Corporatization of Bollywood : Synopsis

August 2016, Disney company stopped its local movie production operation due to current
challenges in the investment model. It has suffered huge losses in box office collection
(Mohenjodaro:, fitoor grossed 8.5 and 3 M while their budget was 15 M and 10M
respectively.Disneys Hollywood production did well (Jungle book grossed 27M)

Disney: Acquired UTV to operate in India. Global and operating Revenue 9.4B and 2.7B. Spent 0.5B in
buying UTV stakes.

Beginning: (1900-1930)

 Bargaining Power of distributers

 Limited capabilities of production companies to exhibit and distribute.
 Focussed only on production of movies

Meandering Ways: (1930-1980)

 Dependency on start actors and directors

 Producers started coming from diverse background( Jewlry, Manufacturing, Real estate,
even crime)
 Movie industry became 5th largest employer-1947.
 Establishment of CBFC and FFC
 Late 1960- Hero cult- Producers wanting to work with specific individual.Actrs worked as
freelancers and worked in multiple movies with fixed payments,

Adapting to liberalization(1990)

 Ushered the era of Satellite television (Threat)

 To cope with this threat bllywwod went overseas and pictured a larger than life in their big
budget movies
 Till now Bollywood isn’t recognised as an insutry, officially. Therefore institutional funding
was not available,producers largely dependent on informal moneylenders. They used to
charge high interest rate due to uncertaimty of return (Exihibit 1 : Industry average of
success rate was below 20%, top 20 grossing movies per year constituted more than 60% of
the revenues earned by the industry in 1990s)
 Movie making- way of money laundering

Seeds of Corporisation: (2000 onwards)

 Forma; recognition of the film industry, Sushma Swaraj, Union Minister

 IDBI act: Approved activity under industrial concern
 100% FDi Permitted
 Exemptions and lower import duties
 Transparency in financing
 Corporatisation
Paradigm shift Before
Hit movie formula:
Concoction of stars,song
dance laden male lead actor
centric love story
Fixed payments and
freelancer actors,verbal
Preproductiom
contracts
Violation of copyright was
not an issue
Lilttle support from govt
Unorganised moneylenders
Financing were source of
financing(Interest rate 36-
48% per annum)
Long drawn process with
discontinuous irregular cash
flow from multiple
unorganised financers,
Unavailability of dates from
actors(Freelancers:Multiple
movie)
Industry had 4-5 saleble stars
with 150 films
Production
After
Rise of
Suits(Lawyrs,accountants,
Talent Scouts,casting agents,
business execs
Professional contracts,
renumeration also included
share of the movie profit
aprt form the fixed payment.
Plagiarism (huh), increasing
conciousness of intellectual
property rights, acquiring
rights
Banks strated disbursing loan
@ 10-15%
Entry of VC and PE players,
Leading Indian business
group joined the market-
viewed Solution to the
irregularities and
unprofessionalism of Industry
Entry of major hollywood
studios(M&A or JV) 100% FDI
inspired
New upcoming actors,
directors, producers as
"Second Line"
hollywwod studios had
Heavy pockets but failed
miserably, maybe because
they had problems regarding
adjustment
issues,inadequate human
resources, cultural
issues(Pulse of ausience?)
Industry benchmark of salary
changed

Acquisition model(MG
arrangement for the
respective
territories:payment of a fixed
amount to producers
regardless of movie;s
performance
Financing movies
Distribution
Limited availability,costs of
reels, delay in laumch in
smaller cities,piracy
Marketing 5-7% of movie cost
Exhibitions
Actors emerged as brands
and they started their own
ventures in different
industries
Other ways of
profit:Overseas table profits,
branding of other products in
the movie,satelite rights(50%
of revenue of a flop movie
Rights to the satelite
television challenged
distributers' profitibility
Pan India distribution
through few
companies(Intermidiaries
between producer
anddistributer)
Co-production model: part of
movies' lifecyclee from start
to end
Introduction of digital tech,
shelf life shortened, early
sale of movie ditribtuion
rights to televisions
30% of movie cost
100% FDI
80 screens to 2200
screen(Multiplex evolved
from 2002 to 2016
Single screen went down in
no(9710 in 2009 to 6000 in
2015)
Dispute over revenue sharing
with multiplexes(Few
companies controlled 70% of
multiplex screens)
Concept of targeted
exhibition
 Challnges in form of IPL

Path Ahead:

Bollywood constituted 43% of India’s movie industry’s gross revenues of 201B and forecasted to
reach 3.7B

Friction Between Talent & production companies

 Money or movie making

 Dependence on stars?
 Professional managers in creative spaces.
 Corporates applied business principles in a creative field. They were able to saty because of
deep pockets,.
 Entry of amazon Netflix
 Requirement of more balanced rick-reward model(Optimising production cost and
marketing cost, working on tighter budgets with good content)