Revenue share row keeps Hollywood films away

No multiplex, Fox Star to release Rise of the Planet of the Apes on single screens.

With negotiations on revenue sharing between Hollywood production houses and multiplex operators in India making little headway, Fox Star Studios has finalised plans to release 450 prints of its latest film, Rise of the Planet of the Apes, in single-screen theatres later this week.

According to industry sources, production houses have been demanding 55 per cent of the revenue in the first week of screening. An executive at a leading multiplex chain informed, “They have been asking for higher revenue share, which is not a viable option for us. The yield of an English movie is half of what we get from Bollywood films. While negotiations are on with all Hollywood production houses, the standoff with Fox Star continues.”

Added another multiplex executive: “While the occupancy levels for a relatively good Hindi movie are 85 per cent in the opening weekend, for a good English movie, it is 60-65 per cent, as it caters to a niche audience. Our operating expenses are relatively the same for all movies screened and at lower occupancy levels, the cost per seat becomes more. Higher revenue sharing with production houses thus becomes improbable.”

Negotiations are on between multiplex operators and leading Hollywood production houses — Fox Star Studios, Warner Brothers India and Disney, among others — to work out a favourable revenue sharing compromise. There are about 1,050 multiplex screens in the country and Hollywood films generate 95-96 per cent of their India revenue from these multiplexes, while the single-screens generate the remaining share, industry sources say. There are a little over 6,000 single-screen theatres operational in the country.

Last month, the release of Harry Potter and the Deathly Hallows Part 2 ran into rough weather, following a similar deadlock between Warner Brothers India, distributor of the film and multiplex operators. Multiplex chains asked for 55 per cent revenue in the first week of Deathly Hallows 2, as opposed to the 50:50 agreement for earlier films.

The issue was resolved just a day before the release, with the profit sharing ratio in favour of multiplexes. However, the delay in negotiations led to cancellation of paid previews on Thursday night and also affected business in a few centres on Friday morning, as the prints were not dispatched.

Though the total contribution of Hollywood movies to the Indian box office remains marginal, it is growing. According to PricewaterhouseCoopers’ ‘India Entertainment and Media Outlook 2011’, the share of Hollywood content in the Rs 8,750-crore Indian film industry stood at 4.6 per cent last year, as compared to three per cent in 2009. As many as 75 foreign films were released in India in 2010, with collections in excess of Rs 400 crore.

Among the top grossers were Christopher Nolan’s Inception (Rs 18 crore), Harry Potter and the Deathly Hallows Part-I (Rs 15.2 crore) and The Chronicles of Narnia – The Voyage of the Down Under (Rs 10.4 crore).