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An Economic Model of Bollywood- Part 1

An Economic Model of Bollywood- Part 1

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

By Shreya Narayan

(The article is the first 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)

In 2001, the Government of India granted ‘Industry’ status to the Indian film industry. Corporatisation of films was hailed, and the mushrooming of multiplexes celebrated with gusto. After all, the unorganised ‘Star-system’ that was prevalent before institutional money came into the industry could be done away with and replaced by an ‘Organised’ Corporate culture. Mere verbal assurances as mode of functioning which was widely prevalent earlier, was to be replaced by standard accounting practices, business plans, targets, time schedules and insurance as mandated by banks and financial institutions. Corporatisation introduced several new measures to reduce uncertainty in revenues earned by a film. It brought in pre-licensing of cable, satellite/TV rights and distribution rights which helped producers to recover a percentage of film production costs before the films released. New sources of revenue; including the sale of merchandise and partnering with companies to advertise their products in films became known and marketing of films took new meaning.

There was a promise of good times and good times had certainly come for the corporates. Revenues of corporates (whose financial numbers are available) involved in film production have increased at a rate of about 16 per cent per annum from US$ 679 million in 2008 to US$ 1.05 billion in 2011. Net revenues of corporates involved in distribution (whose financial numbers are available) have also increased at a rate of about 19 per cent per annum from US$ 3.35 billion in 2008 to US$ 5.58 billion in 2011.

But do these numbers truly tell the story of the film industry?

How many days does the so called 100 crores film even do business? And who remembers these films? I am an actor and yet I have stopped watching these films.

In an industry that produces more than 1000 films a year, the number of films financed or produced by corporates are merely a handful. This means the revenues earned by these corporates are coming only from a handful of films. If all is well and upbeat, then why does the government need to intervene to make policy decisions, so that atleast one Marathi film can get one show at a decent hour between 12 noon to 9 p.m.? And who are crying foul in the name of democracy when those who do not have means get a chance? Why are small films lying in cans for years after getting made? Is what is happening in the industry really democratic? Whose films are getting a good release, and are they even in decent numbers? How many days does the so called 100 crores film even do business? And who remembers these films? I am an actor and yet I have stopped watching these films.

Anyone will tell you that it is not easy to make a film. It takes huge investment that accrues from huge risk-taking capabilities, and the knowledge that even at best of times, both your product and any profits that it may earn in the future, is a gamble at best. Money alone does not make a film; creative ideas and people do. To get the right people for the minutest of roles that comprise the various pillars of film-making i.e. direction, production, cinematography, production design, art direction, music, costumes, make-up and of course acting, is in itself an uphill task. 

For any medium budget film, as the shoot starts, so does a punishing schedule for each member. Tough targets are set, and every shot taken is tick-tocking the money consumption meter, a constraint not felt on a daily basis by big film-makers. However, creative pursuits can only be regulated to a certain extent. Afterall, everyone is human, especially the actor, who is the face of the film. He may not be able to give his best shot in a scene on the day that that scene has been assigned to be completed. To make a great film, great moments need to be captured. So the scene may require redoing, giving much heartburn to the producer.

To top it, production is a thankless job! No one is ever happy with what they get. The star who may be staying at a five star room, may want a suite, or arrangements where an attendant is provided to keep his girlfriend/wife entertained for the next one month. The character artists may feel offended if they do not get to stay in the same hotel that the star is in. Someone may want tofu instead of paneer, and some other person may want a supply of alcohol 24/7. The actress may not feel comfortable in her wig and may want extensions instead, while shooting in a village where extension means Khikri Extension 5km. The sound recording team may complain of the actor not taking care of their German-made equipments while acting high-handed with the actor. The steadycam team may threaten to quit if the Mr.know-it-all Star does not stop telling them how to do their job. And the spotboy may threaten to quit over some fight he had with the vanity van guy. It’s another matter that with money at stake, none of them will actually quit, but there is enough drama for everyone; and while all this is happening, the producer may be piling up crores on his head.

So, whenever a star says that he needs a break from shoot, the producer is probably preparing for a visit to the doctors in the near future, because his payable interests are piling up.

A day’s expense may be 12 lakhs upwards, for a medium budget film being shot in say 45 days time. This of course does not include the remuneration of the star. The film’s money may have been raised on credit with interests to pay, from a number of small creditors, who do not share the higher vision of delivering a good film. Thus, the risk-taking is mostly on the producer’s part. So, whenever a star says that he needs a break from shoot, the producer is probably preparing for a visit to the doctors in the near future, because his payable interests are piling up. While one may perceive the producer as a powerful figure, he is actually the most vulnerable figure on the set, whose health and fortunes are affected by the whims and fancies of even the most easily dispensable person on the film. But this is of course the story of independent producers.

Corporates have been making films with even unworthy stars at the price of 50, 60, 70, 100 and even 150 crores, and yet their business continues as usual even after their film bombs. How?

You may read the second part of the article at:

Shreya 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 Ep
ic 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.


India Brand Equity Foundation—Corporatisation of the Indian Film Industry

LiveMint- Multiplex operators seek higher revenue share. 

Business Standard- Film Industry battles high cost and low revenues.

Author’s experience and knowledge of the business of the film industry learnt on the job through co-production experience on ‘Wedding Anniversary’. 

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