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| Cross-border revenues of south Indian films rising |
| BS Reporter / Chennai Nov 18, 2009, 00:01 IST |
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The South Indian film industry, estimated to be around Rs 1,730 crore, should look at increasing the overseas rights to 8-10 per cent from the present 5 per cent which would help the industry penetrate under-tapped markets abroad, says Ernst & Young, a leading research firm. According to industry experts a recent interesting trend is that revenue from the cross border states and other mode is picking up.
Ernst & Young-FICCI report on the south Indian film industry, to be released on Wedenesday at FICCI M&E conclave in Chennai stated that the South Indian film industry accounts for the largest share of films produced in the country and contributes a significant portion of the revenues of the Indian film industry.
The industry has a number of strengths to its credit including talented, both in acting and technical skills, vibrant theatrical market comprising a large theatre-going population.
Of the aggregate market size of Rs 1,730 crore, the Telugu segment contributes around Rs 770 crore, the Tamil segment Rs 770 crore, Malayalam segment Rs 140 crore and the Kannada segment Rs 50 crore.
Among the various revenue streams, domestic theatrical revenues is, by far, the most dominant, accounting for nearly three-fourths (around Rs12.6 billion) of the total revenues earned. Revenues from cable and satellite (C&S) television rights come next in the list, contributing around Rs 3 billion (17% of the total revenue pie), followed by revenues from international theatrical rights, which contribute around Rs 0.9 billion or 5% of the total revenue pie. Other revenue streams, namely, music rights, domestic home video rights, Internet and mobile rights, etc., contribute, in aggregate of around Rs 0.8 billion or 5% of the total revenues earned, said Farokh Balsara, partner and national leader, media & entertainment practice, Ernst & Young
He added that the south Indian film industry is one of the few in the country to attract masses to theatres and they were able to show movies for long time in the theatres. For instance, Tamil and Telegu movies don’t come to TVs at least for a year, whereas across the country, including Hindi, it will be telecast in six months some of them even within weeks.
The other interesting factor is a cross income from cross border. Balsara noted that 25 per cent of the revenues for Tamil and Telegu movies come from other states and another interesting factor is an increase in big ticket movies. The number of big movies produced for an investment of around Rs 7 crore earlier was around 40 per cent which is now increased to 60 per cent.
When it comes to profitability, for instance in Tamil film industry, hit films in the medium and small budget category have performed better than hit films in the large budget category. However, average performers and flops in the medium and small budget category have fared worse than those in the large budget category.
Thus, the volatility of returns is higher in the medium and small budget category than in the large budget category.
On the challenges, the study noted that major challenges for the south Indian film industry was finance, under-exploitation of the international theatrical, expansion of target viewership, limited exploitation of non-theatrical revenue streams, a key area where the Hindi film industry fares better than the South Indian film industry and inadequate marketing of films, especially for medium and small budget films, sub-optimal exploitation of the domestic theatre market and a steep increase in cost structure are some of the challenges the industry should address. Balsara noted, talent cost alone has increased 30 per cent year-on-year whereas industry revenues have grown at a modest pace. As a result, only a handful of films are successful while the rest are unable to recover their costs. Owing to this high failure rate, film-making has become a very risky proposition and the established producers are cutting back on their activities.
“If the present situation persists even for a couple of more years, it portends an ominous future. The industry may witness a spate of bankruptcies and shrinkage in business activity. While all the components of cost have gone up, the steepest increases are in talent cost and the cost of shooting.”
According to industry players, the key reason for this is the entry of corporate houses as well as new producers from other industries. Unfamiliar with the Tamil film industry’s cost structure and revenue potential, these new players offered excessive remuneration to the actors and technical talent and increased the cost structure considerably for all the producers.
Further many of these new entrants have burnt their fingers in the process and many have exited the industry.
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