Bollywood is raining money
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It is raining money on Bollywood boulevard, with banks, non-resident Indians, international production houses, corporate and media houses joining the party and clamouring for a piece of the Hindi film trade.
Hit or flop, Bollywood films are raking in big bucks. Box-office collections have ceased to be a parameter of gauging a film’s success with most films recovering money through the sale of satellite, music and Internet rights, brand-placement, overseas markets et all.
“Everybody is making money; even the distributors who used to cry hoarse when films flopped at the box-office. Showing the film to less people at Rs.120 is more profitable than screening it full house for Rs.20,” said producer Vashu Bhagnani.
Only 40 percent of the revenue of a typical Bollywood film today comes from the box-office; the rest comes from music, DVD, satellite and Internet rights and direct-to-home (DTH) TV services and mobile ring-tones, according to latest estimates. In fact, Bollywood movies in Britain are reportedly collecting more earnings than British films.
Given the near surety of recovering investment, banks, corporate and media houses are pumping money into Bollywood with trade watchers welcoming the investment but at the same time cautioning that the need for quick recovery could signal the return of formula films.
For the first time since the Mumbai studio-based Hindi film industry was given the status of an industry in 1998, the portion of non-traditional (bank loans, initial public offering - IPO, private and individual equity, companies, TV broadcasters) sources of funding for Bollywood’s organised mainstream film market has surpassed that from traditional ones.
Traditionally, the industry had attracted money from dubious sources including underworld dons in search of glamour, acceptability and venues to use their unaccounted money.
Not any more. According to a Yes Bank report, at least 60-65 percent of the funds needed by Bollywood, which spends over Rs.8 billion ($177 million) annually, are coming from institutions and large corporate houses. This is a remarkable transformation from the 10 percent institutional funding four years ago.
The likes of IDBI and Exim Bank, besides a host of key media and corporate players, have jumped into a business that was hitherto dominated by dubious moneybags.
The industry that churns out more films annually than anywhere else, is on a honeymoon with India Inc. Statistical projections by consultancy firm KPMG says the entertainment industry is growing at 18 percent a year and is set to touch Rs.588 billion in revenues by 2010, and the film industry alone is expected to cross Rs.140 billion.
Earlier, less than 30 percent occupancy was the criterion for declaring a film a flop, but today it calls for celebration. Till recently, distributors and exhibitors were the only ones lamenting the box-office’s financial crisis. But distributors are now a happy lot as they get minimum guarantees from producers and commissions from film publicity.
They no longer need to pay rental to the theatre owner irrespective of the movie’s fate because now revenue is shared between the owners and distributors. With traditional moviemaking economics undergoing a sea change due to mushrooming satellite channels, the new media and emergence of overseas markets, theatrical revenues account for a very minuscule portion of the booty.
According to a report, over the next five years 50 percent of film revenues will come from the ‘new media’ that includes Internet, direct-to-home (DTH), mobile phones, radio and other pay-per-view interfaces.
Bollywood is the main source of entertainment content for the mobile operators who cater to a whooping 50 million. Wallpapers, ring tones, screensavers and games on mobile phones are reaching out to this section for publicity and revenue.
While producers are assured up-front payments by selling rights of the film before its release (sometimes even before it is conceived), banks, IPOs and corporate tie-ups are making it easy for them to generate the money they need in the first place.
Increasingly, moviemaking in Bollywood is becoming not only loss-proof but also risk-proof. Insurance companies are offering a range of schemes that cover nearly everything from the toe of an actor to fire on the sets.
But even the risk of cost overruns and delays can be mitigated because companies like US-based Film Finance Inc are offering “completion bonds” to producers, news reports say. Under this system, while producers pay a steep fee of three percent of the cost of the film, financiers breathe easier because the company underwrites these two key risks.
— IANS
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