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Identification of critical success factors in the Indian film industry and studying their interrelationship

MARKETING RESEARCH
PROJECT REPORT
UNDER THE GUIDANCE OF

Contents
1. Introduction to the Problem 2. Research Objectives 3. Methodology
a) What we did for the primary data b) Questionnaire in the Project Proposal c) Questionnaire we actually used in the survey

d) Secondary Data Collection

4. Sampling
a) Sampling the primary data b) Sampling the Secondary Data

5. Factor Analysis as a data reduction method for primary data


a) Basic Idea of Factor Analysis as a Data Reduction Method b) Combining two variables into a Single Factor 6. Secondary Data Analysis and Interpretation 7. Implications and Suggestions a) Limitations b) Suggesstions 8. References

Introduction to the Problem


The business of movies is a risk intensive business. For an experiential good like movies, Indian film industry is a pretty disorganized one. Most of the movies are made without keeping in mind the target audience and in that search for that elusive Holy Grail called box office success our movie makers end up throwing their product to everybody. And trying to be everything to everybody is not an easy business. Rather it could send you out of business!

So if we could somehow determine what the audience want, and jot out success factors for a movie, a producer/directors life could be made a lot easier. Specifically, as with other experiential goods, the primary reason for people to consume a movie is to experience it, rather than expecting it to fulfill a physiological need. This makes the task of finding out these factors all the more difficult. There is a lot of subjectivity on what constitutes a good movie and a bad movie. That is because all movie-goers dont want to experience the same thing. But the basic need is experience here. We feel that Indian film industry is to a large extent out of sync with what the consumer wants. That is reflected in the way how movies in India are marketed and distributed. Although of late, things have started to change. An example is Yash Raj films who have tried to follow a more systematic approach of targeting, segmenting their viewers and then promoting accordingly. India has the biggest film industry in the world (volume wise). Whereas in other countries like US where films are made mostly by studios, in India movies are made by production houses etc. Some relevant data is show below:

Cinema attendance (Top 25 Countries)

1 India 2 United States 3 Indonesia 4 France 5 Germany 6 Japan 7 China 8 United Kingdom 9 Spain 10 Mexico 11 Canada 12 Italy 13 Australia 14 Brazil

Cinema attendance (per capita)

6000 5000 4000 3000 2000 1000 0


Ic e N ew lan d Ze al an d G eo rg ia C an ad a Ir e la nd Sw dom i tz er la nd Au st ria G er m an Po y r tu ga l di a Fr an In in g ce
Series1

Research Objective

U ni te

To determine and interpret the critical success factors for a movie made by the Indian film industry by collating data from a wide database of movies and movie goers.

Methodology
Our research involved identifying the possible success factors for a movie first. For this purpose we collected secondary data from around dozen or so sites which are based on movies and conducted what is known as exploratory research. Exploratory Research using secondary data The data collated was totally external and consisted of published materials, Computerized Databases. We tried contacting professional groups like Times Of India, Indiafm.com since they regularly publish data about movies. So we thought that they would be maintaining an archive of the movies they give reviews for. But ultimately they suggested us to visit their sites only for this information. So the internet obviously was an important source of information. - Movie guides giving information about casts, directors, music etc. helped us thinking about the possible factors - Directories/web databases (like imdb.com) guided us to other sources of information and how to avail of them.

After digging data and information web we decided to split our research into two parts. This was necessitated due to the fact that the sample data which needed to be collected was of two types:a) Quantitative which could be determined from secondary sources and which movie goers couldnt talk about e.g. Revenues, budgets, music sales.

b) Quantifiable which could be determined from primary sources like movie goers. Eg Preference for favourite actors, effect of director/banners, effect of sensuous scenes.

What we did for the primary sample data collection?


We agreed on a set of parameters which could be included in a questionnaire. These were:Music Director/banner Reviews Script/storyline Friends/relatives opinion of the movie Good theatre/multiplex Quality of promos Genre Locales/visual effects Price of the ticket Sensuous scenes in a movie Then we brainstormed about how to collect data from primary sources out of the possible methods of collecting primary data like surveys, focus groups, depth interviews we found surveys to be the most feasible way of collecting data. This was more so because the movie industry is based out of Mumbai and more importantly because of our lack of contacts with the professionals from this industry. After we decided to go for a survey there were many options with us telephonic surveys, email based surveys, in home surveys and mall based surveys. We chose mall based surveys mostly because of our sampling technique which involved collecting data only from extensive movie goers from the age group of 21 to 30. Well talk about our sampling technique later in the report, but below are enumerated some advantages of using questionnaires for collecting data.

1. The responses are gathered in a standardized way, so questionnaires are more objective, certainly more so than interviews. 2. Generally it is relatively quick to collect information using a questionnaire. However in some situations they can take a long time not only to design but also to apply and analyze. While designing the questionnaire we ensured that the following is kept in mind: 1) Open-ended questions can generate large amounts of data that can take a long time to process and analyze so we avoided open ended questions. 2) Questionnaires are standardized so it is not possible to explain any points in the questions that participants might misinterpret. So we conducted a pivot survey among a select group on campus. 3) We kept our questionnaire short and asked questions where in the respondents had to choose on a continuous rating scale of 1 to 10 where 1 stood for non-importance and 10 stood for supreme importance. Respondents tend to answer superficially if questionnaires are too long. Continuous Scaling is a unidimensional scaling method. As to how went about designing the questions using the scale: Defining the Focus. As in all scaling methods, the first step is to define what it is you are trying to measure. Our objective was to measure the importance users give to the various parameters we had decided in order to watch a movie. Defining the range: We gave a range from 1 to 10 primarily because it would have been difficult for sample moviegoers to quantify their preferences in a lesser range. 4) We repeated a question in the questionnaire and all the forms wherein the ratings were not consistent for the two questions were rejected as it showed that the respondent had been superficial in answering the surveys.

Questionnaire in the project proposal

In the project proposal we submitted we gave out the following questionnaire: Name: If earning: Monthly Income: If studying: Monthly spending: Age: Email:

Q1. How many times do you watch a movie in a month (Average)? 1) 0 2) 1-2 3) 3-5 4) >5

If the answer to Q1 is 1) skip the rest of the questionnaire Q2. Where do you generally watch a movie? 1) At Home on TV 2) At home on vcd 3) In the theatre 4) At friends place

Answer this question only if the answer to the above is 3) Q3. Do you prefer a multiplex to a normal theatre while making a choice for a movie? 1) Yes movie Answer this only if the answer to question 2 is other than 3) Q4. Why do you prefer watching a movie at home? 1) Sheer convenience 2) Affordability 3) Lack of good theaters nearby 4) Would 2) No 3) Only when with family 4) Depends on the

prefer shopping as an outing

Q5. What do you think is most important for you in a movie before you watch a movie? Rank the following in your order of preference starting from 1 (1 is the most important) Story Music Locales where shot Your favorite Stars Director Critical success Q6. As an independent parameter is story important to you? Very Important Important Not that important Not important at all

Q7. As an independent parameter is Music important to you? Very Important Important Not that important Not important at all

Q8. As an independent parameter is Locales where shot important to you? Very Important Important Not that important Not important at all

Q9. As an independent parameter is your favorite Stars important to you? Very Important Important Not that important Not important at all

Q10. As an independent parameter is your favorite Stars important to you? Very Important Important Not that important Not important at all

Q11. As an independent parameter is Director important to you? Very Important Important Not that important Not important at all

Q12 As an independent parameter is Critical success important to you? Very Important Important Not that important Not important at all

Q13 You think you relate to the movies being made these days? Quite often Sometimes Rarely Never

Q14 Did you like Dil Chahta Hai or Mughal-e-Azam as a movie? Ans them 1) DCH 2) MEA 3) BOTH 4) Havent seen either/one of

Questionnaire we actually used for the survey

We made quite a few changes in the questionnaire structure wise and content wise. Structure wise: We introduced a continuous rating scale instead of likert scale. We standardized the format. Content wise: We removed direct questions like Where do you generally watch a movie and others which we thought were unimportant to us for our study. This was because we were clearer about what we wanted to do by then. So here is the questionnaire: Name: Age: <15 Email: Studying: Yes / No 15-20 21-30 30-40 >40

Working: Yes / No Monthly expenditure on movies (approx.):

Q1. How many times do you watch a movie in a month in a theatre (Average)? 1) 0 2) 1-2 3) 3-5 4) >5

For the questions below encircle/tick mark the number, which you think is the most appropriate indication of the importance of the underlined parameter according to you. A higher number indicates more importance. (1= Not important at all) (10 = Extremely important) Q2. How important is the presence of your favourite actors in the film for you to watch a movie? 1 2 3 4 5 6 7 8 9 10

Q3. How important is the music of the film for you to watch a movie?

10

Q4. How important is director/banner of the film for you to watch a movie? 1 2 3 4 5 6 7 8 9 10

Q5. How important are reviews (in newspapers for example) of the film for you to watch a movie? 1 2 3 4 5 6 7 8 9 10

Q6. How important is the script/storyline (which uve read or heard somewhere) for you to watch a movie? 1 2 3 4 5 6 7 8 9 10

Q7 How important is your friends/relatives opinion of the movie for you to watch a movie 1 2 3 4 5 6 7 8 9 10

Q8 How important is a good theatre/multiplex for you to watch a movie? 1 2 3 4 5 6 7 8 9 10

Q9 How important is the quality of promos/trailers/website for you to watch a movie? 1 2 3 4 5 6 7 8 9 10

Q10 How important is the genre (thriller/comedy etc.) for you to watch a movie?

10

Q11 How important are the locales/visual effects for you to watch a movie? 1 2 3 4 5 6 7 8 9 10

Q12 How important is the price of the ticket for you to watch a movie? 1 2 3 4 5 6 7 8 9 10

Q13 How important is the locales/visual effects for you to watch a movie? 1 2 3 4 5 6 7 8 9 10

Q Is the presence of sensuous scenes in a movie a motivator for you to watch a movie? a) Yes b) No c) actually has a negative impact

Q 14 How important is then element of sensuous scenes in a movie? 1 2 3 4 5 6 7 8 9 10

THANKS A TON!!! Enjoy your movie.

What we did for Secondary Data Collection


We collected data about the following parameters for secondary data collections Revenues Money collected at the ticket office throughout India.

Budget Cost of production incurred by the producer or financier. User Review User voting on a scale of 10 from imdb.com Critical Review critical review taken as an average of 2-3 reviews Music Review user voting on a scale of 10 from planetbollywood.com All India Cost distributors cost from boxofficeindia.com Over Seas Gross Revenues collected in US from ibose.com Music Sales From Boxofficeindia.com Award Points Used a formula: Fifty points were attributed to a Best Picture Academy Award, 25 points for each Best Actor, Best Actress and Best Director award, and 10 points were given for each remaining award category. As five movies share nominations in each category, points for nominations were divided by five (e.g., 10 points for a Best Picture nomination) Distributor share Revenue- Taxes-theater owners margin ROI Distributor share/All India Investment In choosing the parameters for secondary data we choose those parameters which are normally attributed with the success of a movie and indicate whether it has made an impact on the audiences. For e.g. In Bollywood revenues are a direct indicator of whether a film has managed to appeal to the mass audiences. Similarly big budget films tend to have presence of popular stars and large sets. User Reviews are the ratings given to a particular movie by the audiences and hence shows its appeal among the audiences watching the movie. Critical reviews are the reviews given to the movie by experts and bollywood reviewers and play their part in forming an opinion among the audiences. Music Review of a film plays a part in creating the public interest in the movie much before its release. Music of a movie is launched around a month before its release and good music reviews can ensure a good opening for a movie.

All India Cost of the movie is the amount which the producers are able to get from the distributors for their films prior to its release and shows the distributors judgment in the movie. Typically in bollywood awards are an indicator of a success of a movie. The more the top awards bagged by the film the more likely is it that it has been successful commercially. Due to the absence of any ready to use data we used the option of collecting data from the internal sources and used already published data and data from computerized databases from the internet for our requirements. The databases we used were special purpose databases like the one for movies at www.ibosnetwork.com and www.boxofficeindia.com we have also used statistical data from the internet for drawing important insights.

Sampling
Sampling the primary data

Sampling is the process of selecting units (e.g., people, organizations) from a population of interest so that by studying the sample we may fairly generalize our results back to the population from which they were chosen We followed these steps while sampling: 1. Target Population: The first step in good sample design is to ensure that the specification of the target population is as clear and complete as possible to ensure that all elements within the population are represented. Therefore given the time constraints and feasibility aspects we have decided to keep our target population as 21-30 year college/office going urban movie-goers. 2. Sampling frame/technique: Method by which the researcher can derive a sample from a POPULATION. The target population is sampled using a sampling frame. Often the units in the population can be identified by existing information; for example, pay-rolls, company lists, government registers etc. Naturally, if the aim of a certain study is to learn things about a certain population, the optimum methodology is to test all members of that population. It would have been very costly and time-consuming for us to collect data from the entire population of the movie market. Hence we used sampling techniques We came across two types of sampling techniques: 1. Probability sampling 2. Nonprobablity sampling Probability techniques tend to be used for quantitative methods, while non-probability often is used in qualitative research. Probability techniques ensure that each sampling unit has a known likelihood of distribution. This gives unbiased selection of sampling units and proper sampling representation of the defined populations.

Examples of probability techniques include: Simple random sampling: each sample has an equal chance of selection. For example, you might pull names randomly from a list. Systematic random sampling: use of an ordered list (example: a membership roster) and pulling one sample at regular intervals (every fifth name). Stratified random sampling: divide population into subgroups. For example, dividing all purchasers into groups based on dollar size of purchase. Then random samples are drawn from each stratum, and combined into one larger sample. Cluster sampling: drawn from mutually exclusive subgroups. For example, you might sample all customers who visit a store on Sundays. These customers compose one discrete cluster. With non-probability techniques, the likelihood of sampling each particular unit is unknown. Sampling cannot be regarded as statistically representative of a larger population. Examples of these techniques include: Convenience sampling: samples are drawn at the convenience of the interviewer. For example, when conducting mall intercepts, the interviewer selects people who are accessible and willing to participate. Judgment sampling: the sample of key respondents is believed to possess the attributes valuable to the researcher. For example, a round-table discussion for a company earning over $10 million annually may be conducted with ten executives selected because they also run organizations earning over $10 million annually. We randomly selected people in our target age group at various multiplexes in Mumbai especially on weekends and in Delhi.

So in essence we shall use the probability technique of cluster sampling whereas we divided target population in two clusters i.e. moviegoers outside of Mumbai and moviegoers inside Mumbai. We chose to conduct the survey for the movie goers outside of IIMC on a weekend because thats when people go for movies in droves. 3. Sample size: We kept the sample size open ended. And by the time we ended collecting surveys we had about 150 sample responses with us. We kept the proportion 50% for people outside of Mumbai and 50% for people inside of Mumbai.

Mumbai Outsiders

Sample for primary data

Sampling the Secondary Data Choice of Sample Movies for the secondary data

The secondary data has been compiled from an in depth analysis of about 53 major movies from the period 2001 to 2004. The data has been taken from movies after 2001 as

the year 2001 is often considered to be a watershed year in terms of movie production and the whole experience of movie watching. It was from this year onwards that the impact of huge multiplexes began to be felt on the movie industry. The whole movie watching experience began to be seen more in an integrated manner. It was not just watching a movie anymore; but also included the entire experience of dining out, spending a romantic evening or just having a blast with friends. The new multiplexes which sprang up all over the country catered to this category of urban youth for whom going out in the evening meant a lot more than just watching a movie. It was also the time when the impact of internet started to be felt on the movie industry. The advent of the internet had an impact on all aspects of the film industry, right from how movies started to be marketed to how the movie-goers started to book their tickets. No single innovation had ever before had so much impact on how movies began to be viewed. The year 2001 was also the year from when critics believe that the preferences of the Indian movie-goers started to show a distinct shift. The traditional musicals of yesteryears started to loose their sheen as the modern urban movie-goers started to look at more than just elaborate sets and gaudy song sequences to grab their attention. The importance of good scripts and powerful performances started to emerge. The Indian movie-goer had become more knowledgeable and the movie industry wasnt complaining. Finally the efforts of all the people in the background whose performances often went unnoticed started to be appreciated. For our secondary data, the movies have been chosen over this four year period based on a lot of considerations. The primary basis for selection of these movies is the revenue that each of these movies have generated. This is because the revenue earned by a movie is usually directly proportional to the revenue it generates. The other factors that have been taken into consideration while choosing the movies are factors such as the impact that these movie might have had on the industry, variation in subjects and scripts, musical

excellence , etc. We have strived to keep the database as broad as possible by including movies which are as diverse as possible. It is only then that a proper analysis of all the factors that contribute towards the success of a movie can be determined.

15 10 5 0 Year 2003 S1 Year 2004 Year 2005 Year 2006 Sample for primary data Series1

Factor Analysis as a data reduction method for primary data


Now we needed to reduce the factors we have obtained using the exploratory and descriptive research The main applications of factor analytic techniques are: (1) to reduce the number of variables (2) to detect structure in the relationships between variables, that is to classify variables.

Therefore, factor analysis is applied as a data reduction or structure detection method. In our case it will be used first as a data reduction approach to find out the important success factors out of the given list of factors we have obtained from the exploratory research.

Basic Idea of Factor Analysis as a Data Reduction Method


Suppose we want to measure people's satisfaction with their lives. We design a satisfaction questionnaire with various items; among other things we ask our subjects how satisfied they are with their hobbies (item 1) and how intensely they are pursuing a hobby (item 2). Most likely, the responses to the two items are highly correlated with each other. Given a high correlation between the two items, we can conclude that they are quite redundant. Subjects' single scores on that new factor, represented by the regression line, could then be used in future data analyses to represent that essence of the two items. In a sense we have reduced the two variables to one factor. Note that the new factor is actually a linear combination of the two variables.

KMO and Bartlett's Test Kaiser-Meyer-Olkin Adequacy. Bartlett's Sphericity Test of Approx. Chi-Square df Sig. Measure of Sampling .689 196.272 66 .000

KMO and Bartlett's Test

Statistics
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. Chi-Square Bartlett's Test of Sphericity df Bartlett's Test of Sphericity Sig.

For factor analysis to be applicable on data we require the Kaiser-Meyer-Olkin Measure of Sampling Adequacy to be greater than 0.5. This is the case in our research. The meaning of this test is that the variables have to be correlated to each other in order to do factor analysis on them. In order to validate this we shall have a look at the correlations between the different variables.

Where:Starpw = Star Power Music = Music Reviews Dirban = Director/Banner Review = Critical/User Review Script = Storyline

Fropin = Friends/Relatives Opinions Theatre = Quality of multiplexes/movie halls Promo = Ads/Trailers/Promos Locales = Locations/Sets/Cinematography Ticpric = Ticket Pricing Sensex = Sensual scenes in the movie A cursory look at the correlation table above suggests a good amount of correlation between the variables. Principal Components Analysis. The example described above, combining two correlated variables into one factor, illustrates the basic idea of factor analysis or of principal components analysis to be precise. If we extend the two-variable example to multiple variables, then the computations become more involved, but the basic principle of expressing two or more variables by a single factor remains the same.

Expressed as a pie chart it looks like this:

Correlation M atrix

Variables
Starpw Music
Sig . (1-tailed)

Theatre Promo Genre Locales Ticpric Sensex

Dirban rev iew script Fropin

Statistics

Variables
Starpw Music Dirban rev iew script Fropin Theatre Promo Genre Locales Ticpric Sensex

Correlation

The principal component analysis has basically extracted out four components out of 12 variables we chose. The four components cumulatively explain about 53% of the data.

Component M atr ix

Component
1 2 3 4

Variable s
Starpw Music Dirban rev iew script Fropin Theatre Promo Genre Locales Ticpric Sensex

Rotated Component M atrix

Component
1 2 3 4

Variable s
Starpw Music Dirban rev iew script Fropin Theatre Promo Genre Locales Ticpric Sensex

Combining two variables into a Single Factor.


One can summarize the correlation between two variables in a scatter plot. A regression line can then be fitted that represents the "best" summary of the linear relationship between the variables. If we could define a variable that would approximate the regression line in such a plot, then that variable would capture most of the "essence" of the two items. Basically, the extraction of principal components amounts to a variance maximizing (varimax) rotation of the original variable space. Now as to how we interpreted SPSS output with regards to the combining of the variables is as follows. Looking at the pie charts above and the table below we can see that according to SPSS variables Theatre, Promo, Genre, Locales can be clubbed into one factor; Star power, director/banner and music into another; friends opinion, critical review and storyline/script into the third and finally price of the ticket and presence of sensual scenes in the movie fourth.
Rotated Component Matrix (a)

Component Starpw Music Dirban review script Fropin Theatre Promo Genre Locales Ticpric Sensex 1 -.003 .278 .058 -.040 .326 -.011 .615 .638 .685 .695 .316 -.201 2 .530 .716 .765 .295 -.066 -.054 .055 .135 .218 -.008 .044 -.100 3 .279 -.073 .017 .702 .503 .664 .328 .026 -.070 .033 .172 -.354 4 .242 -.046 -.117 .122 .060 -.224 -.037 .216 .030 -.061 .701 .676

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a Rotation converged in 6 iterations.

Where:-

Starpw = Star Power Music = Music Reviews Dirban = Director/Banner Review = Critical/User Review Script = Storyline Fropin = Friends/Relatives Opinions Theatre = Quality of multiplexes/movie halls Promo = Ads/Trailers/Promos Locales = Locations/Sets/Cinematography Ticpric = Ticket Pricing Sensex = Sensual scenes in the movie So the four critical success factors are: 1. Creativity Cost: This factor clubs the three variables Star Power, Director/Banner, Music. Creative cost is the factor which basically determines the funneling of money for trying to attain creative excellence. Thus whereas there many other facets to budget like costs on sets etc. this factor concentrates on only the money spent on creative aspect. This factor is responsible for the initial draw of the crowd to the theatres. The kind of stars in a movie and the director and the success of the music is expected to play a part in the successful opening of the film. We believe that the rest of the creativity parameters e.g. screenplay, dialogues etc are hugely dependant on the director. A film like The Rising is expected to draw initial audiences to the theatres just based on the sheer presence of a star like Aamir Khan because he presents an image of working in good films and hence the film carries a tag of credibility in the eyes of the audiences initially. Similarly a director like Ram Gopal Verma is able to get good opening for his movies even though they may not eventually become huge successes. Music if highly successful tend to draw in audiences as shown by the example of Veer Zaara.

2. Audience Feedback: This factor consists of the three parameters friends opinion, critical review and storyline/script. After the initial draw of audiences to the theatres by the critical budget this factor is necessary to draw further audiences and repeat audience to the theatres. This factors help in creating the buzz around the movie. For this to happen the movie has to have go further than having the star appeal and a good banner and director and has to appeal to the audiences. Many movies in spite of the good star appeal and good banners, despite a good initial opening have done disappointing business later on precisely due to weak audience feedback. A movie like Yaadein directed by Subhash Ghai and starring Kareena Kapoor and Hrithik Roshan went on to be a huge disappointment whereas movies have picked up businesses despite seeing sluggish opening. Style starring obscure actors did brisk business after a sluggish opening due to it being highly appreciated by the audiences and getting good reviews as a slick comedy. 3. Experiential satisfaction: Once again we emphasize that movies are an experiential product. This factor clubs the variables like quality of theatres, genre, promos, and locales. This measures the feel good factor among the movie goers. The theatre in which a movie is running plays a significant part in the business of a movie. The movies which run in up market theatres and multiplexes which offer a complete movie watching experience to the audiences with DTS Sound and air conditioning and other add-ons like restaurants and games parlours are more likely to draw in more families to watch the movies than one which is released in an obscure theatre. Similarly locales and genres of a movie play an important part in success of a movie in India. A movie like Hum Aapke Hain Kaun because of its genre based on a North Indian joint family with lots of marriage and festive scenes thrown in was a smash hit

because it was complete family viewing experience for the audiences. Baghban was a similar example. Similarly Company with its genre of the Mumbai underworld was a success. Also use of foreign locations and slick sets further enhances the feel good factor. Promos play their part in creating this feel good experience by highlighting the above aspects of the movie. Television channels and the rapid growth of internet have made it possible to watch trailers of a movie easily. Gone are those days where publicity was limited to songs on chitrahaar. So an expectation of experiential satisfaction could work wonders for a movie. Promos typically shown in between the interval of a movie are the most effective. 4. Value for Money: This factor consists of the parameters price of the tickets and the sensuous scenes in a movie. This factor mainly affects movies which are low budget to medium budget. Such movies are usually targeted at the B and C centers where the above parameters play an important role. Hence we see the trend of a raunchy item number added to most of the movies to do business in these centers. These also partially explain the fact why there were so many low budget movies starring Mithun in the early 90s not only recovered their costs but went on to do brisk business. Of late movies like Jism and Murder have been successful in such centers due to being released in theatres which were low priced and had sensuous content.

Secondary data analysis and interpretation

Before we go on explaining the analysis we did for secondary data wed like to explain how the movie industry operates. This is a simplistic view Movie industry (Agents and transaction costs) Producer/Finan ier Budget(cost of production) Distributor (costs of prints to producer, publicity costs)

Movie (ready to be distributed)

Movie (ready to be released)

Theater/Multiplexes owners (weekly costs to distributors)

Movie released

Viewers (ticket price)

The flow of money is depicted from viewers to theater owners to distributors to producers. We have used the following in finding out correlation between ROI and other independent variables:

Gross revenues = Money collected at ticket counters across India Net revenues = Gross revenues Taxes and duties Distributor share = Net revenues margin of multiplex and theatre owners All India costs = costs incurred by distributors ROI = Distributor share/ All India costs Secondary data analysis was done prior to the primary analysis and is prone to a large standard error. That does not mean that it is useless and does not point out anything. Secondary data collection was the most tedious of tasks as it involved visiting a plethora of sites and collecting data about various films. Large standard error is attributed mainly to size of the sample (we collected data for about 53 movies and ended up running regression only on 45); on consistency of the data collected (although the data collection was done from a-priori agreed to sites and was from reliable sites like imdb.com and boxofficeindia.com. Certain factors like inflation have not

been

accounted

for

while

considering

budgets/revenues.

Model Summary
Model : 1

Statistics
R R Square Adjusted R Square Std. Error of the Estimate

Hence the secondary data analysis although exhaustive and most time consuming can at best serve as the basis for conducting primary analysis and not really a contributor to the number of critical factors. Some analysis:
Model Summary Adjusted R Square -.274 Std. Error of the Estimate 17.00051

Model 1

R .603(a)

R Square .363

a Predictors: (Constant), Music sales(in million units)(from boxofficeindia.com), Awards Points( using formula screen awards/filmfare awards), Music review(/10)(planet bollywood.com), All India cost(crores) (boxofficeindia.com), Overseas gross(only usa's data- million dollars)(imdb.com), User rating(/10) (imdb.com), Critical review(/5)(imdb.com- average of 2-3 reviews), Budget(crores) (boxofficeindia.com)

We can see a large standard error of estimate in the model summary.

Coefficients (a) Unstandardized Coefficients Model 1 (Constant) Budget(crores) (boxofficeindia.c om) User rating(/10) (imdb.com) Critical review(/5) (imdb.comaverage of 2-3 reviews) Music review(/10) (planet bollywood.com) All india cost(crores) (boxofficeindia.c om) Overseas gross(only usa's data- million dollars) (imdb.com) Awards Points( using formula screen awards/filmfare awards) B -22.060 -.648 2.395 Std. Error 64.917 .884 5.085 Standardized Coefficients Beta t -.340 -.456 .195 -.732 .471 Sig. .743 .485 .650

-2.153

5.297

-.167

-.406

.695

1.814

6.383

.100

.284

.784

1.703

2.549

.374

.668

.523

-.134

.239

-.189

-.563

.589

.137

.122

.467

1.126

.293

The Dependent Variable taken in the Regression Analysis is the Return on Investment to the Distributor (as defined earlier). If the RoI is greater then 1 then the movie is categorized as hit. In case the RoI is less then 1 then the movie is a flop. For values close to

1 the movie is considered to have done average business. Also we have used standardized beta coefficients instead of unstandardised because of they have a zero mean and std. deviation 1. That means we are not dealing with coefficients which have different std. deviations and means. Beta Coefficients of the Independent Variable with respect to Dependent Variable Budget (-0.456) The negative correlation suggests that 2001 onwards the big budgeted movies have more then often bombed on the box-office, to name a few Swades, Deewar, Bride and Prejudice etc. At the same time certain low budget movies with novel concepts have made it big on the screen, like Murder, Raaz and Mujhe Kuch Kehna Hai. Movies that had the budget spent on Creative Inputs did well where as Movies relying on the Strong and Long Star Cast eventually bombed. User Rating (0.195) (This is based on the voting done by the users on imdb.com) This is one another indicator of a films success. If the people watching the movie on the first day first show like it, half the success is achieved. These are the people who will go out and spread the positive word amongst their social circle. Even if a person goes out a speaks well about the movie to just 4 of his close pals in the whole day. It will only take 8 days for the movie to be publicized amongst entire population of a huge city like Kolkata. There have been many movies in the past that had a small opening due to lack of big publicity or weak star cast, but as the word spread, the box office sales picked up and turned into a blockbuster. For example Andaaz, MunnaBhai MBBS and Koi Mil Gaya. At the same time there were movies with immense pre-release hype and a sold out first week before eventually dying out in the third week itself, like LOC Kargil and Raincoat.

Critical Review (-0.167)

This finding dilutes the thinking that the critics are the real judge of a movies success or failure. There are several movies which despite scoring badly with the critics went on to become super hits. These were movies which touched the masses but not the creatively and artistically inclined self proclaimed critics. Like Gadar, Baghban and Indian.

Music Review (0.100) The score indicates that a good musical performance helps a movie to pick up with the masses. It helps in drawing people to the theatre. As the title song catches the minds and chords of people, an undercurrent of publicity spreads. Just a thought of Dhoom Machaale Dhoom number and the craze it unleashed substantiates the point. But at the same time the correlation is not very strong due to a considerable number of movies like Ab Tak Chappan coming up with almost negligible music score but a very hard hitting and to the point story and screenplay. All India Cost (0.374) All India cost is the cost incurred all over India by the distributors on the prints and publicity. The strong positive value indicates two things. Firstly; the distributors are more then often able to judge the performance of the movies on the box office. Secondly, the expenditure on the pre and post release publicity provides a constant feed to the empty theatre seats. So at the end of the day, its the penny well spent for the distributors. Overseas Gross (-0.189) There are certain movies like Yaadein, Out of Control and Bride & Prejudice that are being made with the target audiences of NRIs in mind. It is now an over used concept. Such movies have very less appeal left for the Indian Distributors. We can say that Indian audiences/distributors have little interest left for such movies over the last few years. Awards Points (0.467) The very strong positive correlation of Award Points with the Hit movies is not of huge

significance as the Awards are often given to the Commercially Hit Movies. Rarely has it been the case that the Filmfare or Screen Awards went to a movie that fared poorly on Box Office.

Implications and suggestions


Here we shall try to reconcile our findings from both primary and secondary studies and pointing out possible limitations in our findings. Reconciling both the studies As discussed earlier we found out 4 critical factors which determine the success of a movie. FINAL CRITICAL FACTORS AND THEIR VALIDITY Creativity costs Whereas there are many other facets to budget like costs on sets etc. this factor concentrates on only the money spent on the creative aspect. Now our secondary study reveals a negative correlation between budget and ROI so isnt that a contradiction? It can be argued that to the extent money is spent on putting up a good creative team it can be called money well spent. But beyond that the trend has been suggesting that large amounts spent on other production costs can mean an increased chance of movie bombing. Audience feedback We can say that to the extent user review from secondary study suggests that audience feedback is important. But critical reviews have actually revealed a negative correlation with ROI. That means that common masses in India might have a different interpretation of a good movie than critics. But more or less the importance of audience feedback is validated by both studies. Experiential satisfaction

There is a positive correlation between distributor costs(publicity costs) and ROI. That means money spent on publicity is money well spent. That also explains the way publicity is done has changed since 2000-2001. Movie websites have sprung up, promos are much sleeker, PR events are being organized prior to release of the movie. Value for money People want to escape reality when they watch a movie. They are there for a vicarious experience in the most affordable cost possible. So if you are a multiplex make sure that u offer a whole value added product which includes shopping, food along with the movie. That is when people wont mind spending more on the ticket price. Another interesting trend is the ITEM GIRL, sensuous scenes phenomena. There could be a whole study on as to why this has happened, but again we believe that people in cities have started being more open to the concept of sensuality vis--vis those in rural areas.

Limitations
1. We have conducted a sample survey amongst people going to multiplexes and amongst people from IIMC and that too in the age group of 21-30. Now what they feel about a movie might not be a true reflection of the general masses, so a limitation is that the success factors we have enumerated are a reflection at best only of the population in the age group 21-30, living in large cities, visiting multiplexes, watching 2-3 movies a month in a theatre. 2. Sample size- Although we feel that 150 sample surveys are good enough for primary data, we feel we could have possibly missed on some variables. This is inspite of the fact that we have tried to include whatever the exploratory research suggested to us. But definitely for secondary data sample size (53 movies) is an issue, albeit a difficult issue to resolve. We would definitely have loved to get information from a professional agency which was not possible due to our lack of contacts, although we made a few futile attempts to get information from them.

3. Multicolliearity The independent variables that have been used in the analysis also have some degree of inter-dependence amongst thamselves. This factor has not been taken into account while doing the analysis.

Suggestions We dont claim we have derived a formula for success for a movie. And anybody who claims that we feel is either out of his mind or is named Arindam Chaudhary!! Jokes apart this research gives us four critical factors whose interplay can try to explain why a movie succeeds. We again dont claim there could not be other extraneous factors which affect the success of a movie. But we need more time and more information in order to determine those. Some suggestions for people pursuing research on the subject : 1. Avoid Multiple Regression - A fundamental assumption of this method is that the factors used as regressors share no common variance, i.e., are statistically independent. Interrelated factors in a regression model imply multicollinearity, which strongly distorts regression. In order to avoid this there two techniques people can use to do research on factors which are interrelated. While the first technique applies a sequential modeling approach that considers a number of demand-side factors (e.g., star power, advertising expenditures) and supply-side factors (i.e., number of screens on which a movie is released) simultaneously to explain movies success in foreign markets, the latter uses path analysis to identify differences in importance of factors between theatrical box office and video rental revenues. 2. Take customer as well as producer perspective Both people who are supplying(producers) and people who are consuming(moviegoers) should have a say in your research project. Focus interviews should be conducted amongst producers/directors to get their experience into view as a part of exploratory research.

Contributions
Gaurav Chillar Primary Data Collection, Regression Analysis, Preparation of the report Gaurav Thapar Secondary Data Collection (for the year 2004), Primary Data Collection, Factor Analysis, Regression Analysis, Preparation of Questionnaire Amit Tyagi Secondary Data Collection (for the year 2002), Primary Data Collection, Factor Analysis, Report Preparation Deepankar Nayak Secondary Data Collection ( for the year 2003), Primary Data Collection, Preparation of Report, Preparation of Questionnaire Amit Marandi Secondary Data Collection (for the year 2003), Primary Data Collection, Preparation of report, Preparation of Project Proposal Bhaskar Sengupta Primary Data Collection, Secondary Data Collection (for the year 2001), Factor Analysis, Preparation of Questionnaire Abhishek Guru Primary Data Collection, Preparation of Report, Preparation of Project Proposal

References
1. Determinants of Motion Picture Box Office and Profitability: An Interrelationship Approach by Thorsten Hennig-Thurau, Mark B. Houston, and Gianfranco J. Walsh (Sept 2003) 2. http://www.tutor2u.net/business/marketing/research_sampling.asp 3. http://www.imdb.com 4. http://www2.truman.edu/shaffer/266ch4_2001.htm 5. http://www.planetbollywood.com 6. http://www.boxofficeindia.com 7. http://www.ibosnetwork.com 8. http://www.filmfaremagazine/indiatimes.com 9. http://www.rediff.com