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| 'The newer crop has been more successful' | | Q&A: Manmohan Shetty |
| Shuchi Bansal / New Delhi Feb 13, 2009, 00:38 IST |
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 The Ficci-KPMG report on India’s media and entertainment industry, to be launched during the tenth anniversary of Ficci Frames in Mumbai next week, says that the film industry grew by around 12-13 per cent in 2008. This is much lower than the 17 per cent rate of growth in the previous few years. The lower growth rate has been attributed to the poor success ratio of films and the impact of the Indian Premier League on domestic box office collections. Over the next five years, the industry is projected to grow at just 10-12 per cent. Shuchi Bansal caught up with Manmohan Shetty, the grand old man of Bollywood to discuss the industry’s health and future trends.
Shetty, known for producing films like Gangajal, Main Madhuri Dixit Banna Chahti Hoon and Munnabhai MBBS, developed a significant empire in the film processing, production and exhibition business under Adlabs — he sold this to the Reliance-Anil Dhirubhai Ambani Group in 2005. After relinquishing his executive responsibilities at Reliance-Adlabs in November 2007, Shetty, 61, founded Walkwater Media. Victory, his first film under the Walkwater banner bombed at the box office. Excerpts:
How has Ficci Frames contributed to the media and entertainment (M&E) industry?
Ficci Frames has been the leading platform for the M&E industry and is a very opportune business interface. Ficci Frames research reports have put together some interesting statistics on the sector which have been quite useful for potential Indian and international investors.
How did the Hindi film industry perform in 2008 and what percentage of films would have made money?
I think about 15 per cent of the films made money and another 10-15 per cent would have broken even. We saw some major blockbusters on the box office like Ghajini and Singh is Kinng, but the year also ended in losses for quite a few high-profile films which were not good on content.
What went wrong with Victory, your first film under Walkwater Media?
Victory was made with the right intentions — it was on cricket, India’s most popular sport — and Walkwater backed the project fully. It was made on a grand scale but, may be, the end product did not “connect” with the viewer. Some films click, most don’t. We must learn our lesson and move on.
Victory was promoted by a film fund. Do film funds make sense in India?
We partnered with Vistaar Religare Film Fund for Victory. Vistaar bore the prints and advertising expenses of the film in return for a share in the profits. Film funds, like any other investor or financier, have a good opportunity if they back good content. In most cases, it is a co-production or a funding arrangement wherein the co-producer and the film fund take a share in the profits for the creative efforts and finance respectively. To put it simply, in case the film makes profits, the film fund makes money.
IDBI and EXIM Bank are making a contribution through debt-funding. However, we need formal equity/quasi-equity sources of finance as well. Several new film funds are also coming up. Films is inherently a high-risk business and a venture fund, by its very nature, has an appetite for risk.
Do even the small-budget films lose money or do they manage to scrape through by hawking their rights?
Small-budget films, though ‘seemingly’ easy to produce, do not find ready buyers. For the last year or two, good films have recovered a substantial chunk of their costs through increased revenue from non-theatrical rights such as satellite TV and home video. But there is no general rule. In terms of percentage, small-budget films can lose as much money.
Has the arrival of foreign studios made any difference to the Indian film industry?
We have seen some Hindi films coming from foreign studios largely on an acquisition/finance model and it is too early to comment about their impact. Foreign studios have largely contributed for wider Hollywood releases in India since most of them also have distribution interests here.
How have corporate houses which have recently entered the film-making business changed things?
It is true that corporate production houses have grown in dominance of late and may continue to do so in future. I don’t think there has been a major change in the way films have been made, though some high-budget films have been attempted. Most corporate houses have largely worked on an acquisition model where they acquire the full film at a pre-determined cost.
Have they ruined the economics of film-making in India?
Well, they have escalated the cost of film-making and impacted the economics of the business. They paid enormous fees to sign multi-film deals with stars and directors. The salaries of technicians also shot up. However, all that is gradually changing and a correction is taking place.
Can independent producers co-exist with large corporate houses?
Independent producers are feeling the heat. They cannot make films under the current cost structure. They have almost vanished.
What are the new trends in film production, exhibition and financing? For one, new stars, singers and directors are flocking to the industry.
We have to accept the way the film-making process is evolving. An objective evaluation of the box office trends of the last couple of years would suggest that the new breed of directors, technicians, singers and stars have been more successful. Having said that, I would not like to write off their senior counterparts, and it may be noted that a select band of stars will continue to have a loyal fan following.
Thanks to multiplexes, we are seeing different types of films finding an audience . This has given film-makers the confidence to experiment with content. In the exhibition space, I see a definite trend towards digital cinema . The challenge would be to ensure continuous flow of quality-content to keep the audiences flowing.
In film-financing, we are seeing the emergence of risk participation in lieu of remuneration by quite a few stars (variable compensation). However, funding by companies would continue to dominate film-financing. Some new film funds have also raised capital and should also emerge as good sources to back film projects.
Why did you invest in Frameboxx? Does India have a market for animation films considering Roadside Romeo sank without a trace.
Frameboxx Animation & Visual Effects is an animation and Vfx training-cum-education company and is not a production company. Students from Frameboxx find career opportunities in post-production studios, both Indian and foreign. We are bullish on the training business relating to media and entertainment and Frameboxx has almost 50 operational centres.
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