Ancillary revenue to help YRF tide over 'Thugs of Hindostan' debacle

The film finished its opening weekend, an extended four-day festive weekend at that, with Rs1.23 bn in domestic box office collection

After breaking records with an opening-day collection of over Rs 500 million (net after tax), the response to Yash Raj Films’ (YRF’s) Thugs of Hindostan took a nosedive, falling drastically over the weekend. 

The film finished its opening weekend, an extended four-day festive weekend at that, with Rs1.23 billion in domestic box office collection. Given the start it had, experts opined that had the film been appreciated by audiences, it could have collected up to Rs1.8 billion in the first weekend. Its first week collection has been Rs 1.32 billion, a far cry from what YRF expected it to make.

The film’s massive budget — Rs 2.2 billion, coupled with the sound thrashing it has got from critics and moviegoers alike, means that profitability at the box office is now practically impossible. Considering the current system of working in the industry, the film needs to make Rs4.4 billion for everyone in the eco-system — producers, distributors and exhibitors — to break-even and make profits. The possibility of that happening through domestic box office collections is nil. Trade pundits estimate that Thugs of Hindostan will make at most Rs 2 billion in its lifetime.

“As a thumb rule, a film’s lifetime collection is double its haul in the opening weekend. There are exceptions such as Queen and, more recently, Badhai Ho, which exceeded expectations and were surprise hits. But, by and large, the thumb rule applies. By the calculation, Thugs of Hindostan is looking at a collection of at most Rs2 billion in four weeks (which is what is considered to be a film’s lifetime at the box office on an average). YRF had hopes of the film breaching the Rs-4 billion mark, but the outright rejection it has received has foiled those hopes,” says a distributor. 

The film’s collection fell 44 per cent from Day One to Day Two, as it collected Rs 282.5 million on Friday, November 9 (it released on Thursday, November 8). 

The business continued to take a hit as it collected Rs227.5 million on Saturday (November 10), and just Rs172.5 million on Sunday. 

The biggest dip, however, came on Monday (November 12), when the film collected a mere Rs55 million. This was to be expected as the festive period got over. However, had the film’s content been appreciated, it would have seen better numbers after the first day, observe trade pundits. 

Those in the know, however, pointed out that despite the film’s dismal run at the box office, YRF might come out of the debacle fairly unscathed financially. It will be the exhibitors and smaller distributors who will take almost 75 per cent of the hit. 

“The Rs1.5- 2 billion deficit in the film’s collection, to allow everyone involved to make money or at least break-even, will hurt the exhibitors and distributors the most. Many of the deals have been signed on a minimum guarantee basis. This means the risk is primarily taken by the exhibitor,” says another film executive in the know.

While it has hedged its risk through its distribution model in India, YRF has also fortified the ancillary revenue streams for the movie. It has an ongoing deal with Amazon Prime Video for OTT streaming rights, and has also sold the satellite rights of the film to Sony Pictures Network India (SPN). 

The two together are estimated to fetch YRF close to Rs700 million. 

In addition to this, the film’s distribution rights in China have been sold to distribution firm E Stars for an estimated Rs1 billion. 

This means that the studio will be able to break-even and make profits with the help of ancillary revenues. Additionally, the film has been released abroad as well, and has collected around Rs400 million so far, further adding to YRF's kitty. 

While YRF may avoid huge losses on account of the film, the industry is disappointed in Thugs of Hindostan given its star cast (Aamir Khan Amitabh Bachchan, Katrina Kaif and Fatima Sana Shaikh), the time of release and the scale of release.

 “It’s not enough for the producer to make money. The various stakeholders — distributors and exhibitors — should not suffer, or at least the risk should be the same. Theatrical (business) is still the bread and butter for many in the eco-system, and if films don’t do well in the theatres and have to depend on OTT and satellite revenues for profitability, then there is something wrong with the model,” says another distributor.