Mumbai: Indian film companies, currently fending off the cost of producing and distributing high-cost movies, say the global slowdown has paved the way for tighter budgets, and fewer but better offerings in 2009.
India’s film entertainment sector grew by over 13% in 2008, crossing Rs10,000 crore but industry players expect a grim 2009 that will see nearly a third of the films already produced going unreleased due to a lack of funding.
“It’s my prediction that nearly 30-40% of the movies made will not be released in 2009,” said Ronnie Screwala, chief executive officer at UTV Software, which has interests in broadcasting, television and movie content and gaming.
“Last year everyone started making movies to sell them to somebody else. That model has vanished. So, now you are only going to distribute movies if you’re convinced it is going to do well,” he said at a media conference this week.
The release of a few movies may get pushed to as late as 2010 as funding becomes a problem, Rajesh Jain, head of media and entertainment at KPMG Advisory, said, adding that the industry could even see “de-growth” in 2009.
Vibrant growth in India’s infrastructure, automotive and consumer goods sectors over the last 2-3 years had stoked a consumer spending boom but high interest rates and peaking inflation in the second half of 2008 have effectively put a brake on expenditure.
India’s manufacturing activity shrank for a third month in January even after authorities took a raft of measures, including aggressive rate cuts and two stimulus packages, from October-onward to prop up growth and stimulate demand.
In addition, film costs have more-than-doubled over the last 2-3 years with talent comprising more than 50% of the total cost base of a project.
Therefore, for films to profit, lead stars will either have to take a salary cut or work out a ‘revenue-share´ model with producers, industry players said.
“Cost of production went up to a level and breakeven point did not justify that kind of a cost structure. Consequently, 2008 didn’t see a lot of hits,” KPMG’s Jain said.
Returns on investments in mega-budget flicks have also been dismal, with films such as Drona, Victory and Love Story 2050, all released last year, tanking at the box office, industry players said.
However, they remain hopeful that the slowdown will bring costs down to a reasonable level and ensure that quality movies are made at a decent price.
“Everyone is backing out of projects. I think there will be a lot more rationalisation of costs now. There will be a lot of quality projects available at rational prices,” Sheetal Talwar, managing director of Vistaar Religare Film Fund, said.
The fund, which has a total capital commitment of Rs200 crore, has financed Victory, the story of a small-town boy who becomes a cricket legend and crime thriller The Stoneman Murders.
Film producers and financiers, who have so far complained about the poor quality of scripts and high ticket prices which repulsed audiences, were unanimous that 2009 would be about better scripts and quality content.