Can we finally shake off the 'Bollywood' tag?
India’s largest film studios are going national. Of the 27 films Reliance Entertainment has slated for release in 2012-13, six are in Telugu, one in Punjabi and two in Bengali. (See chart) Hindi films form less than 50 per cent of Reliance’s (undisclosed) revenues. “We look at ourselves as an Indian film company,” says Sanjeev Lamba, CEO, Reliance Entertainment.
From 2013 onwards, Viacom18 will be making a film each in Marathi, Bangla and Punjabi. Yashraj Films has set up an office in Chennai to remake its own films. “While the big studios did the odd Tamil or Telugu film, the whole move towards other languages has gathered mom-entum in the last few months,” thinks Kamal Gianchandani, president, PVR Pictures.
This gambit for national scale holds challenges for the largely Mumbai-based studios.
The fabric of India
The biggest of these is protectionism. The Tamil film industry for instance, is insular and ‘highly politicised’, says a South Indian film analyst. He points out that UTV or the others cannot become members of the Tamil Film Producers Council. “Conservativeness will be a major challenge,” agrees C A Gupta, partner, Deloitte Haskins & Sells.
Much of the insecurity stems from one factor. In their bid to gain entry, the studios are pushing up costs, pricing the standalone producer out of the market. The story goes that for Billa2 (Tamil). In Entertainment, a Mumbai-based company, paid superstar Ajith about 70 per cent more than his asking price because it wanted an entry into the market. “In the last three years, inflation in film production has gone up by about 35-40 per cent, which is unsustainable,” says Kandaswamy Bharathan, executive director, Kavithalaya Productions, one of the oldest production houses in Chennai.
Most studio bosses brush the issue away. “There was a certain amount of trepidation to start with, now it is cool,” says Siddharth Roy Kapur, CEO, UTV Motion Pictures. He along with Lamba and other bosses are more focussed on mastering the local sensibilities and cultural nuances, not just of storytelling and filmmaking but also of the business. Says Vikram Malhotra, COO, Viacom18 Motion Pictures, “In Hindi, 80 per cent of the box office takings come in the first 2-3 weekends and satellite and music rights are big revenue contributors. Most of the other Indian languages are not weekend driven. And in Marathi, Bangla or the others (not the South Indian languages), satellite, music or the other rights do not fetch great returns.” (See chart)
To start with then, most studios outsource. For instance, both Billa2 and UTV’s Thaandavan (Tamil) are being made by local outfits.
But, “Unless you are a south-based company, you cannot do well here,” says Sreedhar Pillai, a Chennai-based film expert. So, Reliance has invested in distribution across 11 cities in the south. “More than half of our workforce is in distribution. They know the lay of the land. Now, we are adding production teams and supporting them with local language people from here,” says he. As a result, in the last two to two-and-half-years, Reliance hasn’t felt the need to acquire a film.
Why scale rocks
There are three reasons for this push into a market that is only one-fifth of the total. One, the average budgets are less than half of those for Hindi films, so the returns are better.
Two, there are economies of scale, especially on marketing and distribution costs. Farokh Balsara, sector leader, media and entertainment for Europe, India, Middle East and Africa, at Ernst & Young, points out that Indian films have a huge market in countries such as the US or Malaysia, Singapore, etc. Many of the studios that set-up distribution infrastructure abroad, find economies of scale in distributing other Indian language films in the same markets. For instance, Rs 250 crore or 30 per cent of Eros’ total revenues came from the overseas market.
The third, is cross-pollination of ideas and people. “There is a dearth of good scripts in Hindi. The south has a better handle on storytelling. So, getting into that business also gives studios access to local talent,” says Sunaman Sood, director, Acendo Capital.
A lot of the non-acting talent, technicians, writers come from other languages to Hindi. And remakes from Hindi to Tamil or Telugu or vice-versa are common. Last year’s super hit, Singam, was co-produced by Reliance in Tamil. It then remade the Hindi version.
We are a long way from there, but soon there will be an Indian film company.
TCS chief N Chandrasekaran today took over as Nasscom Chairman for 2012-2013, the software industry body.