Hindi Film Industry Interview with Tejaswini Ganti (New York University)

MBA Crystal Ball: Tell us a little about yourself and your interest in the Indian film industry. Tejaswini: Im a cultural anthropologist who has been conducting ethnographic research about the Hindi film industry since 1996. I lived in Bombay for a year in 1996 while conducting research for my PhD dissertation and then I did subsequent fieldwork in 2000, 2005, 2006. I have also observed Hindi film shoots in the U.S over the last decade. In anthropology our main research method is what we call participant observation, which means that we derive our information about a particular community, society, or group, from immersing ourselves in that particular social world and observing and interacting with people within it. Thus, for my research I spent a lot of time on film sets, filmmakers offices, editing studios, dubbing studios, outdoor shoots, and other sites of production; I also worked as an assistant on two different films. I carried out formal, sit-down, taped interviews with about a 100 people in the industry over the last many years, but the daily conversations and interactions that I had with industry members play a central role in my analysis of the film industry. I teach at New York University in the Department of Anthropology and its Program in Culture & Media; some of the courses I teach include the Anthropology of Media; the Anthropology of South Asia; and Visual Anthropology [among others]. From the time I was a young child probably about 3 or 4 I have been an avid viewer of Hindi films; Ive grown up with them both in my early years in India and then my subsequent childhood and adolescence in the U.S. Hindi cinema has always been a very important feature of my entertainment/leisure/social life, and Im fortunate that I was able to turn a personal passion into a professional pursuit. That credit goes to my advisors in graduate school who encouraged me to think about pursuing research about Hindi filmmaking for my dissertation project. In the early 1990s, there was a growing interest within anthropology about media and popular culture, so I was in the right place at the right time.

MBA Crystal Ball: What makes the Indian film industry (Bollywood) unique? Tejaswini: First of all, even though filmmakers, the government, and the media keep pronouncing it as such there is no such thing as the Indian film industry in terms of nationally integrated structures of financing, production, distribution, and exhibition, even if there is some overlap and circulation of personnel between the six main film industries in India. There are many film industries in India of which the Bombay-based Hindi film industry, now better known as Bollywood, is the most well-known globally; however, Hindi films comprise about 20% of the total number of films produced in India, with an equal number [and sometimes more] of films being made in Telugu and Tamil every year. When all of the films made in all of the languages about 20 or so are tallied up, that is what makes India the largest feature film producing country in the world; Bollywood doesnt make 800 -1000 films a year, it makes approximately 200 or so a year.

Now to answer the question: I think what is quite remarkable is how despite years of hostile or indifferent government policies, high rates of taxation, complete disinterest by much of the organized sector, scarcity of capital, and a very decentralized structure, the Hindi film industry managed to survive and continue to make films that were successful, touched peoples hearts, and were seen by millions of people all over the world. The example of the Hindi film industry counters all of those theories trotted about by neoliberal economists and Republican politicians in the U.S. about how excessive taxation and regulation kills entrepreneurship it definitely did not do that for the Hindi film industry! Filmmakers complained and continue to complain about the Ind ian governments economic policies that affect them negatively, but it didnt stop them from making their films. The second feature that I also find unique is that Hindi films have circulated all across the world since the 1950s Morocco, Egypt, Nigeria, Ghana, Israel, Tanzania, Greece, Turkey, Bulgaria, Poland, Indonesia, Soviet Union, Peru, China, and many more countries without any significant diasporic community without any marketing effort on the part of their producers. These films circulated far and wide and cultivated loyal audiences and the producers sitting in Bombay had no idea. Its a hobby of mine to collect stories/anecdotes about where Hindi films have turned up the most interesting example was when a student in an anthropology class at Barnard College where I was giving a guest lecture mentioned he had seen a Hindi film on video in a Yanomami village in the Amazon! In that sense, these films have managed to reach all sorts of unexpected and unanticipated audiences on their own strength with zero promotion or marketing. I often found myself telling filmmakers in Bombay stories about where all their films had reached and they were quite surprised!

MBA Crystal Ball: From a business perspective, what are the similarities and differences compared to Hollywood? Tejaswini: They are both similar in that they are both large, commercially oriented, profit-seeking, globally circulating mainstream entertainment industries. However, thats where their similarity pretty much ends. In contrast to Hollywood, the Hindi film industry is highly decentralized, has been financed primarily by entrepreneurial capital, organized along social and kin networks, and until the early 2000s was governed by oral rather than written contracts. The Hindi film industrys structures of finance and distribution, sites of power, organization of labor, and overall work culture are quite distinct from Hollywood. It has been and continues to be an industry of free-lancers who come together for a particular film project. Until the advent of what is referred to as corporatization, which really started to take shape in some sort of serious manner about 5 years ago, there was no integration between production, distribution, or exhibition, although that is beginning to change now. Finally, a very important difference between the two industries is that Hollywood has always had the support of the US government, since the early 20th century, to help its goals of expansion, unlike the Hindi industry, which first took shape under a colonial power. The British were trying to figure out how to promote their own films in India and had no interest in fostering Indian filmmaking; after Independence, the Indian government treated films akin to a vice in terms of its censorship and taxation policies.

MBA Crystal Ball: How has the industry evolved over time? Tejaswini: Wow, thats a huge question my entire book is about that actually!

MBA Crystal Ball: Gazing into your crystal ball, what key developments do you see in the next few years? Tejaswini: Actually when it comes to media generally, and the Hindi film industry specifically, it is very hard to predict trends. The sort of changes that have taken place in the Hindi film industry from industry status, corporatization, and the advent of multiplexes to the celebration of mainstream Hindi cinema in the worlds most prestigious film festivals none of that could have been predicted by members of the industry. When I first began my research, most filmmakers were absolutely certain that the Central government would never grant industry status to filmmaking, and yet two years later, it did. However, if I have to predict, I would say that the increasing integration between the production, distribution, and exhibition sectors that I mentioned above will continue. However, even with large companies like Reliance Big Entertainment and UTV, it appears that the independent producer and distributor are still required to carry out the actual work of producing and distributing films. The increasing partnerships between Hollywood and Hindi filmmakers will also continue; although I cant predict where that will lead.

MBA Crystal Ball: What are the top management challenges faced by Bollywood today? Tejaswini: There are a number that touch on a variety of issues ranging from marketing to data collection. First, I feel that filmmakers, which Im using broadly to refer to producers, distributors, directors, and others, need to think outside of the box in terms of who they imagine their audiences to be and who they could be; they should not think that South Asians are the only audiences for their films, nor should they be locked into a mindset that views North American white audiences as some sort of holy grail, when the whole world has been watching Hindi film for decades. Secondly, within India, I believe that filmmakers should not be content with making all of their money from a small segment of the audience, which is what the advent of multiplexes with their exorbitant ticket rates have done to the film business. The industry should be trying to grow its audience, not shrink it. Thirdly, the industry is witnessing large infusions of capital through the entry of the corporate sector into filmmaking, but much of that capital is chasing the same stars rather than trying to cultivate new talent. Also there is a tendency for the trade to want to bet on star children and not risk taking outsiders for leading roles Im talking about the male leads and I feel the industry should be trying to expand its talent base and not just automatically rely on industry members sons, grandsons, nephews, brothers, etc.

Finally, a consequence of the decentralized nature of the industry is that there is a real problem in terms of collecting reliable data about revenues no one ever really knows how much money a film has made and success and failure are all relative to which position you occupy on the chain.

MBA Crystal Ball: Do you see parallels with other popular, non-Hollywood genres (e.g. dubbed martial arts movies were a rage about a decade back, but not any longer)? Tejaswini: Not really, because I dont believe Hindi films are some sort of fad; they may be a fad for some journalists or media outlets, but Hindi films are going to be made and be popular whether a small group in the U.S. [in media outlets or film schools] finds it exotic and curious or not.

MBA Crystal Ball: In terms of market reach, do you see the Indian film industry gaining a wider acceptibility (beyond the Indian diaspora)? Would language, culture and a highly typical desi flavour act as deterrents in the process? Tejaswini: I already believe that Indian films have a global audience neither language, culture, or songs have posed a problem in the past, but the challenge for filmmakers has always been to realize those profits. Part of the problem is that the global mechanisms for data collection publications like Variety with its very EuroAmerican perspective for example produce a very narrow picture that basically ignores and/or erases the global presence of Hindi cinema. Also, there was nothing intrinsically universal or less culturally specific about Hollywoods films. It was not the content, but a series of historical factors that have led to its global dominance from the devastating impact of World War 2 on the European film industries to the U.S.s neocolonial relationships with Latin America and Japan. The U.S. is actually one of the most protected and closed film markets in the world as the MPAA is a very powerful lobby. As I had mentioned, the U.S. government from the early part of the 20th century saw the economic and ideological potential of film exports and Hollywood was often referred to as the little State Department. In fact, Will Hays, the head of the MPAA in the 1920s asserted, every foot of American film sells one dollar worth of manufactured products somewhere in the world. So the issue of expanding market reach has to do with political and economic factors rather than simple content.

MBA Crystal Ball: What skills do we need to develop so that we get there? Tejaswini: The Indian government needs to have a better long-term vision about how it wants to promote filmmaking in the global market. Filmmakers should dub their films into more languages to reach newer audiences, for while much of the world may be used to watching films that dont feature their people of their own nationality, they do expect to hear their own languages. There should be better subtitling for markets where subtitling is more preferable and the songs definitely need to be subtitled and subtitled better! Basically, filmmakers cant afford to be pennywise and pound-foolish; that is, all of these efforts will require substantial investments, but one cant expect to reach new markets without expenditure. If

Hindi films in the past managed to reach so many audiences without any effort on the part of their makers, imagine what actually trying can do?

MBA Crystal Ball: Tell us a little about your books. What topics have you covered so far

Tejaswini: My first book, Bollywood: A Guidebook to Popular Hindi Cinema (2004, Routledge) which will be coming out in its 2nd edition later this year, explains the cultural, social, and political significance of Hindi cinema, outlines the history and structure of the Bombay film industry, and details the development of popular Hindi filmmaking since the 1930s. I was motivated to write this book because in the course of teaching a class on Indian cinema, I became aware of the need for a monograph that introduced the history, context, and form of Hindi cinema as well as the film industry and its production practices. My second book, Producing Bollywood: Inside the Contemporary Hindi Film Industry , which has just been published by Duke University Press, explores the transformations in the Hindi film industry from 1995-2010, a period in which economic liberalization dramatically altered the media landscape in India first with the advent of satellite television and then multiplex theaters. The book details how the Hindi film industry became Bollywood a globally recognized and circulating brand of filmmaking, often posited by the international media as the only serious contender to Hollywood in terms of its global popularity and influence. A key feature of this transformation is that Hindi cinema and the film industry have acquired greater cultural legitimacy from the perspective of the state, the media, and English-educated/speaking elites in India, a result of what I argue is the ongo ing gentrification of Hindi cinema and the film industry.

Despite odds, the film industry has been constantly growing. The budgets, the scale of operations and the skillsets needed are constantly expanding. And a booming industry needs skilled manpower to sustain that growth. If you have been fascinated by the industry, it can offer many career opportunities for those with solid business skills to take it to the next level.

Cambridge University's MBA Director, Dr Jochen Runde, recommends the bestselling book Beyond The MBA Hype as 'required reading for anyone contemplating an MBA at an international business school.' Get your copy from Flipkart & join thousands of readers who've shattered the hype

In addition to this, the company has mandate to distribute allfilms produced by Reliance

Entertainment Big Motion Pictures.

T.V. Content Production: Adlabs acquired a 51% stake inSynergy Communications, which is a well known

contentproduction house for television, associated with famous gameshows like Kaun Banega Crorepati, Mastermind and JhalakDikhhla Jaa.The division produces only

commissionedpro grammers and has produced 8 shows adding up to 214hoursof programming in FY08. In the next year, it plans to launch 15shows including Dus Ka Dum,Aap Ki

Kachehri, Bindass Champ,Kya Aap Panchvi Pass Se Tez Hai, Angrezi Mein Kehte Hain.

Adlabs has shown the most aggression in its expansion plans sofar, mainly because of access

to the deep pockets of ADAGgroup. It has entered into an agreement with Rave Entertainmentto acquire the right to conduct cinema exhibition business at the23 screens that

the group is developing in NCR, Uttar Pradesh,Punjab and Haryana. This gives the company access to 6properties, 4 of which are tax exempt. Recently, the companyhas

acquired majority skate in Malaysiabased Lotus Five StarCinemas and will be operating a 51 screen cinema chain inacross Malaysia. The chain will be catering to the Indian,Bangladeshi

and Pakistani population in the country by playingHindi and Tamil films along with Hollywood, Chinese and Malaymovies.

5.CINEMAX

Cinemax India (Cinemax) is one of the smallest multiplexexhibitor s within the listed space with 56screens across 19properties, a majority of them concentrated in the Mumbaiterritory.

The company has a predominant presence in theWestern region and is the largest exhibitor in the Mumbaiterritory with a 35% share of the multiplex screens in Mumbai.Cinemax

is now focused on expanding its presence across therest of India and is seeking to aggressively add capacity acrossother regions

Aggressive capacity addition plans: The management atCinemax has guided for adding 41screens during FY09E followedby 72 screens during FY10E. The company employs

two criteriafor selection of properties: a payback period of less than 4 yearsand a target RoE of 1820%.

Tapping ancillary revenue streams:

Cinemax has beenactively seeking means to tap ancillary revenue streams byforaying into the branded food court business and the gamingbusiness. In an effort to reduce its over-

dependence on ticketsales (that currently contributes 70% of the operating revenues),the company is focused on adding other ancillary revenuestreams to bolster the

spender head from current levels.Cinemax is targeting F&B contribution within overall revenues toincrease by about 300bps from current levels of 14%.

Leased operating model to help improve margins: Amongthe 19 properties that Cinema currently operates (as of Jun'08), 8are owned while the other 11 are operated on the leased model.With

more properties being added on the leased model, theproportion of owned properties within the overall mix wouldreduce. This shift is likely to push the rentals up by about 600bps(from 8% of

the topline), which is likely to be offset by anequivalent decline in overheads such as personnel costs andadministrative expenses.

Future expansion plans: On the exhibition front, Cinemaxintends to add 41 screens duringFY09E and 72 screens duringFY10E. The company has also forayed into the

movie distributionspace with 'Kismet Konnection', which is scheduled for an allIndia release on 18th Jul'08. Cinema has acquired the distributionrights

for the Mumbai and Punjab territories. The company alsointends to form a separate SPV for movie production with a totalinvestment outlay of Rs1bn over the next two years.

Cinemaxplans to raise Rs1bn for this initiative of which Rs700mn will bespent towards production and the rest towards distribution. At itsCMP of Rs87, the stock is currently trading at 18x its

fully dilutedFY08 EPS of Rs4.91. We do not have a rating on the stock

Property selection criteria: Cinemax applies two criteria forselection and addition of

properties to its existing count. Firstly,the company targets an Roe in the range 18-20%. Secondly,Cinema targets a payback period of less than 4 years forselection decisions. The

management has guided for thefollowing seat / property matrix over the next 3 years.

GROWTH DRIVERS

At a time when single-screen theatres are dying due to lack of footfalls,people are queuing up at multiplexes that sell tickets at almost 5 times theprices prevailing in single-screen

theatres. This fact provides ampletestimony to the increasing prosperity as well as the Indian consumers willingn ess to pay for superior-quality entertainment. Given the

prevailingdemandsupply dynamics, we believe that the sector offers high visibility forsteady cash flows.

Supply side - Improving dynamics

On the supply side, we look at content suppliers, real estate suppliers andthe prevailing regulatory

environment in order to judge the visibility of revenues from the sector.

Content supply set to boom

Multiplexes are in existence because people want to

watch movies in aquality ambience. Hence, as a direct corollary, more footfalls will begenerated with more movies being released. In this sense, the multiplexoperator can do nothing but

depend on the suppliers of content (movieproducers and distributors) for a regular and highquality supply of content togenerate higher number of footfalls. Content supply is set to boom in thecoming

years mainly because of the following factors:

Increasing investment in film production

Film production is presently going through a wonderful phase as far as

supplyof funds is concerned. This space has been attracting a lot of attentionbecause of its inherently strong fundamentals. A number of players withdeep pockets have entered this

space, which should keep the contentpipeline robust over the coming years. In this year so far, an investmentpipeline of ~$1.7bn has been announced in this space (investible over thenext 2-3

years). Producers are now flush with cash and are no longer overlydependent on informal sources of funding. We believe that this trend willcontinue in the medium-term and supply of

content will not be a problem formultiplexes. Moreover, ticket sale reporting is far more transparent in multiplexes than insingle-screen theatres. This results in higher film

revenues for producers,which can be ploughed back into movie production.

Reducing shelf life of movies making multiplex

theideal format for distributors

The shelf life of a movie has dramatically reduced from a few months earlierto merely a 1-2 week window now. This has significantly

reduced the timewindow within which producers/distribut ors can monetize the movie andrecover their costs. Multiplexes, with multiple screens, have far moreflexibility in

scheduling of movies, which enables them to exhibit multipleshows of a single movie simultaneously, thereby helping distributors recovera majority of the anticipated

revenues from the film during the first weekitself. For instance, 31 shows of the movie 'Race' were shown on a single dayby a multiplex operator in Mumbai. Today, multiplexes are contributing 35-40%

to the overall domestic box officecollections with less than 5% of the total screens under operation. Webelieve that the format is highly relevant for the distributors and none of them can

afford to bypass it and still make money on films.

Hollywood films gaining ground - more contentsupply

Hollywood films are increasingly finding acceptance in India, making Indiathe fifth-

largest market of Hollywood films in Asia and the 15th largestmarket for Hollywood globally. An increasing number of Hollywood films arebeing released in India in multiple languages with

greater number of prints.For instance, Spiderman 3 was released with 600 prints in 4 languages. Thefilm was a blockbuster on the Indian domestic circuit, clocking $4.5mn duringthe opening

weekend.We believe that the number of foreign films released in India is set to grow,especially with large studios such as Reliance Big Entertainment and Yash RajFilms foraying into

foreign film distribution. We expect this trend to benefitthe multiplex industry in terms of ensuring a steady stream of content.

Real Estate Supply

Multiplexes are often regarded as the footfall magnets for malls. The conceptof shopping-cumdining- cumentertainment outing is gaining popularityamong the urban populace,

where multiplexes in malls become the mostrelevant destination choice. Almost all upcoming malls have a multiplexoperator as an anchor tenant. Hence, we believe that the

supply of realestate will not be an issue for the sector, even though the pace might beslow due to development delays.India is presently witnessing a retail revolution with many big

playersforaying into organized retail and many mall development plans beingannounced in order to cater to their expansion plans. The pace of malldevelopment will surely ensure

availability of quality real estate for multiplexoperators.

15

of 38

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A Project Report on Impact of Multiplex on Indian Exihibition Industry

This project is an effort to create a brief relation among the multiplex industry in india and other exhibition industry key driver. Download or Print 14,407 Reads Info and Rating Category: Uncategorized. Rating: (12 Ratings) Upload Date: 09/26/2008 Copyright: Attribution Non-commercial educationdegreeprogram Tags: s Flag document for inapproriate content

Uploaded by parashar v k Follow Download

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38 p. A Project Report on Impact of Multiplex on Indian Exihibition Industry

This project is an effort to create a brief relation among the multiplex indu...

In addition to this, the company has mandate to distribute allfilms produced by Reliance Entertainment Big Motion Pictures.

T.V. Content Production: Adlabs acquired a 51% stake inSynergy Communications, which is a well known contentproduction house for television,

associated with famous gameshows like Kaun Banega Crorepati, Mastermind and JhalakDikhhla Jaa.The division produces only commissionedpro grammers and has produced 8 shows

adding up to 214hoursof programming in FY08. In the next year, it plans to launch 15shows including Dus Ka Dum,Aap Ki Kachehri, Bindass Champ,Kya Aap Panchvi Pass Se Tez

Hai, Angrezi Mein Kehte Hain.

Adlabs has shown the most aggression in its expansion plans sofar, mainly because of access to the deep pockets of ADAGgroup. It has

entered into an agreement with Rave Entertainmentto acquire the right to conduct cinema exhibition business at the23 screens that the group is developing in NCR, Uttar

Pradesh,Punjab and Haryana. This gives the company access to 6properties, 4 of which are tax exempt. Recently, the companyhas acquired majority skate in Malaysiabased Lotus Five

StarCinemas and will be operating a 51 screen cinema chain inacross Malaysia. The chain will be catering to the Indian,Bangladeshi and Pakistani population in the country by

playingHindi and Tamil films along with Hollywood, Chinese and Malaymovies.

5.CINEMAX

Cinemax India (Cinemax) is one of the smallest multiplexexhibitor s within the listed space with 56screens across 19properties, a majority of them concentrated in the Mumbaiterritory.

The company has a predominant presence in theWestern region and is the largest exhibitor in the Mumbaiterritory with a 35% share of the multiplex screens in Mumbai.Cinemax

is now focused on expanding its presence across therest of India and is seeking to aggressively add capacity acrossother regions

Aggressive capacity addition plans: The management atCinemax has guided for adding 41screens during FY09E followedby 72 screens during FY10E. The company employs

two criteriafor selection of properties: a payback period of less than 4 yearsand a target RoE of 1820%.

Tapping ancillary revenue streams:

Cinemax has beenactively seeking means to tap ancillary revenue streams byforaying into the branded food court business and the gamingbusiness. In an effort to reduce its over-

dependence on ticketsales (that currently contributes 70% of the operating revenues),the company is focused on adding other ancillary revenuestreams to bolster the

spender head from current levels.Cinemax is targeting F&B contribution within overall revenues toincrease by about 300bps from current levels of 14%.

Leased operating model to help improve margins: Amongthe 19 properties that Cinema currently operates (as of Jun'08), 8are owned while the other 11 are operated on the leased model.With

more properties being added on the leased model, theproportion of owned properties within the overall mix wouldreduce. This shift is likely to push the rentals up by about 600bps(from 8% of

the topline), which is likely to be offset by anequivalent decline in overheads such as personnel costs andadministrative expenses.

Future expansion plans: On the exhibition front, Cinemaxintends to add 41 screens duringFY09E and 72 screens duringFY10E. The company has also forayed into the

movie distributionspace with 'Kismet Konnection', which is scheduled for an allIndia release on 18th Jul'08. Cinema has acquired the distributionrights

for the Mumbai and Punjab territories. The company alsointends to form a separate SPV for movie production with a totalinvestment outlay of Rs1bn over the next two years.

Cinemaxplans to raise Rs1bn for this initiative of which Rs700mn will bespent towards production and the rest towards distribution. At itsCMP of Rs87, the stock is currently trading at 18x its

fully dilutedFY08 EPS of Rs4.91. We do not have a rating on the stock

Property selection criteria: Cinemax applies two criteria forselection and addition of

properties to its existing count. Firstly,the company targets an Roe in the range 18-20%. Secondly,Cinema targets a payback period of less than 4 years forselection decisions. The

management has guided for thefollowing seat / property matrix over the next 3 years.

GROWTH DRIVERS

At a time when single-screen theatres are dying due to lack of footfalls,people are queuing up at multiplexes that sell tickets at almost 5 times theprices prevailing in single-screen

theatres. This fact provides ampletestimony to the increasing prosperity as well as the Indian consumers willingn ess to pay for superior-quality entertainment. Given the

prevailingdemandsupply dynamics, we believe that the sector offers high visibility forsteady cash flows.

Supply side - Improving dynamics

On the supply side, we look at content suppliers, real estate suppliers andthe prevailing regulatory

environment in order to judge the visibility of revenues from the sector.

Content supply set to boom

Multiplexes are in existence because people want to

watch movies in aquality ambience. Hence, as a direct corollary, more footfalls will begenerated with more movies being released. In this sense, the multiplexoperator can do nothing but

depend on the suppliers of content (movieproducers and distributors) for a regular and highquality supply of content togenerate higher number of footfalls. Content supply is set to boom in thecoming

years mainly because of the following factors:

Increasing investment in film production

Film production is presently going through a wonderful phase as far as

supplyof funds is concerned. This space has been attracting a lot of attentionbecause of its inherently strong fundamentals. A number of players withdeep pockets have entered this

space, which should keep the contentpipeline robust over the coming years. In this year so far, an investmentpipeline of ~$1.7bn has been announced in this space (investible over thenext 2-3

years). Producers are now flush with cash and are no longer overlydependent on informal sources of funding. We believe that this trend willcontinue in the medium-term and supply of

content will not be a problem formultiplexes. Moreover, ticket sale reporting is far more transparent in multiplexes than insingle-screen theatres. This results in higher film

revenues for producers,which can be ploughed back into movie production.

Reducing shelf life of movies making multiplex

theideal format for distributors

The shelf life of a movie has dramatically reduced from a few months earlierto merely a 1-2 week window now. This has significantly

reduced the timewindow within which producers/distribut ors can monetize the movie andrecover their costs. Multiplexes, with multiple screens, have far moreflexibility in

scheduling of movies, which enables them to exhibit multipleshows of a single movie simultaneously, thereby helping distributors recovera majority of the anticipated

revenues from the film during the first weekitself. For instance, 31 shows of the movie 'Race' were shown on a single dayby a multiplex operator in Mumbai. Today, multiplexes are contributing 35-40%

to the overall domestic box officecollections with less than 5% of the total screens under operation. Webelieve that the format is highly relevant for the distributors and none of them can

afford to bypass it and still make money on films.

Hollywood films gaining ground - more contentsupply

Hollywood films are increasingly finding acceptance in India, making Indiathe fifth-

largest market of Hollywood films in Asia and the 15th largestmarket for Hollywood globally. An increasing number of Hollywood films arebeing released in India in multiple languages with

greater number of prints.For instance, Spiderman 3 was released with 600 prints in 4 languages. Thefilm was a blockbuster on the Indian domestic circuit, clocking $4.5mn duringthe opening

weekend.We believe that the number of foreign films released in India is set to grow,especially with large studios such as Reliance Big Entertainment and Yash RajFilms foraying into

foreign film distribution. We expect this trend to benefitthe multiplex industry in terms of ensuring a steady stream of content.

Real Estate Supply

Multiplexes are often regarded as the footfall magnets for malls. The conceptof shopping-cumdining- cumentertainment outing is gaining popularityamong the urban populace,

where multiplexes in malls become the mostrelevant destination choice. Almost all upcoming malls have a multiplexoperator as an anchor tenant. Hence, we believe that the

supply of realestate will not be an issue for the sector, even though the pace might beslow due to development delays.India is presently witnessing a retail revolution with many big

playersforaying into organized retail and many mall development plans beingannounced in order to cater to their expansion plans. The pace of malldevelopment will surely ensure

availability of quality real estate for multiplexoperators.

15

of 38

Leave a Comment
2249745a323768 json

You must be logged in to leave a comment. Submit Characters: 400 deleted_fbuser_1331756626_2 nice reply03 / 02 / 2012 falkonguy nice 1 reply01 / 25 / 2010
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A Project Report on Impact of Multiplex on Indian Exihibition Industry

This project is an effort to create a brief relation among the multiplex industry in india and other exhibition industry key driver. Download or Print 14,407 Reads Info and Rating Category: Uncategorized. Rating: (12 Ratings) Upload Date: 09/26/2008 Copyright: Attribution Non-commercial educationdegreeprogram Tags: s Flag document for inapproriate content

Uploaded by parashar v k Follow Download

Embed Doc Copy Link Add To Collection Comments Readcast Share

Share on Scribd: Readcast

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3 p. indian cooking glossary

38 p. A Project Report on Impact of Multiplex on Indian Exihibition Industry

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A PROJEC

T REPORT ON

Impact of

Multip lex
Submitted for Prof.

Reena Kakkar Ret ail Marketing (25/09/200

8)Submitte d by

VISHNU PARAS HAR

INDEX

S l N r l a n

e o

r P

i a

t i c a r s g e o

u P

THE CURRENT INDUSTRY SCENARIO

1

FILM EXHIBITION BUSINESS IN INDIATREME NDOUS SCOPE

1

3 MULTIPLEX
2

4 KEY PLAYERS IN MULTIPLEX

3-11

5 GROWTH DRIVERS
12-17

INCREASE PRODUCTIO N OF HINDI MOVIES

18-19

HOLLYWOO D STUDIOS EYE BOLLYWOO D

19-21

HOLLYWOO D LOOKING TO INDIA FOR POSTPRODUCTIO N WORK

21

9 REAL ESTATE SUPPLY

22

10

MULTIPLEX BUZZ!!
23

11 INCREASING CORPORATIZ ATION

OFBOLLYWO OD
25

12 COST AND REVENUE ANALYSIS

26-29

13 RISK AND CONCERNS

30-31

14

WAY FORWARD
32

THE CURREN T INDUSTR Y

SCENARI O
India's craze for films has not been fully exploited by the "Film Exhibition"industry due to the lack of

screen density in the country coupled with thepoor quality of screens. "Multiplex Cinemas" offer an alternative to tap thispotential by providing a

quality experience to the viewer as well aseconomies to the multiplex operator."Films" has been one of the integral components of the Indian entertainmentindustr

y contributing nearly 27% of the total revenues of the entertainmentindust ry. Besides, films also contribute to other components of theentertainment industry like music,

television and live entertainment. TheIndian film industry is one of the most complex and fragmented national filmindustries in the world comprising of

a number of regional film industries likeHindi, Tamil, Telugu, Kannada and others. The Hindi film industry is the mostpopular among them. Though India

produces the largest number of films inthe world (Approximately 1000 per year), it accounts for only 1% of theglobal film industry revenues. In spite of

being over 90 years old, the Indianfilm industry was accorded the status of industry only in 2000. Over theyears, the Indian film industry has been highly

unorganized as film financingwas dependant on private and individual financing at extremely high interestrates. Only recently, the industry has got

access to organized finance. Withvertical integration taking place between producers, distributors, exhibitors,broadcast ers and music

companys corporatization is now taking shape inthe Indian film industry. We believe, that corporatization, will bring abouttransparency,

accountability and consolidation which will help to improve theoverall profitability of the Indian film industry as well as reduce piracy andleakages which presently

account for 14% of the Indian film industry'srevenues.

FILM EXHIBITI ON

BUSINES S IN INDIATREMEN

DOUS SCOPE
Film exhibition forms the most important component of the Indian filmindustry.

According to the KPMG report domestic theatrical revenuescontributes 57% of the total Rs59bn film industry revenues and are expectedto grow at 17%.

Overall, the Indian film industry is expected to grow at 16%CAGR it is expected to reach Rs143bn in 2010. The main pockets for filmexhibition in India are Delhi,

Mumbai and South India. Due to various regional

language film industries in the South, it has become an important

filmexhibition pocket. Hyderabad and Bangalore are 2 southern cities whereoccupancies are exceptionally high at around 70%80%.

MULTIPL EX
India currently has 11500 existing screens, 95% are standalone, singlescreens. These single screen

cinemas are poorly maintained as the ownersfind it difficult to upgrade and renovate their facilities, due to unavailabilityof organized finance. The deteriorating

quality of these cinemas dissuadedviewers and they started using alternative viewing options.Over the last few years, multiplexes have

emerged as a trend in urban India."Multiplexes" are essentially cinemas with 3 or more screens. They provide aquality viewing experience and are generally

located around shopping mallsto increase footfalls in these malls. Each screen in a multiplex has smallseating capacities in the range of 150-300

seats as compared to singlescreen cinemas which have capacities in the range of 800-1,200 seats.With around 11500 active screens, India is under screened.

China, whichproduces far lesser films than India has 65,000 screens while the US has36,000. In dias screen density stands low at 12 screens per

millionpopulations. There is a need of at least 20,000 screens as against the current11500. This gives multiplex operators enough room to grow as the traditionalsingle-

screen theatres do not have the financial wherewithal nor do theyenjoy tax incentives.

KEY PLAYERS IN MULTIPL EX

1.

PVR CINEMAS :

Strong operational performancePVR is one of the leadingmultiplex operators with very strong performance on

operationalparamete rs. The company has been able to establish itself asone of the premier entertainment destinations, which hasresulted

in the highest occupancies, footfalls and spend per headas compared to all of the other multiplex operators.

Aggressive expansion plans-

PVR intends to open ~100screens in the coming two years. We are assuming a 50%discount to these plans for our estimates, in order to rule outmall

delays. Among the new screens, 20-30 will be high end PVRPremiere screens with ticket prices in the range ofRs150-Rs750.It has already opened 17 out of the total

30 screens that weexpect for FY09E, thus providing more certainty to our estimates.

Foray into coproduction-

PVR has, through PVR Pictures,entered into film coproduction, after its first movie met withbeginners luck. It has 4 movies lined up for FY09E and

intends toramp it up to 8-10 movies in FY10E. We expect the moviebusiness to operate at 13% EBITDA margin and contribute

11%to the total revenues by FY20E.

Leading Multiplex operator: PVR is one of the leadingmultiplex chains in India with 101 screens under operation in 14cities

at present. PVR has been successful in building a lifestyleentertainme nt brand because of its focus on customer serviceand quality of experience.

Because of the strong brand andpresence at prime locations, PVR has found a very encouraging
4

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A Project Report on Impact of Multiplex on Indian Exihibition Industry

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