Not a good year for Bollywood productions

Box office collections for major production houses below investment.

Bollywood is showing a negative return on investment — at least, if the box office collections (domestic and international) of the top five production and distribution houses are something to go by.

According to the industry, the five major film production houses — UTV, Yash Raj Films, Studio18, Eros and Reliance Entertainment — have made box office collections of Rs 510 crore from 19 big-ticket movies this year (till the first week of November), though they’d forked out over Rs 537 crore to either make or to buy these. The top five players account for over 70 per cent of the medium and big budget movies made in Bollywood.

 

Of course, the revenues do not include what the companies made from selling other rights — like music, DVD and television, amongst others, the numbers of which are not available, especially as many of them keep these rights with themselves.

The Salman Khan- Kareena Kapoor starrer Main Aur Mrs Khanna, Ashutosh Gowarikar’s What’s your Rashee featuring Priyanka Chopra, Eros International’s Amitabh Bachchan starrer Aladin and the Akshay Kumar-Kareena Kapoor Kambaqt Ishq, all big-ticket films, did not stir their box office at all. These four movies together were made with a price tag of Rs 150 crore, while the box office collections were just around Rs 110 crore.

“The number of films that released this year has been high but we’ve had just two performing months. Content has failed, which has led to the drop in box office collections,” says Vishal Kapur, COO, Fun Cinemas.

Of course, one key reason was the two months’ producers-multiplex strike. That meant most movies’ release dates were crammed together, which ate into each other revenue share. The industry is estimated to have lost nearly Rs 100 crore during the producer-multiplex standoff.

Revenues of all multiplexes were down, and the first quarter of financial year 2009-10 was the worst ever.

For instance PVR Cinemas’ consolidated revenues were down 46 per cent to Rs 44.56 crore versus Rs 82.25 crore during the first quarter of last year. Its net loss was Rs 12.86 crore versus Rs 1.68 crore in the corresponding quarter of last year.

In addition, the average occupancy across cinema halls has been about 45 per cent. “Occupancies have been consistently dipping. This year, the average occupancy is around 30 per cent. The worst ever,” confirms Anand Shah, analyst, Angel Broking.

What added to the troubles was the high cost of acquiring films, with almost everyone chasing the big starrers. For instance, Studio 18 is believed to have paid almost Rs 38 crore for Luck; yet, the film earned just Rs 18 crore from the box-office, according to the industry. “Cost models have gone into a spiral, with absurd costs of acquisition that didn’t make sense. It has been a challenging year for production companies. Hopefully, next year the correction in costs will happen,” says Siddharth Roy Kapur, CEO, UTV Motion Pictures.

However, movies like Kaminey, Dev D and Wake up Sid helped UTV nullify the loss suffered due to the non-performance of other UTV releases. Studio 18 CEO Sundip Bhargava, however, could not be spoken to for comments.

Bollywood moghul Yash Chopra played safe this year after two unsuccessful years. New York, featuring the trio of Katrina Kaif, John Abraham and Neil Mukesh, earned around Rs 40 crore, while Dil Bole Hadippa with Rani Mukherjee and Shahid Kapoor earned Rs 25 crore. The combined cost of production of these two films is estimated to be around Rs 42 crore.

While revenues from domestic box office collections have taken a beating, studios like UTV and Yash Raj Films have earned more from the international box office. “These studios are heavily promoting their films internationally. And, abroad, the demand for films from their stable is high, which has helped them earn more from overseas,” says an expert. Usually, a film earns 60-65 per cent of its revenues from the domestic box office and 10-15 per cent from the international one (the remaining amount from other rights like music and home video). The contribution from the overseas market is said to be growing, though it’s just around five per cent more this year.

Still, the year is not over. Reliance, which has had a lacklustre year, hopes to cash in on the coming Aamir Khan movie, 3 Idiots, while Eros is banking on the Saif Ali Khan-Kareena Kapoor starrer, Kurbaan, and Salman Khan’s Veer. The total budget of these three films is around Rs 115 crore.