Khao Aur Khilao budget by Arindam Chaudhuri
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Bollywood Bullies
Today, the handful of multiplexes contribute about a third to half (depending on which report or consultant you believe) of the total revenues in this $2 billion industry. With above average occupancy rates (vis-à-vis single screen theatres) and higher ticket prices, splitting revenues definitely is an attractive option. But why keep the upper hand in the negotiation and demand terms better than a 50-50 split based on movie performance? For multiplexes, it’s simple economics. A big banner movie doing well rakes in the moolah that helps them subsidise their expanding operations in smaller cities (where average occupancy is less) and other screens in the same city. It is ridiculous, though, for a producer who risks huge amounts of money (especially now with financing drying up for movies) in making and marketing a film. A KPMG report points out that theatrical receipts make up 70% of a Bollywood film compared to a figure of 35% for a Hollywood film. Naturally, sink or swim at the box office is a matter of survival for the producer with the film so heavily dependent on its box office performance. No wonder, a producer like Mukesh Bhatt is fuming at the state of affairs. He told TSI: "It is not that no questions were raised on profit sharing. Negotiations used to happen but unfortunately, weren’t taken up seriously by them. When multiplexes had initially started off, there was a 50% sharing percentage but slowly as they picked up, they started demanding for more. It is the question of our survival. Profit sharing is our right. I see no reason why the multiplexes should have a problem. The producers make a film, incur all the expenditure in terms of promotion etc and these multiplexes just put it up, and also chuck it out as per their call of whether it is a hit or a flop. They are nobody to take that call.” The multiplexes are looking at a short-term gain, craving a bigger piece of the current pie, not realising that clever positioning can help them expand the pie without squabbling over a percentage point or two of revenues. Says Shubho Shekhar Bhattacharjee: "With the current standoff, the producers are not really getting affected. Due to elections and IPL coming up, as it is we would have seen few releases. So it's the call of the multiplexes now. They have to sort the problem because they will be at a greater loss.”
There are always alternatives to the multiplexes – be it DTH, web distribution or rentals. But the Indian market will take time to evolve. Says Mahesh Bhatt: "Technology is changing at a very fast pace. And of course, new and better technology will keep reaching the consumers.” In the meantime, the box office rules. But who rules the box office? The pampered bully who goes by the name of a multiplex? "If we succumb to their pressure, we are finished," says Mukesh Bhatt. The producers are united in a sort of a last stand. It looks like this fight for fair rights at the box office will be playing at a multiplex near you for quite sometime to come.
Tareque Laskar with inputs from Spriha Srivastava
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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Bollywood Bullies
Today, the handful of multiplexes contribute about a third to half (depending on which report or consultant you believe) of the total revenues in this $2 billion industry. With above average occupancy rates (vis-à-vis single screen theatres) and higher ticket prices, splitting revenues definitely is an attractive option. But why keep the upper hand in the negotiation and demand terms better than a 50-50 split based on movie performance? For multiplexes, it’s simple economics. A big banner movie doing well rakes in the moolah that helps them subsidise their expanding operations in smaller cities (where average occupancy is less) and other screens in the same city. It is ridiculous, though, for a producer who risks huge amounts of money (especially now with financing drying up for movies) in making and marketing a film. A KPMG report points out that theatrical receipts make up 70% of a Bollywood film compared to a figure of 35% for a Hollywood film. Naturally, sink or swim at the box office is a matter of survival for the producer with the film so heavily dependent on its box office performance. No wonder, a producer like Mukesh Bhatt is fuming at the state of affairs. He told TSI: "It is not that no questions were raised on profit sharing. Negotiations used to happen but unfortunately, weren’t taken up seriously by them. When multiplexes had initially started off, there was a 50% sharing percentage but slowly as they picked up, they started demanding for more. It is the question of our survival. Profit sharing is our right. I see no reason why the multiplexes should have a problem. The producers make a film, incur all the expenditure in terms of promotion etc and these multiplexes just put it up, and also chuck it out as per their call of whether it is a hit or a flop. They are nobody to take that call.” The multiplexes are looking at a short-term gain, craving a bigger piece of the current pie, not realising that clever positioning can help them expand the pie without squabbling over a percentage point or two of revenues. Says Shubho Shekhar Bhattacharjee: "With the current standoff, the producers are not really getting affected. Due to elections and IPL coming up, as it is we would have seen few releases. So it's the call of the multiplexes now. They have to sort the problem because they will be at a greater loss.”
There are always alternatives to the multiplexes – be it DTH, web distribution or rentals. But the Indian market will take time to evolve. Says Mahesh Bhatt: "Technology is changing at a very fast pace. And of course, new and better technology will keep reaching the consumers.” In the meantime, the box office rules. But who rules the box office? The pampered bully who goes by the name of a multiplex? "If we succumb to their pressure, we are finished," says Mukesh Bhatt. The producers are united in a sort of a last stand. It looks like this fight for fair rights at the box office will be playing at a multiplex near you for quite sometime to come.
Tareque Laskar with inputs from Spriha Srivastava
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM 4Ps Quiz- Shahrukh Khan Video
IIPM - Most Innovative B-School
IIPM Best B-school
IIPM
IIPM Global B-School
IIPM Alumni Officially on Facebook
IIPM 4ps Quiz
IIPM: History, and Founder Director Dr. M.K. Chaudhuri
IIPM New Delhi, The Indian Institute of Planning and Management, India
IIPM Placements New Delhi, India
IIPM New Delhi India
IIPM MBA Institute India
IIPM - International
Business and Economy - India's Most Influential Business and ...
Rankings IIPM, The Indian Institute of Planning and Management India
Management Certification, IIPM India
(IIPM) Management Education Institute India
Moneycontrol >> News >> Press- News >> IIPM ranked No1 B-School in ...
» IIPM ranked No1 B-School in India :: Education, Careers ...
The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...
domain-b.com : IIPM ranked ahead of IIMs
IIPM makes business education truly global-Education-The Times of ...
