News Column

Chennai Express: Show me the money [Financial Express (India)]

August 11, 2013

YellowBrix

India's maturing film industry has realised that there is no formula for success and each film needs a unique distribution-exhibition strategy

It was a coup of sorts for Disney UTV's distribution arm when Chennai Express released in over 3,500 screens across India on Friday. One of the widest domestic releases yet in Bollywood, Chennai Express collected R6.75 crore in paid previews alone-the highest to date, with 3 Idiots following at R2 crore-on Thursday, and the makers are expecting it to surpass all previous opening weekend records.

Of Disney UTV's current slate, Chennai Express isn't the only film running in theaters. Ship of Theseus, an independent film that the studio is distributing, has witnessed a steady rise in numbers over the three weeks since its release on July 19. Having opened at a mere 21 screens in five metro cities, the Anand Gandhi-directed Ship of Theseus is currently running to packed houses in 31 cities.

Every film is unique. This fact has been beautifully demonstrated by the distinct, contrasting distribution strategies that Disney UTV adopted to release its last two films. Indicative of the growing maturity in the industry, it is a fine example of how Bollywood has come a long way from the traditional model of production, distribution and exhibition.

"One of the reasons why most production houses also distribute their films is that they know their product best, they understand its genesis and the potential, which also helps in marketing the movie. They don't want to take the risk of handing it over to other distributors, as in the traditional model, who may not be able to view the film as the unique product that it is," explains Gaurav Verma, director, India Theatrical Distribution, Studios, Disney UTV.

Up till the 1990s-before the corporatisation of the film business and setting up of studios-distributors also often served as financiers of a film where producers would borrow money from them in return for a share of revenues generated upon a film's release. The key reason was that banks didn't lend them money, save the biggies like Rajshri Productions. While it allowed producers access to funds, it also gave distributors large control over the film's making and exhibition. Back then, the widest a film released was across 1,500-1,800 screens.

"The first instance to change that scenario was privatisation. Corporates started to set up and they either came with seed money or could borrow from banks," recounts Utpal Acharya, head of distribution at Reliance BIG Pictures, who has been in the industry for over a decade. As a result, independent producers, such as Vashu Bhagnani and Dharma Productions, started to tie up with corporates who could back films.

With an easier flow of money, the quality of film-making and the scale of storytelling went up as did the number of noticeable films being released in a year. "Earlier, there were no more than 35 such films in a year. It is almost triple that number as it stands today," points out Acharya. This was compounded by the fact that the industry had very little bankable talent, each commanding a high fee. "As the budgets went up, films became too costly and thus unviable for distributors, even for top names, such as Sringar and Raksha Films that operate in Bombay territory, to purchase every lucrative project that came into the market, making it imperative for producers to also start looking at distribution.

Privatisation, however, also simultaneously changed the exhibition business. Kamal Gianchandani, president, PVR Pictures, points out that the country today has over 500 multiplexes with close to 20 new properties being added every year. However, the country's first multiplex, PVR Saket in Delhi, opened as recently as 1997. The industry credits family entertainers of quality production by makers like Yash Raj Films and Rajshri Productions for bringing the audience back to theatres.

"Multiplexes added to this experience by providing a comfortable environment with good sound and picture quality and amenities like hygiene and quality food stalls. There are close to 2,000 single screens and 500 multiplexes today in the country. The latter is only 25% of the single-screen number but contributes up to 75% of a film's revenue. This has also played a huge role in the rise of what the industry is now calling the R100-crore club," Gianchandani adds.

The multiplex culture also gave rise to what are often referred to as "multiplex films". With scripts and storylines that look beyond the formulaic big-budget entertainers, this new genre proved that there is a discerning audience for films that is high on content but may lack star power. It is, in fact, this genre that made producers realise the need to take up distribution. Although for good cinema, distributors would show reluctance to buy these films since there was no star factor. But good response in the multiplexes to films such as Bheja Fry encouraged producers. "At UTV, we've done Udaan, Aamir and Paan Singh Tomar, among several others, where we backed strong scripts and used marketing to generate curiosity that initially brought in the audience. We would open small but word-of-mouth would help the film grow bigger over the weeks following its release," says Verma.

"But every film cannot release in 2,500 screens-that is something only the big stars bring in, such as the Khans, Hrithik Roshan and now Ranbir Kapoor, among others. For other films that include a studio's yearly slate, we come up with plans that help us maximise our gains without compromising on a film's run," says Vivek Krishnani, head, distribution-marketing-syndication, Fox Star Studios.

So apart from getting studios to device individual distribution strategies for films, this also made them relook at the marketing of a film-something that was a mere formality earlier but is today often the make-or-break factor for a film. "Today, with so many awaited films releasing week after week-some Fridays see multiple releases-and jostling for audience attention, their shelf life has gone down from several weeks to the opening weekend," points out Gianchandani.

Verma adds that, in addition, they are racing against the growing home video and satellite landscapes. "The threat of piracy is very high too with the Internet increasing that risk. All it takes is for one pirated copy to pop up anywhere across the world. In such a scenario, distributors aim for as wide a release as possible so that maximum revenue can be generated over the weekend," explains Verma.

In the current scenario, therefore, big players, such as Reliance Big Pictures and Disney UTV, largely have their own offices across India as they also produce and distribute regional films. This helps them develop a relationship with exhibitors and also get grassroots level feedback regarding the business. In certain territories, where they may not yet have established as strong a base, they may partner with top distributors. Several other companies, such as Fox Star, PVR and Eros, too, are working towards the same but usually work with respective distributors from various territories as associates and follow a revenue-sharing model. "On one hand, distributing the film we produce helps cut the risks and on the other, it gives us thrice the amount of profit as compared to what we would earn if a middleman were involved," explains Acharya.

Interestingly, Rakesh Roshan, one of the older producers in the industry, doesn't follow the new production-distribution format. His latest offering from the Krrish franchise, Krrish 3 that he recently announced, has no studio backing the film. Industry sources claim that confident of the franchise's success, Roshan chose to turn his distributors into financiers. "It gives him complete control over the film but he didn't have to invest any money in the making by doing so. Although he has sold it for a healthy profit-sharing model, he might have earned up to thrice the amount had he tied up with a studio," explains a member of the industry.

Although much has changed, the industry even today functions on the old territory system from the pre-independence era. So the country is essentially divided into 13 territories-Bombay, Delhi/UP, east Punjab, Rajasthan, Mysore, West Bengal and Bihar being key earners in that order.

While the number of distributors has drastically reduced over the last decade-Bombay territory, the largest at 33-45%, has only two big players in Sringar and Raksha Films whereas Delhi/UP has none save late Ponty Chadha's Wave-a few big players remain in the market. Corporates, too, don't mind offloading the risk in case of films that are mass entertainers and are certain to do well. "We have sold Chennai Express in some territories because the offer was lucrative but we didn't do the same with Barfi! despite good proposals because we knew no one would understand the film as well as we did," points out Verma.

In the current evolving scenario, digitisation is another huge factor that has contributed to the increased reach of films. The digital format is not only helping curb piracy, but has also become a cheaper and easily manageable alternative to physical prints. "Firstly, it has provided the option to release a film in the smallest of towns, such as Gorakhpur, on the same day as the big cities at a fraction of the cost of sending physical prints. Secondly, it brought in transparency and the format allows one to track the number of shows running in a remote town and the number of tickets sold as they are mostly computer-generated," explains Acharya, adding that it has further increased the earnings on a film.

Digitisation has also enabled distributors to reach out to a larger overseas market beyond the predictable UK, North America, Canada, Middle East, Australia and select parts of Europe. With increased awareness about Bollywood, the world is curious to explore the cinema it has to offer although only films with big stars release overseas. However, the market has been steadily growing and, in Acharya's opinion, adds to up to 10% of the film's total earnings (including satellite, music, etc) and up to 20% of the film's domestic earnings. Take, for example, Aamir Khan's 3 Idiots that earned upwards of $25 million overseas.

Chennai Express has cashed in on this very growing market. The film is releasing in over 700 screens in over 15 countries-the largest for any Indian film. They have also managed to lock the maximum number of new markets, targeting Morocco, Germany, Switzerland, Austria, France, Peru and Israel. The film, in addition, has been subtitled in 10 different languages, including Hebrew, French, Malay and Arabic, and Disney UTV, along with Shah Rukh Khan's Red Chillies that is co-producing the film, has personalised the promotional material for each of these territories.

This, say members of the industry, is indicative of the way forward. With quality content made at controlled budgets and supplemented by stronger distribution networks and increasing number of multiplex screens, the industry's domestic growth is being touted at 20% per year. "You'll see more films that earn R100 crore

and each may not have a big star in it," says Verma.

As it happened with Aashiqui 2 recently.

Copyright 2013 The Indian Express Online Media Pvt. Ltd., distributed by Contify.com

Credit: Dipti Nagpaul D'souza

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