Saturday, August 29, 2009

Business of Bollywood movies: Not the same anymore

The year 2009 has come and it is coming to an end. It has been another eventful year for the Bollywood cinema. So many things happened in the industry, some are good and some are bad. But the biggest change took place in the business of movie making. Things are not the same any more in Bollywood. The recession caused some major changes in the movie industry.

The fall of Bollywood:

After seeing an unprecedented growth Bollywood took a major blow in 2008. Because of the credit crunch, production houses cut their budgets and went for major overhaul. Banks and corporations, who previously invested in movies, scrapped many projects due to tight budget.

Normally, it takes around 40-50 crore to produce a high profile movie and Rs.5-15 crore for a medium budget movie. Reliance Big Entertainment, Mukta Arts, Studio 18 are some of the top production houses who produced majority of the high-profile movies in the last couple of years. They lost 50-80% of their capital in the last one year. The situation became further worse when high budget movies like Drona and Yuvraaj failed at the box office last year.

Introduction of a new payment system:

Interestingly, the economic recession had one good effect on the movie industry. It made movie production “cheaper by around 30%.” Previously, the actors were paid high amount of fixed fees but now the amount have been reduced significantly and they are given a share of the movie’s revenue. Top Bollywood actors like Shahrukh Khan, Aamir Khan got into such revenue sharing arrangements with their producers. The Hindu Business Line reports:

“In the past few years, everything was over-priced. Production, acquisition of talent, and salary costs had illogically shot through the roof with no commensurate returns at the end,” said Mr Yash Chopra, Chairman, Yashraj Films.

Agrees Mr Mahesh Bhatt, Creative head of Vishesh Films: “Talents costs have to go down considerably. Stars who were being paid above Rs 20 crore for a movie are now willing to take a 50 per cent cut in their fixed fee.

Here is another interesting comment from Mahesh Bhatt:

Producer-director Mr Mahesh Bhatt said corporations that entered the motion picture business had little knowledge of the industry.

“They approved astronomical payments to artistes for which they got no commensurate returns. There has to be some sanity in budgeting for films. Due to the slowdown, the industry will be cut in size, the honeymoon phase between corporate houses and artistes will be over, and there will unavoidable correction,”

Producer-Multiplex owner stand-off:

Another major event was the two-months strike called over by Bollywood producers in the middle of the year over revenue sharing with multiplex owners. The producers were demanding a 50:50 revenue sharing while the multiplex owners were asking for a performance based model. The strike started from early April and continued till June 5, 2009. Last year, around twenty movies were released at this time half of which were big budget movies. This year, the movie industry was badly affected by the recession. More over, the IPL cricket league, which started in the mid-April, caused a serious shortfall. All these coupled with the strike caused serious financial losses to one of the largest and most profitable movie industry in the world.

Over the past few years, large number of multiplex cinemas grew up in all the major cities Indian cities. They currently account for two-third of the movie ticket sales. Many producers even make movies only to release in multiplexes. Release of many top budget movies were stalled due to the strike. reports:

According to the final settlement, 50, 42, 35 and 30 percent for the first, second, third and fourth week respectively for all movies will be shared between the two parties.

According to Mukesh Bhatt, Chairman, United Producers and Distributors Forum (UPDF), the strike cost the Indian film industry over Rs.3 billion. The auxiliary industries like hoardings and advertising also incurred an estimate lost of Rs.1billion. The combined fixed cost losses including rent, salary, electricity bills, for multiplexes in the April-June quarter is around Rs.140 crores.

Releasing movies in 2010:

Because of the credit crunch released dates of many movies have been pushed to 2010. Movie makers are hoping that things would become better by that time.

Demise of commercial Bollywood movies:

It is true that the number of Bollywood films released per year increased significantly over the year but there had been no major change when it came to quality. Film making has become more like a gimmick especially, commercial movies. First, you take the story from a Hollywood movie, then throw in some of your own Indian masala like exclusive locations and songs, sexy heroin, one nice item song, some nicely shot fighting sequence and a little bit sex here and there and you got your next big hit. Now, spend few hundred thousand rupees on marketing and promotion and create a hype. On the opening weekend lots of people will come. The opening week is very much important because people are very much enthusiastic but after seeing the movie they do not want to see it again. Within two three weeks, they start to lose interest and a new movie fills in the gap. This has been going on for quite some times. Forget those movies that would create long queues in front of the theatres day after day. People now want masala movies for fun. Moreover, movie makers now make movies targeting a specific audience. Many producers make movies only to release in multiplexes. Lack of good story caused many big budget movies doing poorly at the box office recently.

Rise of movies with good stories:

The rise of multiplexes in recent times has also created a new type of audience that are looking for movies that has a good story. These movies do not have top Bollywood actors or actresses, they do not showcase expensive sets but what they have is good story and great acting. Movies like A Wednesday, Dasvidaniya, Khosla Ka Ghosla, Bheja Fry, Johnny Gaddaar, Dasvidaniya. If I have to name my most favorite Hindi movie of 2008 then the two movies that comes to my mind

are: Jaane Tu.. Ya Jaane Na, the movie that introduced Imraan Khan, Aamir Khan’s nephew and Rock On!!, the movie that introduced Farhan Akhtar as an actor. I enjoyed watching these two movies very much. The great thing about these movies is that they have great stories to tell and the actors really gives great performance.

Change is very much necessary:

After Hrithik Roshan, the Hindi movie goers did not see the rise of any new hero. This is really tragic. We still have cope with Shah Rukh Khan’s over acting and Salman Khan’s muscles. This is really tragic. The Bollywood movie makers should look out for talented young actors who can truly replace Shahrukh, Salman, Aamir and Akshay. After Hrithik Roshan, there were no other actors to give out block buster hits.

Related articles:

NDTV Movies

BBC (1)

BBC (2)

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