Boxed out: Inside Bollywood’s lost magic

However, things didn’t move like they did before the pandemic. Hindi-language films disappointed. Star vehicles like Bachchhan Paandey, Heropanti 2, Samrat Prithviraj, Laal Singh Chaddha and Vikram Vedha tumbled one after the other at the box office. On the other hand, Chalikwar’s expenses mounted.

Earlier this year, he decided to shut the theatre for good.

“We haven’t seen anything other than Pathaan work in months. Films are either not releasing consistently or are failing to draw any viewers," Chalikwar said.

His travail reflects the struggle of many other smaller cinemas, primarily those dependent on Bollywood or Hindi language cinema. Unlike multiplexes, which can showcase multilingual content and lure up-market audiences on premium rates, the smaller theatres are symptomatic of a broader battle the Hindi film industry is bracing up to—Bollywood simply isn’t growing consistently.

There are many reasons why. An under-screened theatrical market has increasingly alienated the common man, thanks to overpriced tickets and food and beverage (F&B) offerings; there is a famine when it comes to organized capital; some stars charge exorbitant fees, leaving other stakeholders with a smaller pie; negligible government support, despite the much-recognized soft power of cinema, makes survival even more difficult.

Numbers gleaned from trade experts and reports underline the inconsistent growth of the industry and the impact of the pandemic.

The year before the pandemic, in 2019, Bollywood’s net domestic box office collections were estimated at ₹4,350 crore. The 2022 earnings were less than half that number, trade experts said. The industry had collected ₹3,300 crore in 2018 and ₹3,000 crore in 2017, underlining the stagnation trend.

Total box office revenue, earned by films across multiple languages, doesn’t show an increasing trend either. A recent Ficci-EY report estimated the domestic theatricals box office collections at ₹10,500 crore in 2022. While collections have recovered from the pandemic lows, it is yet to top the 2019 numbers—box office revenue totalled ₹11,500 crore in 2019.

North America, in contrast, is soaring when compared to just Bollywood. 2022 closed at $7.5 billion, a gain of 64% over 2021, according to data from ComScore Movies.

Even within the country, non-Hindi, regional language cinema is increasingly nudging Bollywood out of its coveted space in mainstream discourse: compared to 2019, Hindi cinema lost 11% in share of overall box office in 2022, while Telugu cinema has been the biggest gainer, growing its share from 13% to 20%, according to a report by media consulting firm Ormax.

The numbers signal that newer streams of revenue, like video streaming, haven’t shored up the financial health of the Hindi film industry while established avenues, such as theatres, have turned more unpredictable by the year. The overall box office is today more a function of high-ticket prices than actual admissions.

Where’s the money?

Any industry requires sustained capital, across its value chain. This is not the case with the Hindi film industry.

Banks or private equity don’t play a consistent role. And global corporations have refrained from active investment; their movie production operations are, more or less, defunct.

While the Walt Disney Co. is increasingly focusing on producing for its streaming platform Hotstar, others like Sony Pictures International Productions remain cautious. Warner Bros has no local production arm even though it distributes American films in the country and MGM (Metro-Goldwyn Mayer) hasn’t even attempted an entry.

What explains this disenchantment with Bollywood?

One, local co-producers have consistently refused to part with the intellectual property (IP) rights. Two, leading Indian male actors insist on commanding 60-70% of the production budget as salary. Third, the Bollywood theatrical film business model no longer fetches big returns in small towns. Returns were under stress even before the pandemic.

Therefore, it isn’t surprising that Disney India has decided against co-producing the next instalment of the Brahmastra franchise, a fantasy action film. Released in September 2022, the film generated revenue of ₹257 crore in India. However, it was very expensive to produce (about ₹400 crore) and didn’t make a profit, trade experts said.

Several studios believe it simply makes more sense to distribute Hollywood films—they bring in better returns and require negligible marketing, particularly the superhero franchises.

Some financial institutions are interested, but only occasionally. Banks have collaborated with companies like Yash Raj Films and Dharma in the past. But Vivek Krishnani, CEO of MovieVerse Studios, a freshly minted film content studio, pointed out that unlike the West, foreign financial partners have limited or no involvement in the creative aspects of filmmaking in India. As a result, they often shy away. “It is difficult to attract a foreign partner when they have very limited say in operations," Krishnani, who is a former managing director at Sony Pictures Films India, said.

What is further missing in the Indian movie business is easy connection between different stakeholders. Moviemakers, instead, rely on relationships and networking. “E-commerce helps buyers and sellers worldwide to come on to a single platform. But in the film business, we work with the old system," Pankaj Jaysinh, chief executive officer (CEO) of India operations, UFO Moviez, a cinema distribution network, said. “We frequently ask, ‘do you know someone who will finance?’ or ‘how to get to a certain distributor or producer?’ The result is an over-dependence on the middleman. More often than not, genuine stakeholders are misled," he added.

There is also room to improve on the transparency in the business, Jaysinh said. Many times, reported box office collections are different from actual collections. This misleads stakeholders who plan their marketing and distribution strategy accordingly.

How Bharat thinks

India is an under-screened film market. There are 9,000-odd cinemas but this count is steadily shrinking—single screens, particularly, are bowing out of the game. And there aren’t enough theatres beyond the metros.

The country’s movie screen expansion is deeply slanted towards the National Capital Region, parts of Maharashtra, especially Mumbai, and cities like Bengaluru that have a tradition of multilingual viewing.

According to the Ficci-EY Media and Entertainment Report 2019, there are 125 screens per million population in the US; 60 in the UK; a mere 8 in India. Lack of government incentives are a challenge but the bigger issue is the absence of content that caters to audience segments beyond the metros.

“There is no content conducive to audiences in tier-three and tier-four towns. This explains why so many theatres are shutting down. The need for incentives or rebates comes much later," said independent film exhibitor Akshaye Rathi.

The difference between the Hindi and the southern markets, Rathi added, is that in the latter, single screens still bring in a sizable chunk of revenue because the general tone of content appeals to a wider stratum. The southern films mostly focus on action, comedy, romance and songs—that makes for a wholesome package.

This, in turn, circles back to the quality of writers and directors that the Mumbai film industry is breeding, who are far removed from ground realities. They often fail to understand the ethos of small-town India. Therefore, they are unable to weave the experiences of small-town India into their stories.

Trade experts have pointed out that while several recent Bollywood films—such as Shubh Mangal Zyada Saavdhan and Badhaai Do—are set in small towns, their take on taboo themes like homosexuality or live-in relationships finds little resonance with the demographic.

“Many films today are made to service the actors who stand at the top of the food chain. They, in turn, need to think beyond Mumbai and Delhi and improve their understanding of how the rest of India thinks. What’s more worrisome is that they are surrounded by public relations agents who are more fanboys. They don’t give the right advice," Rathi said.

In contrast, in the Telugu industry, top stars have managed a serious connection with audiences that continue to hero-worship them and throng to their films, ensuring good openings. The cap on ticket pricing in states like Andhra Pradesh and Tamil Nadu further helps feed their fandom and movie-going habits.

Food for thought

On the other hand, the Hindi belt is plagued not just by high ticket rates but exorbitantly priced F&B, a factor that cinema owners attribute to unpredictable box office collections. In the absence of hits, F&B becomes a lucrative earnings option.

Siddharth Anand Kumar, senior vice president of films and events at Saregama India, which owns the boutique studio, Yoodlee Films, pointed out that while filmmakers get a share of ticket revenue, everything made from concessions goes to the cinema. In fact, in many cases, F&B may cost a movie-goer far more than what they paid for the ticket itself.

Concessions refer to retail section items such as popcorn, drinks and other items within the cinema complex.

While cinema screens were getting added consistently before 2020, the pandemic put a brake on the growth story, said Kamal Gianchandani, CEO of PVR INOX Pictures. However, it is true that multiplexes haven’t been able to penetrate down to India’s smaller towns and villages where most people don’t have the resources to afford discretionary expenses like cinema, he agreed.

“Multiplexes cannot work at ultra-low-ticket pricing. We’re not just dealing with high taxation rates but most of our equipment is imported (like projectors, sound systems and seats), not manufactured in-house," Gianchandani said, explaining the rates.

Further, F&B is an integral part of multiplex revenue across the world. “In fact, we’ve witnessed growth in total F&B volume, which is calculated by total F&B consumption in terms of value, divided by the number of patrons. If prices were such a deterrent, why would people be spending on it?" Gianchandani asked.

No new Khan

What is Bollywood without its stars?

Shah Rukh Khan, Salman Khan, Aamir Khan, Ajay Devgn and a few others have managed to hold on to their stardom. However, trade experts said that the new crop of actors are both overpaid and less effective—they are unable to draw people to the theatres. In fact, nobody from the younger lot can woo people to the cinemas by just starring in a film, in a way Salman Khan can. When it comes to the new stars, film goers would like to know more about the content of the film before they choose to visit the theatre.

That, however, hasn’t stopped many top and mid-level stars from increasing their fees by at least 20% over the past two years, with digital streaming rights emerging as a new source of income. While some correction is in the offing, much of the damage has been done.

Unlike Hollywood, Hindi cinema barely has a tradition of branded franchise films—the kind that Marvel is known to churn out on a regular basis—without the presence of big stars. In such films, the main cast is secondary and more of the production budget is spent on making the film itself.

Bollywood has tried out the franchise model before. One example is Rohit Shetty’s cop universe (Singham,Simmba, Sooryavanshi). But Yash Raj Films can bring scale.

While Yash Raj Films declined to comment on Mint’s queries for this story, CEO Akshaye Widhani, in an earlier interview, said that going ahead, the ‘spy universe’ (interconnected films whose plots will cross over, like that of Pathaan, Tiger franchisee and War) is going to be a big focus area for the company, and franchise films will take up a major portion of its theatrical slate.

At least Bollywood’s big production houses do seem keen to change the game.