New Delhi / Mumbai: Over the next two years, India’s film industry will actually start functioning like one. In this period, business groups and companies such as Network 18, the Reliance-Anil Dhirubhai Ambani Group (R-Adag) , UTV Motion Pictures Plc., Percept Holdings, Carving Dreams Entertainment Ltd, Eros International Plc. and Saregama India Ltd have lined up between 120 and 140 projects at a total cost of around Rs4,000 crore.
Each of these companies will produce between 10 and 30 films in the next two years. All of them will have a steady pipeline of releases: some will have one new release every quarter; others may have up to four. And most are signing actors, scriptwriters and directors for more than one project, ensuring that they have the required bench strength to function pretty much like a motion picture assembly line.
Or a Hollywood studio.
“If you identify films as your core business, you have to churn out enough volume to establish your credibility in the market,” says Siddharth Roy Kapoor, executive vice-president (marketing, distribution and syndication), UTV Motion Pictures. “That’s how the Hollywood studios work, and that’s the model the organized corporate players in India are trying to emulate,” he adds.
In the process, Bollywood, as India’s Hindi film industry is known, itself is beginning to look more like an industry. In 2006, India saw the release of 223 Hindi films out of a total of between 900 and 1,000 (the Telugu and Tamil film industries are almost as prolific as Bollywood). The majority of the 120-140 projects lined up by production companies are in the Hindi segment.
Celluloid Dreams (Graphic)
Bollywood is currently dominated by traditional production houses that release, on an average, between two and four films a year—some do just one.
In contrast, UTV will make around 30 films in the next two years at a total cost of Rs400-500 crore. The Indian Film Co., promoted by Network 18, plans to spend Rs400-450 crore and make 25-30 films in the same period. Reliance Entertainment, part of R-Adag, will, according to people familiar with the development, spend Rs500 crore and produce 25-30 films. And Percept Picture Co., the production company of Percept Holdings, will spend a similar amount, but over the next three years, and produce 17 films. Other firms, including Saregama, Eros, Balaji Telefilms Ltd, Carving Dreams and Pritish Nandy Communications Ltd also plan to spend significantly to produce several movies over the next two years.
The move to the “Hollywood studio model” is driven by funding, say experts.
“Film production involves huge investments. Traditional or smaller film production companies didn’t have access to institutional funds to sustain this kind of supply,” says Farokh Balsara, national sector leader (media and entertainment), Ernst & Young, an audit and consulting firm.
“Today, funding is not an issue. The Indian film industry has established its credibility among investors. So, private equity, capital markets and even global players are ready to place a bet on credible players,” Balsara adds.
The Indian Film Co. and UTV Motion Pictures raised around Rs450 crore and Rs300 crore, respectively, from the London Stock Exchange’s Alternative Investment Market earlier this year. And Prime Focus Ltd and K Sera Sera Productions Ltd raised around Rs150 crore and Rs60 crore, respectively, from the Indian stock markets last year.
Executives in the entertainment industry say that while funding matters, companies are moving to a studio model to address issues such as shortage of talent, rising demand for content, better cinema (or exhibition) infrastructure and emerging revenue generation opportunities.
“The Indian film industry produces the maximum number of films in the world, but the quality of our products is questionable and that’s because of scarcity of talent in the industry,” says Sandeep Bhargava, chief executive, Indian Film Co. “Everyone is trying to block talent by firming up their production schedule.”
Indian Film Co. has signed up scriptwriters and directors such as Anurag Basu, Anurag Kashyap, Rohit Shetty, Priyadarshan (who uses only one name) and Amit Sagar for its projects. R-Adag’s Adlabs has signed multi-film deals with actors Hrithik Roshan and Akshay Kumar and UTV has signed similar deals with actors Priyanka Chopra and John Abraham, and director Rakeysh Om Prakash Mehra.
Companies are willing to plan several projects at once and sign on actors, scriptwriters and directors also because of the growth in the number of cinemas across the country.
According to a report by industry lobby Federation of Indian Chambers of Commerce and Industry and audit and consulting firm PricewaterhouseCoopers, India had around 325 multiplexes and 12,000 single screens in 2006. Over the next four years, four companies—PVR Ltd, Inox Leisure Ltd, Shringar Films Ltd and Adlabs—alone will add more than 650 screens to cater to the growing demand for entertainment options in an economy that is expanding at more than 9% a year.
“The rate of return (on distribution and exhibition deals) is much better than what it used to be two years ago. A small territory, which fetched Rs30-40 lakh two years ago, is now earning us Rs1-2 crore,” adds Madhu Mantena, business head, Saregama Films.
Emerging revenue streams, such as home videos and mobile content, and growing demand from overseas market are also inspiring companies to plan ahead. “The avenues for exploiting Bollywood content have grown,” says Preet Bedi, CEO, Percept Picture Co. “Earlier, over 90% of the revenues would come from theatrical releases. Today, it has come down to 60%,” he adds.
“Other streams such as broadcast rights, gaming and mobile content are really growing fast now,” says UTV’s Kapoor.