Demonetisation pinches Bollywood as Box Office collections take a hit
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New Delhi: The dismal box office performance of last Friday’s film releases after the demonetisation of Rs500 and Rs1000 bank notes earlier in the week, hardly comes as a surprise. A drop of nearly 20-25% has been witnessed from what would have ordinarily been expected from the week’s collections, say trade and industry experts.
While Farhan Akhtar’s musical drama Rock On!! 2 notched up Rs7.01 crore in its opening weekend , Punjabi animation movie Chaar Sahibzaade: The Rise of Banda Singh Bahadur managed about Rs1.5 crore. Figures for the week’s other releases, Dongri Ka Raja, Billy Lynn’s Long Halftime Walk and Desierto remained unavailable.
“Like any other business sphere, there has been a very significant impact. That is essentially because the ticket counter is pretty much a retail business and most retail businesses which have a significant cash component, got impacted,” said Ajit Andhare, chief operating officer, Viacom18 Motion Pictures. “So an average Rs35-40 crore weekend has come down to almost 50% levels as a result of what has happened.”
While it is clear that not even the most ardent movie buffs will rush to the theatre after queuing up at banks and ATMs, there is more to the strapped-for-cash phenomenon that is likely to persist at least for the next couple of months.
To be sure, the demonetisation move may not directly impact Bollywood’s basic modalities. For one, producers are unlikely to tamper with release schedules considering there are back-to-back films lined up at any given point of time and a delay only means additional marketing cost. Plus, there is the basic funding mechanism.
“In Hindi, the prominent producers all work within the studio system and have been on 100% cheques for a long time. With corporatization of the industry, that problem is not even relevant to the film industry,” Andhare said. In 1998, the National Democratic Alliance government granted cinema the status of an industry, making it eligible for institutional funding from banks.
“But I do think the industry in the south will get impacted because it has not seen many organized, corporate players,” he said.
However, the move may impact the Hindi film industry in other ways, especially, if there are big budget films in the pipeline. “They (big budget films) have already crossed the bridge so there’s no repairing the damage there but the collections (of movies) will reduce no doubt and that will automatically be adjusted in the production cost,” said Sanjay Bhandari, financial adviser to the industry. “It works in reverse; based on the profile, story and banner, somebody estimates the revenue likely to come in for a film and then works on the production budget. Now if they know they will only get Rs40 crore instead of 50, they will spend Rs10 crore less on the budget. People will not spend big money on big-budgets movies because about 60-70% of the collection comes from India,” he added.
Further, the demonetisation move might also mean a fundamental change in people’s inherent movie-watching habits.
“Recovery has reduced, so either multiplexes will have to reduce their prices. Or since movies are the only source of entertainment in India, people will look for alternatives,” said Bhandari.
“We’re used to seeing weekend collections of Rs100-200 crore. Now films will recover slowly because people may want to watch on digital or at low prices. They will wait for downloads or for a TV premiere. They will continue to watch movies but if a ticket is priced at Rs1000, they will prefer going to a single screen,” he added.
To be sure though, the picture is not entirely bleak. The most immediate respite is provided by the relatively heartening collections of American superhero film Doctor Strange that netted close to Rs20 crore by its second week, building on its young, multiplex-going target audience familiar with the online ticketing infrastructure. Devang Sampat, director of Strategic Initiatives at Cinépolis India, confirmed considerable rise in cashless transactions, a move they encouraged as a chain by introducing offers like 30% discount on online ticket bookings on their website and via booking aggregators.
“My sense is, it (the situation) is improving progressively, let’s say the release on 25th November will be better off than the one on 18th November,” Andhare said. “This is essentially a course correction and is a larger issue than just the impact on cinema and theatre. Over time, people will factor the same and single screens will essentially move on to some sort of a digital mechanism for sure. And of course, there will be liquidity and cash in the system. In my view, it is a three to four-week process to get to normal, if not earlier.”