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HomeEconomicsAn economic model of Bollywood – Part 3

An economic model of Bollywood – Part 3

What is the new economic model that is making audiences’ choice redundant?

By Shreya Narayan

(The article is the third and final part of a series of three, making an attempt to unravel the new economic model for film industry and throwing light on its various components)

Once upon a time, the consumer was the ‘king’. Whether a film will do well or not used to depend on the audiences. That was the most democratic way to determine a film’s fate. However, for business people such a thought is akin to gambling, which they cannot afford after such huge investments. The cunning corporate minds worked around this problem by creating a system that is, though a short term money-spinner…. has mired the industry in a vicious cycle with dangerous outcomes for the future of films.

The cunning corporate minds worked around this problem by creating a system that is, though a short term money-spinner…. has mired the industry in a vicious cycle with dangerous outcomes for the future of films.

Only that film gets corporate backing which has a star. How many stars are there in India, and how many films can they work for in any given year? Even the star directors have to have stars in their film to sell it or get good distribution deals. Thus nothing has changed….the star remains the central point of even this system. The corporates started luring these stars with obscene amounts of money…money the stars could not have dreamt of when they were doing well in the nineties. The untapped of potential of films became evident even to them, and so even those stars who acted coy with media before and did like not being insanely marketed, started spending huge amounts of money to publicise themselves. However, these huge films with stars bombed if the film was not good; consumers were proving themselves to be kings!

Corporates saw that though the star could pull the audience to the cinema hall for a few days if marketed well, he was not the reason a film worked. Again, to let the fate of the film be audience-dependent was not acceptable. Afterall, the star was taking as much money as the cost of making the whole film. That should give a picture of what does the rest of the film industry earn. The reality of the film industry is such that only the stars payment is done in earnest. Others may or may not get paid depending on whether the film does well or not. Services provided are not akin to payments made.

Only one person’s payment is assured and that’s why he moves around talking humility, goodness, social responsibility and being human!

Rest of the film industry’s stories are fraught with depression and unstable relationships, and non-payment of dues has a lot to do with it!

In order to assure that the fate of the film must not depend on the quality of films, suitable steps were taken. The most important was the marketing budget of the film. For e.g., Salman Khan was a big star in the 90s and even mid 2000s. He could get audiences till the theatre but his films were flopping. While only 3-5 per cent of the total film budget was used for marketing a film in days before corporatisation, the new numbers are staggering! With a whopping 40 percent of the films budget now dedicated to marketing, the marketing blitzkrieg is aimed to create frenzy about the film by putting the spotlight on the star. The result is that less than ordinary human beings attained demi-god statuses in the eyes of the public, dazzled by all the money and glamour and paid news of charity and goodness. The result of such marketing is that the star pulls in curious people in huge numbers in the first three days (Friday, Saturday, Sunday…that’s it). And even if the film is bad and no one comes from the fourth day to watch, the film would have recovered its cost and made a little profit! Thus even before the audience can make up its mind whether a film is good or bad, and if he should recommend it or pan it, the film has made its money, and secured all the parties involved, who then rush back to their plush holes to discuss another such project. The Consumer does not matter anymore in this system; in fact, the Consumer is dead!

With a whopping 40 percent of the films budget now dedicated to marketing, the marketing blitzkrieg is aimed to create frenzy about the film by putting the spotlight on the star.

But this is not all. There is a question of the audience preferring another film over the one that the big corporate house is releasing. This huge problem of competition has been shrewdly dealt with again, and is the most effective part of this economic model—removal of competition for a clear run at the box office! Thus when these big budget films are being released by the Corporate Houses into their friendly multiplexes, no scope is left for playing any other film at any decent business hour. One can often hear that the big star extravaganza is opening in 5000 screens all over. And when the audience goes to the cinema hall, this film may be running ten shows at the interval of every half hour. What are the choices? There are none! This is the film the audience ought to watch. One wonders at the legality of such business model considering all competition is quashed, and monopolistic moves are blatantly practised. But with the government sleeping over Cinema regulations for half a century, where is the question of fair trade practises?

One wonders at the legality of such business model considering all competition is quashed, and monopolistic moves are blatantly practised. But with the government sleeping over Cinema regulations for half a century, where is the question of fair trade practises?

When they say that a film has been made at a budget of say 100 Crores, they mean that the star took 35-40 crores, the film was made in 20-25 crores and the marketing costs etc. came to 40 crores. Now we all know what the average income of an average Indian is. Not even half of the Indian population may earn ONE Crore in their lifetime. Thus how easy it is to bring them into the theatres whipped up with marketing budgets of 40 Crores! Is the star really capable of whipping such frenzy on his own? No. But the star is getting both money, and adulation bought by someone else’s money….so that corporates can earn money from unsuspecting audiences, conning them into thinking that they are going to be served ‘Biryani’ when all they are served is ‘Instant Noodles’, the taste of which does not last even till they reach back homes. The danger of creating such demi-gods through marketing is that the star starts thinking that a film runs because of him, and thus the talent cost has shot up to almost 40% of the film’s budget.

And when they say that a film has made 200 crores, they do not want to emphasise that it was made at a budget of 100 crores. That is because it means zero profit for the producer. Only after a 100 cores film makes 200 crores does it break even in this new economic system. The overflow then contributes to profits. But that film is forgotten in a matter of weeks, and maybe viewed on TV within a month or two of its release. This is what the film business has come to.

Not only is the voice of the consumer dead, especially those who come out of curiosity in the first three days of a film’s release…….even the lasting effects of films are dead. Even before audiences can realise that they have come to watch a bad movie, the creators of the ‘Three Day Money Model’ have made their money and gone underground. Later audiences can be heard bemoaning the film, but they do not realise that their opinion does not matter in the business of ‘big-budget, big star’ films.

That is why there is no space for small films in multiplexes. They do not agree with this new economic model. And regional films cannot even dream of getting multiplex viewership till government changes policy decisions, such as the Fadnavis government did to at least get one show for Marathi films in Mumbai multiplexes. Thus, small films are dependent for box office revenues on the audiences/consumers; they do not have stars and thus no one shall give them the money to make demi-gods out of unknown actors. It is more ironic in the face of this sales pitch that multiplexes having smaller seat capacities shall give thrust to small films business when corporatisation started. But all that promise has proved as mere lip-service.

Before the big players entered the market, film industry could hope to make a few classics every few years. Now you will have one maybe every five years, and that too from the stable of the biggest producers only. Small films, unable to get a good release, only get a niche audience at the best of times, and the profit sharing ratio assures that small producers shall always be at loss. Those times when a small film could hope to be a runaway success, or when unknown actors without any backing became overnight stars, are long gone. Not to say that miracles do not happen, but those that do, happen against the biggest odds and hurdles which this powerful posse of the moneyed pose. Today no one, including most stars, would risk calling their films pieces of art. It’s because art has been sold on the altar of big star, big talk, big money, big marketing, big hype, big lies.

What has been the result of this Three-Day Money model? As per the FICCI-KPMG Report 2015, the total revenue of the film industry has remained stagnant since 2012 at Rs.11,240 crores to Rs12,640 crores in 2014. Of the top 20 films released in 2014, only four were profitable. On the cost side, propelling the star’s incentives as high as 40% of the cost of the film has backfired. This decision was the result of desperation of corporates to find certainty in revenues.

Nowhere else in the world does talent cost more than 15-20 per cent of the film’s budget!

As far as marketing goes, even till five years ago the ever increasing marketing costs were averaging 15-20 percent. Today averaging about 40% of the film’s budget, and laden with gimmicks on the back of the star, it’s the bane of producers, and delight of the talent who thinks he can shoot his cost more. The dangerous vicious cycle is for all to see. To add to this, the satellite/TV market has crashed several points. Some of the biggest films of 2014 like Jai Ho and PK had to go begging for television buyers. After climbing sharply for two years, the satellite revenues fell by half or more. Satellite rights had gone up to Rs. 50-60 crores after starting at around 20 crores, but now they are back to Rs. 25 Crores. According to film pundits, a movie with a budget of Rs.60 crore could hope to make 20-25 per cent, or Rs.12-15 crores from TV rights, however with the cost of movie making escalating up to Rs 100 crores, and Rs.150 crores, in which most of the money goes in marketing and ego massaging of the star, TV industry cannot be expected to proportionately fill the gap.

The sad part is that instead of searching inside for answers for the mess they have made, Corporate Houses are looking out to blame something/someone else. They say that India’s abysmal ten per million people screen density (the US is at 125) is to blame for lower revenues, and not the way they have helped spiral costs through mindless spending! Also the fact that the quality of cinema has only taken a nosedive does not seem to bother them. This utter disdain for Indian consumers and a bid to kill their choices with endless gimmicks does not seem to them as a contributor towards stagnation. Also the creation of more and newer talents is something they want to leave only to Yashraj. That policy shift could bring down the costs drastically. However, corporate houses do not seem to have the confidence to do so. Every time a new-comer is given a chance, they go looking for some star’s relative! Has it struck anyone that the best way to create talent is on merit?

The picture being thus, it’s important to determine the revenues earned by the film industry where Corporate Houses and their ‘Three-Day Money Model’ is not involved. That will determine how the film industry is actually faring. Twenty-thirty films releasing in a year should not decide the progress of the film industry when more than a thousand films do. That trade happens on principles of competition rather than monopolistic practises accruing from mere money power is something that can only benefit films.

If the government does not update the laws, the losers shall ultimately be the consumers. Else whose responsibility is it to see that the film industry does not become a pawn in the hands of a few? And that films are not a mere three day phenomenon? And that the frenzy for a star is created not through a 40 crores marketing budget, but by the greatness of the film? And that to truly see a Silver Jubilee again, one may not have to ride a time machine!

4Shreya Narayan is an actor. Her most recent work includes Tigmanshu Dhulia’s film ‘Yaraa’, and Syed Afzal Ahmed’s ‘Ye Laal Rang’, both slated to release in 2016. She also featured in Anurag Basu’s Rabindranath Tagore stories for Epic Channel, in the story ‘Dui Bon’. Her earlier work include films like Tigmanshu Dhulia’s ‘Saheb, biwi aur gangster’ and Inder Kumar’s ‘Supernani’. She has also co-produced her first film this year. Named ‘Wedding Anniversary’, it features Nana Patekar.

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