71.22 million) and an eye-popping enterprise value of $2.01 billion, according to UK-based brand valuation consultancy Brand Finance.

     

    There is no stopping Shah Rukh Khan. Not even a dismal performance at the IPL. Kolkata Knight Riders, the team that the Bollywood star owns, leads the pack of eight with a valuation of $42.1 million. Mukesh Ambani’s Mumbai Indians walks into the crease at the second spot with a brand valuation of $41.6 million, followed by Rajasthan Royals with $39.5 million. The others in the pecking order are Chennai Super Kings ($39.4 million), Delhi Daredevils ($39.2 million), Bangalore Royal Challengers ($37.4 million), Kings XI Punjab ($36.3 million) and Deccan Chargers ($34.8 million).

     

    The IPL and the team franchises will have to prepare for a long slog if they are to reach anywhere near the value of the EPL and its member clubs. They will have to induct professional management teams, introduce rigorous corporate structures, and chalk out strong commercial streams including merchandising and licensing.

    In an interview with Indiantelevision.com’s Sibabrata Das, Brand Finance India managing director Unni Krishnan talks about the wonderful start the IPL has made, the potential it has in creating a global fan base and the things that need to be done to stretch the value of the brand and its market capitalisation.

     

    Excerpts:

    Sceptics have questioned the rationale for valuing Kolkata Knight Riders at $42.1 million. Does the performance of the team get a low weightage in comparison to the high-profile value of Shah Rukh Khan as the team owner?
    The valuation process was on 2-3 months before the second edition of the IPL and, in many ways, you can’t predict the future. Having said that, enough data is available to prove that KKR has customer loyalty, a high degree of fan following, and amount of viewing for the matches that they play. Shah Rukh is able to generate an identity for the team. KKR is also able to tie in high-profile sponsors and sources of licensing and merchandising (L&M). Brand value is nothing but an ability to create fan base and convert that into cash.

    Even in the inaugural edition of the IPL, KKR didn’t fare too well. And in the second season, its performance has actually skid. So is there scope for a re-rating of the team franchise’s brand value?
    Unlike the EPL clubs which have created a track record, the IPL is new. When we went into the exercise, the performances were just a year old. Which is why we can’t yet form a strong view of a clear winner. The valuation of the eight team franchises falls within a tight range of $42.1 million and $34.8 million.

    KKR is one of the clubs which has made money from the first year itself. But valuations are not chipped in stone. When we carry out our second exercise after a few months, we will weigh in certain factors like KKR’s performance, captaincy and blogger issues that could have had an impact on the commercial revenue streams and the value of the brand.
    Brand Finance has valued the IPL brand at $311.44 million while fixing the enterprise value at $2.01 billion. Is there a ratio between the value of the brand and its market capitalisation?
    Since the IPL is at its infant stage, the ratio between the brand and the market value is low and not clear yet. We can arrive at a benchmark after 3-4 years as the value of the brand grows. In a typical matured stage, the range varies between the 40-50 per cent ratio. The brand-to-the market value ratio in case of the EPL, for instance, should fall within this region. The brand contributes to the market value in a significant way.

    How come a recent study by UK-based Intangible Business and MTI Consulting has almost halved the team valuations that you have arrived at?
    Valuations are based on opinions and the quality and strength of assumptions. We have conducted a rigorous exercise.

    Has IPL’s shift in home to South Africa for the second season created a disruption in the fan build-up process and hence a dip in valuation?
    The IPL property is not under-rated because it has gone to South Africa. We are, in fact, seeing the beginnings of a global iconic brand. In the cricket-following countries like England, South Africa and Australia, it is creating a new interest among the youth, who had moved away to other sports. A whole new set of fans and audiences are being created,breaching ethnicity and race. Led by a blend of Indian and foreign players, it will take the next 4-5 years to build a global fan base for the teams, cutting across the identification of countries. We are going to see a global brand coming out of India much like the Tatas. That is the potential of the property that IPL is.

     

    But the IPL will not have a clear run in this T20 form of cricket. There are other countries like South Africa and England who are going to have their own form of IPL. Serious competition is going to come. But having said that, the foundations and start of the IPL have been a huge success. The value is just not in marketing but also with a lot of economic substance embedded into it.
    ‘EPL clubs have a heritage of 100 years and have moved towards corporatisation. Some of the values of these clubs are in the wide range of $100-600 million. The IPL does not have that kind of legacy or magnitude. But it has a lot of headspace for value creation‘

    Do the IPL teams have the potential of becoming as big as the EPL clubs?
    The EPL clubs have a heritage of 100 years and have moved towards corporatisation and rigorous structures. Some of the values of these clubs are in the wide range of $100-600 million. The IPL does not have that kind of legacy or magnitude built into it yet. But it has a lot of headspace for value creation, though much depends on how an organised management process and system is being set up. We may have the teams being listed and huge value being created going forward.

    When do you see listing of these teams happening?
    There is a lot of money and Bollywood thrown into the system called IPL. Listings can happen in the next 3-5 years after revenue streams, cost drivers and the need for professional management teams are clearly understood. Sustainable value needs to be built. Some teams may even opt for private equity.

    How IPL is going to impact the business of sports marketing in India?
    It will be a game changing moment for sports marketing and merchandising in India. The global L&M market is $108 billion and is a significant industry on its own. Manchester United and Real Madrid have a vey strong licensing and merchandising model. India is taking its first baby steps. IPL is the medium under which these processes will come into the country. Bangalore Royal Challengers has already started focusing on sports marketing. L&M has a strong commercial role that needs to be developed, going forward. The IPL teams have appointed top legal firms to protect their IPRs. The leakages inside the system have to be plugged or you will have a case of lost opportunities.

    What are the steps IPL needs to take to scale up?
    More teams and seasons need to be introduced. But IPL can’t consider the T20 format as its personal fiefdom because competition is already starting. We are yet to see the teams take to the professional management skills that the EPL clubs have imbibed. But the teams are on the right track.

    Will Test cricket be severely impacted because of the T20 format?
    The Test format will be in crisis unless there is a reinvention in its game architecture. It is especially dying out among the youth in the developed countries. The T20 game has given a new lease of life to cricket. Whichever format is innovative will succeed. But T20 certainly has an edge.

  • Multiplexes take Rs 450 million hit

    Multiplexes have taken a Rs 450 million knock since the producers began to stop supply of their fresh slate of movies from 4 April.

    The pinch is particularly felt hard by the top six plex operators who account for three-fourth of the 850 screens across the country, according to information gathered by Indiantelevision.com.

    In this research article, Indiantelevision.com estimates the revenue loss to climb to Rs 850-900 million if the strike continues for a month.

    Analysis

    Let us examine the impact in revenue caused due to different occupancy rates due to the movie release embargo. The big six namely Big Cinemas, PVR, Inox, Cinemax, Fame Cinemas and Fun Cinemas themselves constitute about three- fourth of the total number of screens. While there are more than 11,000 single-screen cinemas across the country, the multiplexes contribute to well over 50 per cent of the revenue generated.

    The occupancy rates are expected to be significantly different in the multiplexes with major Hindi films not being released. According to Fun Cinemas COO Vishal Kapur, screens are currently operating at around 15 per cent occupancy.

    The table below shows the number of seats, revenue per-show and revenue per-day generated by all multiplex screens in the country at the given occupancy rates. The occupancy rates have been considered between 10 and 60 per cent across all screens in the country.

    Note that in the above table, the average number of seats per screen in a multiplex is taken to be 230 and the total number of screens has been taken at 850. The average price of a movie ticket has been considered to be a conservative Rs 125. Additional losses would include loss in sales in food and beverages at the counters which is estimated to be around Rs 35 per-seat. The total loss, thus, incurred per-seat per-show would amount to Rs 160.

    A 10 per cent occupancy rate causes a difference of around Rs 15 million per day across all the 850 screens in the country. During normal times, screens may operate between 15 to 50 per cent occupancy depending on the movies showing at the time, says marketing head of Inox Harshavardhan Gangurde.

    Thus if we take a figure of 35 per cent to represent the occupancy rates of multiplex screens at any time of the year, in the current scenario there could well be a difference of 20 per cent in average occupancy rates.

    As is evident from the table, the multiplexes earn Rs 30 million less per day from ticket sales and food counters. Per week, this amounts to a loss of Rs 210 million in revenue, taking all multiplex screens into account. This figure does not include additional sources of revenue from vehicle parking and other such ancillary sources. However, the IPL may well have tempered the losses as it has the potential to lower the occupancy rates in the multiplexes.

    The big six hit the most

    The top six multiplexes took the biggest hit in revenue losses, as is evident from the table below.

    IPL impact on movies

    Many believe that the IPL is one of the main reasons for bringing a halt to the release of Hindi movies. The IPL took the country by storm in 2008 and is believed to have eaten away significantly into box-office collections. Industry observers believe that this is the right time to hold movies from releasing in multiplexes as it would in any case lead to significant losses. Movies released during the IPL in 2008 (from 18 April to 1 June) include Sirf, Tashan, Anamika, Mr. White Mr. Black, Pranali, Jimmy, Bhootnath, Jannat, Don Muthuswami, Dhoom Dhadaka and Ghatothkach. Clearly, most movies released were not big-budget movies. The only significant movies released during this time were Tashan, Jannat and Bhootnath. Jannat was the only movie which did reasonably well while the others had nothing much to write about.

    This year, during the IPL season, producers have decided not to jump into the fray at all. The IPL has provided the perfect time and opportunity to broker a deal with multiplex owners.

     

    Conclusion

    There could be a 20 per cent loss in occupancy rates if the United Producers and Distributors Forum stays put in not releasing new movies till a settlement is reached. From our calculations, this difference in occupancy rates would amount to revenue losses of Rs 850-900 million per month in multiplexes. This figure is much lesser than Rs 1-1.5 billion per month as is being claimed by some industry sources.

    The IPL has provided the perfect time for producers and distributors to settle the issue with multiplex owners. This issue had been simmering for a while ever since the release of Fanaa by Yash Raj movies way back in 2006. A sensible resolution of this issue hopefully would be reached during this time which would serve the best interests of either party for a good period of time.

  • ‘Scaling up through film acquisitions is a risky model’ : Mahesh Ramanathan- Big Pictures COO

    ‘Scaling up through film acquisitions is a risky model’ : Mahesh Ramanathan- Big Pictures COO

    Rock On! was only the beginning. After going on to create a new set of cult audience with their first co-production, Reliance ADAG's Big Pictures is bullish on its 18-movie slate for 2009.

    On the distribution front, Big Pictures rode on the success of Ghajini at the fag end of 2008 to get a slice of the overseas business with Rs 390 million. The challenge this year is to step up the film production and distribution business.

    In an interview with Indiantelevision.com's Anindita Sarkar & Gaurav Laghate, Big Pictures COO Mahesh Ramanathan talks about the company’s production plans and the revenue scope that the film business offers as different studios scale up.

    Excerpts:

    Big Pictures had made a grandiose announcement of producing 18 movies in 2009. But with the economy slowing down, is there a revised plan?
    With the Indian film industry growing at a CAGR of 17 per cent, which is almost double the GDP growth rate, box office definitely remains unaffected. Though there is a slowdown in the economy, that definitely does not lead to any de-growth in demand. If the content remains right, there can't be any downturn in consumer sentiments when it comes to movies.

    Having the financial muscle of Reliance ADAG, why has Big Pictures gone in for six Bollywood co-productions out of this roster of 18?
    Co-production deals for us actually bring in a perfect marriage between creativity and commercial acumen. While we bring in certain virtues like financing, marketing, promotion and distribution of content through our various platforms (online, home video, mobile, DTH), the director still calls the shots. However, he has to align his creativity with us to bring in the viability for the product for commercial exploitation.

    You will also be producing seven regional films this year. What kind of potential do you see in the regional film space?
    The regional film space currently accounts for 50 per cent of the Indian film market and is growing. While there is a huge appetite for Bengali films, the Southern region is definitely a huge market to tap. Marathi film industry is also revamping. So the potential to commercially exploit these markets remains huge.

    Any plans of entering the Bhojpuri market?
    We don't plan to step into the Bhojpuri market as of now as there are huge distribution challenges.

    Recently, we have seen a lot of small and mid budget films raking in good numbers at the box office which also includes your first Hindi production Rock On. Do you plan to create more small budget movies?
    Our business model is not based on budgets. While we do have a few low budget films like Sikander and Chaloo lined up for 2009, we will begin the year with our big budget Luck By Chance. Budget is purely a derived figure based on the demands of the script. Our approach is more towards building a portfolio across a variety of genres that include small, medium and mid-budget movies.
    'Our business model is not based on budgets. Our approach is more towards building a portfolio across a variety of genres that include small, medium and mid-budget movies'
     

    Year 2008 was a year of film acquisitions for some major studios. Why did you decide to stay away from it?
    Scaling up through film acquisitions remains a very risky model. When you are acquiring a film, there is a lot of producer profit that is built in which jacks up the price. Our business model focuses on creating original content. Not only can you keep your costs low but also ensure that the viability of the film remains secured.

    If you are into acquiring of films, you are entitled to exploit the product only for a stipulated time period. This is not the same case with content creation. Original content helps you build your own catalogue and once the catalogue is built you can use it to create more revenue streams.

    What role does marketing and promotion play in increasing a film's occupancy in theatres and multiplexes?
    Huge! Take Ghajini for example. The pre-release marketing and promotional activities for the film induced extreme interests amongst audiences and as a result Ghajini witnessed almost 100 per cent occupancy in its first week at theatres. The marketing activities that we did across 40 territories overseas also helped us generate a lot of eyeballs. So marketing is definitely very important to tap the right audiences.

    How difficult is it to tap the right set of audiences?
    Because of media fragmentation, it is becoming very difficult to reach the right set of audiences and engage them. Today, you cannot pin your hopes onto only the press and television. You have to have a 360 degree approach and mass customise your communication to audiences – and this is where we score. We have a presence across almost all media and entertainment platforms – be it radio, home video, online, mobile, social network etc. Thus, synergising all these platforms helps market and promote our films in a much focused way. It is also very cost effective.

    How do you strategise your film marketing activities in the international space?
    Unlike India, it is more of micro-marketing in the overseas market where you target the diaspora. Hence, the choice of media vehicles is more local there. You have to be aware of the local newspapers and have to have a local expertise and channelise them smartly.

    Though in terms of value the Indian film industry is only 2 per cent of the entire global box office, it is generating interests across international studios. Why?
    When it comes to the number of films produced in a year, we are definitely the largest in the world. India produces over 1000 films a year. We are also the largest box office in the world with 3.5 billion admissions a year. While Hindi films account for approximately Rs 50 billion, a similar amount is generated from regional movies. So it's definitely an attractive market for international studios that have long term plans in this country.

    When it comes to value, our box office stands at only 2 per cent of the global box office. But that is because our collections are still dependent a lot on single screens where ticket rates are really low. However, with the establishment of 3700-3800 multiplex screens in the next five years, we will see a lot of value being added to the box office.

    How much of the revenue generation potential of a film is inflicted by piracy?
    Between theatrical, home video and cable, it is estimated that the overall piracy eats away almost 80 per cent of the film's entire revenue potential.