The liberalization of Bollywood

The impact of the 1991 reforms may be exemplified best by the transition to multiplexes, but the change is much deeper

Lata Jha
Updated20 Jul 2016
A file photo of people watching a movie at a PVR multiplex in Mumbai. Photo: Reuters<br />
A file photo of people watching a movie at a PVR multiplex in Mumbai. Photo: Reuters

New Delhi: For a generation that grew up in the 1990s or earlier, the impact of economic liberalization on Indian cinema is best exemplified by the transition from rickety single-screen cinema halls to plush multiplex theatres.

The change goes much deeper. With the gradual dismantling of the licence-permit raj, the film industry came into its own, particulary after 1998, when the National Democratic Alliance government granted cinema the status of an industry.

The nature of film financing changed and the corporate sector stepped into movie-making. Over the years, the exhibitions business was also transformed, allowing audiences to experience luxury seating and the latest movie projection and sound systems.

The NRI inspiration

There were two key themes to movie-making in the 1990s.

First, pitching to the non-resident Indians (NRIs) and creating cinema that they would consume. This meant the use of big stars and the depiction of extravagant romance, affluent lifestyles and shooting in fancy locations.

Not that filmmakers hadn’t done it earlier. Manoj Kumar’s Purab Aur Paschim (1970) and Dev Anand’s Des Pardes (1978) were some of the earliest takes on the diaspora. But somehow, it never mattered as much as in the 1990s, when the work of three filmmakers—Sooraj Barjatya, Aditya Chopra and Karan Johar—brought in what film critic Anupama Chopra calls “a generational change”.

Trade analyst Komal Nahta adds that it was just a matter of the business evolving. It took Barjatya’s Hum Aapke Hain Koun (1994), a grand family drama that became the first Indian film to cross 100 crore worldwide, for filmmakers to realize that Indian audiences overseas were happy to watch traditional Indian films and weren’t obsessed with Hollywood.

“It was a turnaround,” Nahta said. “Indians and Asians living abroad started identifying with our films because filmmakers like Johar and Chopra offered them a taste of India and Indian traditions and values set in a very modern style. There was a good mix of modernity and tradition so they couldn’t complain that it didn’t compare with Hollywood. The making technique was Hollywood-ish but the roots were very Indian.”

The second significant theme entailed the push-and-pull of who defines what is Indian. From hipper, younger-looking background dancers brought in primarily by choreographer Farah Khan to the foreign brands that designer Manish Malhotra had introduced, it was a brand-new world.

“The big question was, can you wear brands like Polo, or a necklace that says ‘cool’ and still be Indian? And the answer was yes,” said Chopra.

She added that actor Shah Rukh Khan was the perfect embodiment of that idea. As his characters in a host of films like Dilwale Dulhania Le Jayenge (1995) and later Dil To Pagal Hai (1997) and Kuch Kuch Hota Hai (1998) show, he could be suave, witty and cool, but also totally Indian and grounded.

“DDLJ was probably the first contemporary film to give a benign view of the NRI,” Chopra said. “Shah Rukh Khan’s NRI was more Indian than the Indians were. The argument was that the Indian values are movable, you don’t have to live in India to be Indian.”

Film financing

Until the 1990s, the norm was to receive film funding from private financiers. A tribe of 15-20 businessmen would put in money that came at phenomenal rates of interest, about 3-4% per month. So, an amount of 2 crore borrowed for six months would come at an interest rate of 24%, which was deducted in advance, leaving only what was net of interest. That enabled a huge component of transactions to be carried out in black—including those with actors who often received remuneration in both cash and cheque. Of the former, no account was ever kept.

“In the new millennium, came finance from institutions like banks—like IDBI (Industrial Development Bank of India) which started financing at the rate of 15-16% per annum,” said veteran film producer Mukesh Bhatt. “After which came corporates about five years ago that brought investments on partnership basis with equity partners not charging any interest, but taking 50% of the revenue,” he added.

Breaking away from the age-old Bollywood tradition of ‘risking’ personal wealth saved up for years or mortgaging property to produce a single film, production houses have now adopted the studio model where there are systematic blueprints to ‘break even’ before a film’s release.

Studios such as Viacom18 Motion Pictures, Eros International, Reliance Entertainment and UTV Motion Pictures are engaged in operations that involve acquisition, production, syndication, marketing and worldwide distribution of full-length feature films. Their pre-licensing deals entail music, television, satellite, home video, internet, digital, in-flight, overseas and merchandising rights. Newer strategies include part-production and revenue-sharing post-production. Not to mention the beeline of brands that want to be associated with these films —either as sponsors or as part of the storyline (read brand integrations).

Prior to liberalization, Hollywood films used to hit the theatres in India months after their release elsewhere. Now they are part of the mainstream and arrive in India almost simultaneously with their worldwide release.

On 8 January 2016, Mint reported that Hollywood revenue in India had risen by more than 92% to 437.79 crore in 2015, from 227.62 crore in 2014.

ALSO READ: Hollywood’s revenue in India jumps over 92% to Rs437.79 crore

Exposure to Hollywood films rubbed off on filmmaking in India as well.

“Hollywood opened our audiences’ eyes to the quality of cinema and technology of a much higher standard,” said veteran filmmaker J.P. Dutta. “Their films, action and special effects were out of the world and that automatically raised the bar for us.”

Films such as Rakesh Roshan’s Krrish (2006) and Shah Rukh Khan-starrer Ra.One (2011) were greatly inspired by Hollywood film techniques. The makers spared no expense and hired foreign technicians in their action, make-up and special effects departments.

The studio model has taken over the industry to such an extent that producer Bhatt says single producers are as good as dead now.

Stars command astronomical figures and sometimes even demand a part of the film’s intellectual property rights (IPR). Actor Aamir Khan is known to take away 33% of the profit his movies make besides an upfront fee, according to people in the film trade who requested anonymity.

Others such as Shah Rukh Khan and Akshay Kumar mostly co-produce their projects.

Foreign entrants such as The Walt Disney Company (India), Sony Pictures Entertainment Inc. and Fox Star Studios have emerged as major players.

Recent hits like Disney’s ABCD2, and Fox’s Neerja, and Prem Ratan Dhan Payo, which was produced by Rajshri Productions and distributed by Fox, point to the connect they’ve made with Indian audiences.

Foreign studios spotted the opportunity in the Indian market after economic liberalization took root. The inherent glamour and potential of the Indian movie market was one lure, but the changing landscape of the Indian entertainment industry, with the mushrooming of multiplexes was a powerful compelling factor.

“Sony Pictures was actually the first Hollywood studio to enter Indian film production back in 2007 at a time when multiplexes were well and truly changing the culture of movie-watching and allowing for a wider variety of films to be released,” said Vivek Krishnani, managing director, Sony Pictures India. The studio made Saawariya, which featured Ranbir Kapoor and Sonam Kapoor in their debut performances.

Krishnani said the studio’s commitment to local production and distribution over the past few years shows its strong belief in the Indian market.

“It’s no longer just about formulaic films. India has become a fast evolving market where great stories are being told, new genres are being created and new audiences discovered. It’s a really exciting time to be in the Indian industry right now,” he said.

In 2015, the Indian film industry was worth 13,820 crore and is expected to expand at a compound annual growth rate of 10.5% for the next five years, according to the KPMG-FICCI Indian Media and Entertainment Industry Report 2016, ‘The Future: Now Streaming’.

The multiplex revolution

The biggest revolution in the 1990s happened with the advent of the multiplex.

“In the 1980s, people had stopped going to cinema halls,” said author and film critic Bhawana Somaaya. “One, because the condition of the single screens was pathetic so people from good families didn’t go to theatres. Plus the VCR (video cassette recorder) had come,” making it possible for families to watch movies in the comfort of their homes.

Plus, the cinema business was struggling because traditional large-format single screens weren’t viable—the 1,000 seaters couldn’t play Hollywood films, there was a struggle to fill them up on weekdays. The turnaround happened gradually after the first multiplex was opened by PVR at Saket in New Delhi.

Soon, the national government permitted 100% foreign direct investment in the exhibition business; some states rationalized the entertainment tax structure. Before the move, exhibitors were paying as much as 50% of the ticket price as entertainment tax.

“The other thing that took place was that a lot of state governments such as Maharashtra and Uttar Pradesh came out with an entertainment tax holiday policy in order to encourage a capital-intensive business such as exhibition,” said Kamal Gianchandani, chief executive officer, PVR Pictures, and chief of strategy, PVR Ltd. “That was really the big-ticket change that took place—a paradigm shift in the government’s thinking about this sector, which encouraged a lot of investment, plus helped in creating a social entertainment culture in cities and tremendous job creation in that.”

The immediate impact of the multiplex boom was the abolition of the limit on ticket rates.

“In the 80s and 90s, entertainment tax matters were handled by the charity commissioner and ticket rates could not be increased without his/her permission. So if a big film of a big star was out for release, the producer or distributor had to take special permission to hike ticket rates for the first three days or the first week,” recalled Nahta.

Today, he said, film tickets can have differential pricing for different shows or different days of the week. Indian filmgoers have journeyed from paying 30-40 per ticket to shelling out 500-700 and sometimes even 1,000.

“Exhibition is the one change brought about by liberalisation that stands out,” Nahta said.

Because of multiplexes which charge high admission rates and allow small seat-capacities, the game has changed for both big and small films.

“A big film would earlier cost 5-7 crore, now it comes at 100 crore. It’s also profitable to make the small films because earlier, one had 500-700 seaters. That has changed to 50-80 seaters. 40 out of 500 seats filling up doesn’t make commercial sense, 40 out of 80 seats does,” he said.

Also notable is the fact that the revenue-sharing ratio between multiplexes and producers is skewed in favour of the former. In the first week of a film’s release, a producer gets 50-52% of the business and over time, his share decreases. That explains why a marketing and promotional frenzy before every release has become intrinsic to filmmaking today.

“The whole game is about the first week or the first three days. And to lure audiences you have to market your film like crazy,” said Nahta.

On the flip side, he added, a lot of filmmakers are focusing more on their marketing campaigns than the content itself. “Why would a producer want to make a film that runs for long? He’s interested in making money for himself, not for multiplexes.”

Satellite invasion

It is also in film marketing that the synergy between film and television is most clearly seen. Before private television channels came on the scene, public broadcaster Doordarshan showed movies on television. But the kind of money paid by the movie channels at that point of time was fairly insubstantial. That has changed in the last 20 years, with films being purchased pre-release for telecast on satellite TV.

“That had two impacts on the business of cinema. One, that television networks, besides buying movies, started doing a lot of promotion—free as well as charged—to help position films in the minds of the viewers,” said Nitin Keni, chief executive officer, Essel Vision Productions Ltd, referring to the use of trailers, promos and teasers by television channels.

“On the other hand, because films were being picked up for exhibition on channels, slowly a larger portion of money started coming from satellite channels, in turn increasing the viability of the produce,” he said.

And along with Hindi, came the exposure to English channels.

“Because the Internet was pretty much non-existent the way it is today, with the advent of cable and satellite television, the Indian consumer got to see some of the best productions from across the world,” said Ferzad Palia, executive vice-president, head-youth and English entertainment, Viacom18 Media Pvt. Ltd.

“That opened up a whole new way of thinking and experiencing entertainment. And with that you saw the advent of a lot of progressive cinema as well, be it in terms of production, scale or subject.”

Other examples of the synergy between television and cinema may be seen in the direct satellite release of films that distributors do not deem viable for a theatrical release or in the tele-films that came out in the 1990s (Keni produced one of the first at the time—Mahesh Bhatt’s Phir Teri Kahaani Yaad Aayi in 1993).

Music reality shows have opened the doors for a generation of rich and diverse voices from across the country while innovations like Coke Studio have changed the perception that folk or classical music were only made for the old and experienced.

“That’s the great part of it—that it empowers people to dream and reach the top without going through the usual stuff,” said Shantanu Moitra, music director of films like PK and 3 Idiots. “The flip side is it’s become so easy that there’s no quality consciousness. But it’s survival of the fittest. If you’re good, you shall survive. But at least it opens the doors.”

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