Economy Of Indian Film Industry

By
Lokesh Damani Leven Dsouza Arpita Kothari Bhavin Kothari Minal Nayak Arun Ramanan Siddharth Shah Urmila Walke 05 10 19 20 30 40 50 60

Contents
Introduction to Indian Film Industry History Regional Film Industries

Bengali (Bangla) Film Industry Kannada Film Industry Malayalam Film Industry Marathi Film Industry Tamil Film Industry Telugu Film Industry Indian Cinema Meets Hollywood Nature of Finance Future Vote Of Thanks

Introduction to Indian Film Industry

The Indian film industry is the largest in the world in terms of number of films. Movie tickets in India are among the cheapest in the world India accounts for 73% of Asia-Pacific movie admissions, currently estimated at US$2.9 billion. The industry is mainly supported by the vast cinema-going Indian public. The Central Board of Film Certification of India cites on its website that every three months an audience as large as India's billion-strong population visits cinema halls. Indian films are gaining increasing popularity in the rest of the world, especially in countries with large numbers of expatriate Indians.

A Brief History

1896 - first moving pictures showed in Bombay. 1913 - first Indian-made feature film (3700 feet long) released. 1931 - India's first talkie, Alam Ara, released, dubbed into Hindi and Urdu. The 1930s and 40s - Talkies addressing social differences of caste, class and the relations between the sexes were released. Radical cultural organizations led to the formation of All India Progressive Writers Association and the Indian People's Theatre Association (IPTA) The 1950 - Calcutta became the vanguard of the art cinema. 1951 - industry became the object of considerable moral scrutiny and criticism, and was subject to severe taxation.

1951 - The First International Film Festival, held in Bombay. Showed Italian works for the first time in India. 1960s - popular cinema had shifted its social concerns towards more romantic genres.

The period is also notable for a more assertive Indian nationalism. 1970s - By the beginning of the year there existed above 150 film societies all over India. 1980s the films took a more stronger stance on the social issues with an outpouring of the social conscience, and flowing of new images. 1990s - In the 1990s, video, national and satellite/cable television have resulted in the development of a prolonged crisis in Indias movie industry, where commercial and art films are equally at risk of failing at the box office. The state film finance unit (now named the National Film Development Corporation) has a major stake in the expansion of the national network.

Regional Film Industries:

Bengali (Bangla) Film Industry:

The history of cinema in Bengal dates back to the 1890s, when the first "bioscopes" were shown in theatres in Calcutta. The early beginnings of the "talking film" industry go back to the early 1930's, when it came to British India, and to Calcutta. The contribution of Bengali film industry to Indian film is quite significant. Based in Tollygunge, an area of South Kolkata, West Bengal and is more elite and artistically-inclined than the usual musical cinema fare in India. Its most famous film director is Satyajit Ray, who won an Oscar for lifetime achievement in cinema.

Kannada Film Industry:

The Cinema of Karnataka encompasses movies made in the Indian state of Karnataka. Most of the movies are made in the Kannada language, with a handful of them in Konkani or Tulu. Kannada films form an important component of the Cinema of India. The most popular actor in Kannada films was late Dr.Rajkumar. He had acted in over 200 movies and is a recipient of the Dadasaheb Phalke Award. The year 2005 witnessed stupendous box office success for Kannada film industry. Starting with Shivarajkumar starrer Jogi, which grossed Rs. 35 crore at the box office, films like Anna Tangi, Namma Basava, Amruthadhare, Deadly Soma, Nenapirali performed well at the box office. An estimated four of every five released had succeeded at the box office But the beginning of the year 2006 has proven to be a disaster for Kannada film industry as promising flicks like Shree, Math, Shubam failed miserably at the box office

Malayalam Film Industry:

Malayalam cinema, or movies in Malayalam language, forms a significant component of the Cinema of India, both as a form of art and as mass medium. The Malayalam film industry, based in Kerala, is sometimes called 'Mollywood'. Malayalam movies are known for their artistic nature and they frequently figure in the national film awards. It is also known for being the most conservative out of the different film industries in India. Notable people include Mohanlal, Mammooty, Dileep, Suresh Gopi, and Adoor Gopalakrishnan Most critics and audiences consider the period from (late 1980s to early 1990s) as the golden age of Malayalam cinema. The Malayalam cinema of this short but beautiful period is a culmination of the malayali ethos and south Indian life. It is characterized by detailed screenplays, excellently directed by master-directors, dealing with everyday life with a lucid narration of plot intermingling with humor and melancholy.

Marathi Film Industry:

Valued at Rs 100 million, the Marathi film industry churns out 20-25 films per year on an average. According to industry sources, the film industry is now doing better as compared to the past years with more and more filmmakers starting to show their inclination to experiment.

Tamil Film Industry:

Kollywood is a name often applied to the home of the Tamil-language film industry. In the past, almost all South Indian films were filmed there. It is based in Chennai (formerly known as Madras) in the state of Tamil Nadu in South India. The name is a conflation of Kodambakkam (an area of Chennai with a high concentration of film studios and in which many people working in the industry live) and Hollywood, and mirrors the adoption of the name Bollywood by the Mumbai-based film industry. Silent movies were produced in Kollywood since 1916 and the era of talkies dawned in 1931. By the end of the 1930s, the industry was booming to the extent that the State of Madras legislature passed the pioneering 'Entertainment Tax Act 1939' with little opposition.

Telugu Film Industry

The Telugu film industry is the second biggest film industry (sometimes called Tollywood) is based in Andhra Pradesh's capital city, Hyderabad. Telugu is the second largest spoken language in India. The state also has what is claimed to be the largest film studio in the world, Ramoji Film City. The first studio for Telugu talkies was Vel Pictures, constructed in 1934 by P.V. Das, located at Madras. The first film made here was Sita Kalyanam. The first film made by a Telugu person, R.S. Prakash, was Bhishma Pratigna (The Pledge of Bhishma, 1922). The first big movies in Telugu were made by the Surabhi Theatres troupes.

Indian Cinema Meets Hollywood:

Contact between Indian and Western cinemas was established in the early days of film in India itself. Dadasaheb Phalke was moved to make Raja Harishchandra after watching the film Life of Christ at P.B. Mehta's American-Indian Cinema. A number of Indian films have been accused of plagiarizing from Hollywood Movies. Bollywood also produces box-office hit like the films Dilwale Dulhaniya Le Jayenge and Kal Ho Naa Ho, both of which deal with the overseas Indian's experience. The meeting between Hollywood and India is a two-way process. Both Chadha and Nair are of Indian origin but do not live in India, and who made their names in Western independent films; they have now been funded to create films that "interpret" the Indian cinematic tradition for Westerners. A similar filmmaker is Deepa Mehta of Canada, whose films include the trilogy Fire, Earth and Water. Indian cinema is also influencing the English and American musical. Some Indian immigrants (desis) have succeeded in the Western film industry purely on their own terms without showing any Indian cinematic influence. Examples would be filmmakers Manoj Night Shyamalan and Jay Chandrasekhar.

Comparison: BOLLYWOOD 1,013 3.6 Billion $1.3 Billion 12.6% $1.5 Million $500,000 VS Films Produced* Tickets Sold Worldwide Revenues** Annual Growth Rate Avg. Production Cost Per Film Avg. Marketing HOLLYWOOD 739 2.6 Billion $51 Billion 5.6% $47.7 million $ 27.3 Million ** Estimates, 2002

Cost Per Film *National film production, 2001 PWC, FICCI ,BW estimates.

Data Motion Pictures Association of America,

Nature of Finance Cash flow financing for film production. Cash flow financing for film distribution/exhibition in overseas markets. Term loans for fixed assets finance. Term financing for export market development.

Indian Film Industry Indian film industry an integral part of the Indian socioeconomic psyche. The most popular source of entertainment in the country. Indian film industry was conferred Industry Status in the year 2000. Indian Film industry is the world's biggest film industry in terms of the number of movies produced and released in a year. In 2004, there were 934 films certified across, with Hindi accounting for 245 of them. The total number of people attending movies is almost over 3 billion, double the US markets and three times rest of Asia. The Indian film industry as discussed above is a cluster of regional film industries, like Hindi, Telugu, Tamil, Kannada, Malayalam, and Bengali etc.

This makes it one of the most complex and fragmented national film industries in the world. The global entertainment and media (E&M) industry spending saw a growth in 2001 rising by 1.5 % and exceeding the $1-trillion mark. The global E&M spending was expected to reach $1.4 trillion in 2006, with a 5.6 % compound annual growth rate (CAGR). Market for Indian films abroad is now crossing the NRI lines. This popularity gave the film entertainment business, an expected of growth of $1.1 billion in 2006. According to estimates available in January 2001, the Indian film industry has an annual turnover of Rs. 60 billion (approximately US $1.33 billion). It employs more than 6 million people, most of whom are contract workers as opposed to regular employees. As at the start of 2001, a reasonable budget film in Hindi could cost US $1.75 million. A low budget Hindi film can be made for even as low as Rs. 15 million. A big budget Hindi movie can cost in excess of US $30 million 'Stars' like Shah Rukh Khan and Salman Khan are paid Rs. 20 million (US $440,000) per film. India has a National Film Development Corporation (NFDC) which finances some films. A few film makers, who would find it hard to obtain finance from the regular sources, have been financed by the NFDC.

How the industry rakes in moolah Producer: Distributors give him a minimum guarantee fee before the movie in return for film rights in a territory within the country. Producers can recover up to 30 per cent of the cost of the film, pre-selling it to distributors. Distributor: They offer an MG fee to the producer to book a territory. And spend on print and publicity on which they take a 20 per cent commission. Any overflow of revenue after recovery of the MG fee and commission is divided between them and the producer. Exhibitor: Under a new system revenue gets shared between theatre owners and distributors. Generally, in the first week of a release, the split is evenly 50:50, in the second week the producer gets 40 per cent and the exhibitors the rest, in the third week the producer makes 30 per cent and if the movie continues into the fourth week, he gets 25 per cent of the collections.

Yash Raj Films: Dhoom 2 : The movie had a very successful opening both in India and overseas. In the US alone, it had earned US $2,642,290 by early 2007. Fanna: Box office: The film as of September 2006 has collected Rs 53,13,00,000 in India. The overseas collection as of September 2006 stands at Rs 28,25,00,000. Fanaa is the 4th biggest hit of 2006

Kabul Express: Box office :The film opened to a high response. The first day showed a 60-80% response and has been doing well in most parts of the country.

Drawback: The film industry is currently losing un-estimated volumes of revenue due to competition from local cable operators who illegally beam newly released movies into the drawing rooms of their subscribers.

Future: The overall entertainment industry in India is taking on professional colors and this will change the culture of the film industry too. Some film production companies, such as Mukta Arts have made public share issues, thus keeping out of the world of dark financing. The Film Federation of India is actively seeking to make film financing a viable proposition for banks. It is likely that films would also be insured to offset possible losses for banks. The granting of industry status to the film industry will eventually allow overboard financing of films, though this will result in production of fewer films than at present. Stricter enforcement of copyright law will help the film industry in its fight with cable operators. Foreign entertainment companies, with steady revenue streams, can do good business if they invest in Hindi and other Indian language films. Despite high risks on a per-movie basis, the risk spreads out across a number of movies.