Does Movie Marketing contribute to the success of the movie or its just a current trend? Submitted to: Name of the Guide (Department) Submitted by: Name of the Candidate Enrollment No. Session Years Dear Anita I have received your synopsis as well as the confirmation of your external guide you through the thesis. This letter is a formal approval to the topic proposed by you Please go ahead with the thesis. Make it a comprehensive thesis by using empirical data as the basis of the research.

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Increase in the average ticket prices will be the primary contributor to this growth. Currently, 3. 25 billion tickets were sold in India in 2007. The overseas collections are estimated to grow cumulatively at 19% over the next five years to reach Rs 20 billion in 2012 from a current size of Rs 8. 5 billion in 2007. This would be mainly due to increased marketing and selling efforts internationally, distribution muscle and growing popularity of Indian content abroad.

Films” has been one of the integral components of the Indian entertainment industry contributing nearly 27% of the total revenues of the entertainment industry. Besides, films also contribute to other components of the entertainment industry like music, television and live entertainment. The Indian film industry is one of the most complex and fragmented national film industries in the world comprising of a number of regional film industries like Hindi, Tamil, Telugu, Kannada and others. The Hindi film industry is the most popular among them.

Though India produces the largest number of films in the world (Approximately 1000 per year), it accounts for only 1% of the global film industry revenues. In spite of being over 90 years old, the Indian film industry was accorded the status of industry only in 2000. Over the years, the Indian film industry has been highly unorganized as film financing was dependant on private and individual financing at extremely high interest rates. Only recently, the industry has got access to organized finance.

With vertical integration taking place between producers, distributors, exhibitors, broadcasters and music company’s

Page 2 Movie Marketing Essay

corporatization is now taking shape in the Indian film industry. Corporatization will bring about transparency, accountability and consolidation which will help to improve the overall profitability of the Indian film industry as well as reduce piracy and leakages which presently account for 14% of the Indian film industry’s revenues. 1. 2 Components of the Indian film industry The Indian film industry comprises of a cluster of regional film industries, like Hindi, Telugu, Tamil, Kannada, Malayalam, Bengali, etc.

This makes it one of the most complex and fragmented national film industries in the world. These regional language films compete with each other in certain market segments and enjoy a virtual monopoly in certain others. The most popular among them is the Hindi film industry located in Mumbai, popularly referred to as “Bollywood”. a) Bollywood Out of the 200 Hindi films made in India each year, around 150 are made in Bollywood. These Bollywood films are released throughout India on both big and small screen formats, with several of them being screened overseas as well.

Though there have been instances of regional films, enjoying a national release or even an overseas release, virtually all films having a national audience, are made in Bollywood. It accounts for over 40 percent of the total revenues of the overall Indian film industry, which is currently estimated at INR 59 billion. It is estimated that only INR 50 billion finds its way to the industry reserves, with the balance INR 9 billion being cornered by pirates. b) Regional Films The major regional film industries are Tamil and Telugu, which together earn around INR 15 billion, followed by Malayalam, Bengali and Punjabi.

With increased viewer exposure to a plethora of entertainment options on satellite television, the number of regional films produced annually has fallen from around 800, three years ago, to around 650 currently. c) English Films Big budget Hollywood films are beginning to make a mark, with their dubbed versions making inroads into the semi-urban and rural markets. On a cumulative basis, box office collections of foreign films grew in both revenues and number of releases, from INR 1 . 5 billion from 60 films in 2007 to INR 1 . 8 billion for 72 films in 2008. -update? 1. 3 Multiplex Trend

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 a quality viewing experience and are generally located around shopping malls to increase footfalls in these malls. Each screen in a multiplex has small seating capacities in the range of 150-300 seats as compared to single screen cinemas which have capacities in the range of 800-1,200 seats. With around 11500 active screens, India is under screened. China, which produces far lesser films than India has 65,000 screens while the US has 36,000.

India’s screen density stands low at 12 screens per million populations. There is a need of at least 20,000 screens as against the current 11500. This gives multiplex operators enough room to grow as the traditional single-screen theatres do not have the financial wherewithal nor do they enjoy tax incentives. However the number of multiplexes has shown considerable growth from 340 in 2005 to 850 in 2009 and is expected to go above 1000 by 2011. Five years ago, Iqbal or even Page 3 for that matter, would have found it very difficult to get released.

Such ‘off beat’ movies were shunned by distributors and theatre owners because they did not attract the ‘front row’ crowds. Not any more. A multiplex revolution in urban India has changed it all for Bollywood. Says Ajay Bijli, who runs the PVR chain of multiplex cinemas: “The multiplex has completely redefined the business of distribution and allowed a variety of movies to taste success”. Another big advantage for multiplex cinemas is their proximity to shopping malls. Most multiplex cinemas globally have been located in shopping malls that already attract urban consumers.

Many shoppers and window shoppers routinely visit shopping malls, and end up watching a movie in the multiplex. 1. 4 Corporatization The Indian film industry is biting the bait of corporatization and attempting to professionalise itself- Ravimohan, Crisil The Film Industry on the whole has always worked like small scale industries in the unorganized sector. For over five decades of its existence, the industry did not produce any “Corporate Entity” worth its name. Amitabh Bachchan who promoted Amitabh Bachchan Corporation Limited (ABCL) took the lead towards Corporatization of film industry in India.

Though still an unlisted company with shareholders and whatever its fate may be, ABCL set the example for others in film industry, that things can be done in a little more organized way. In 2000-01, film making business was given the much awaited industry status. It gradually moved towards adopting the best practices from other industry counterparts. Many corporates entered the industry and started making movies as products and started treating them as projects. They bought increased level of professionalism and transparency in the business of film making.

Some of the players even integrated both forwardly and backwardly and diversified to generate new revenue streams for movies. Corporatization laid emphasis on costs, revenues, profits and pricing and this changed the entire process of film making. Scores of film producers, financers, distributors and associates, have now converted their businesses into “Companies” under law. Some have already raised capital from the public and are now listed at major stock exchanges, while several others propose to do the same.

Besides Zee Telefilms, some others who have successfully corporatized includes Jitendra promoted Balaji Telefilms, SriAdhikari Brothers, RPG’s Saregama, Pritish Nandy Communications and Subhash Ghai’s Mukta Arts. It was only after 2004 that the film industry woke up, the corporate spotted an opportunity in this business and the rules of the game changed. Contracts came in to the picture. Stars began reporting on locations in time not because some underworld don was arm-twisting them, but because it was written into their contracts.

Films started to have completion bond certificates with the guarantees and financiers because of which films started getting completed on time and went on floor timely. Thus, gradually in a matter of only a few years, filmmaking in India has changed rapidly and even started to move in the Hollywood style of film making. 1. 5 Changing financing options The journey from an Unorganised Sector to a Corporate Industry status has changed many paradigms for the Hindi Film Industry. The financing options have gone under favourable change.

According to a Yes Bank report, “over 38 per cent Hindi films in 2004 were financed through non-traditional sources (debt, IPO, private and individual equity, companies, TV broadcasters) compared to only 10 per cent two years before that. As much as Rs 256 crore (Rs 2. 56 billion) was disbursed through these sources to the film industry in that year. From the Industrial Development Bank of India and Exim Bank to Yes Bank, they’re all queuing up to lend money to the entertainment sector. ”30 Exim Bank, for instance, “offers loans at 8-10 per cent interest provided the film has export potential.

IDBI’s credit line for films is available for 10-15 per cent, to be paid before the film is released. Yes Bank had sanctioned a Rs 5 crore (Rs 50 million) loan to Pritish Nandy Communications Some production companies have used the buoyant IPO route to fund films. One such company is PNC (Pritish Nandy Communications) which raised Rs 38 crore (Rs 380 million) from its IPO of which Rs 23 crore (Rs 230 million) was used to finance films across various genres. The company is now raising $12 million through convertible debenture, and the cash will be used to de-risk its movie-making portfolio.

The money would help them increase the number of films they make each year from three to at least eight. Corporate houses that are jumping into the entertainment fray are also showing their financial muscle. Aditya Birla’s Applause Entertainment is able to borrow money from group companies at rates lower than even banks. Adlabs had earmarked a revolving fund of Rs 60 crore (Rs 600 million) to finance films. The company is tying up directors in long-term contracts to make films for the company.

Changing Movie Making Business & Recent Trends in Hindi Film Industry No longer the release of movies (whether big or small budget) on Fridays sends jitters through the film producers and they are presumably less worried than before. Thanks to the changing practices and economics of film making, production houses have been able to reduce their dependence on the box office. Today, movie studios like Yash Raj Films can afford to detach itself from the fortunes of its film because chances are whatever the fate of the film at the box office; it’ll end up making money anyway.

For instance a movie like “Tashan” which bombed at the box office was actually a profitable venture for Yash Raj movies. Made on a budget of Rs 30 crore, additional Rs 7 crore was pumped in for publicity and making prints. The film managed a decent opening due to the extensive publicity and star appeal and collected Rs 27 crore from domestic and around Rs 5 crore from overseas territories totaling 32 crore from the Box office itself. Now add to it satellite rights, music, Home video rights and other rights, you have a money spinner in your hands.

And the phrase “bombed at the BO” became redundant because, whether they ran or not, chances are that everything from “Kismat Konnection” to the ill-fated “Karzzz”, made at least enough money to recover their investments. Animation films have not been the forte of the Indian film producers thus far, recent successes of some films have encouraged producers and distributors to view the genre differently. Also, the coming in of international animation films on VCD and DVD and also its increasing broadcast on Cartoon Network and other animation channels, have made players more hopeful.

According to P Jayakumar, CEO, Toonz Animation India, the global entertainment industry is worth $70 billion and animation is worth $37 billion, but in India the pie is very small. Nevertheless, it is a burgeoning industry, he reckoned. Averred Jayakumar, “We feel that at least 65-70 per cent of the airtime on kids’ channels should be dedicated to the desi content and for which regulations need to put in place. These and similar other initiatives will considerably boost the growth of the Indian animation industry. ” Hanuman’ did meet with reasonable success in the last year.

The success of the movie boosted the potential for the marketing of films in the genre of animation 1. 7 Recession and its impact on Movies Bollywood is feeling the heat of the global economic meltdown. Till recently whopping budgets, big productions and skyrocketing star prices were the norm. But now top producers and senior film executives feel that the Hindi film industry was living on excess and the ongoing financial crisis highlights the need to control spending. Producer Pritish Nandy maintains that these tough times will initiate smart sizing. Spiralling star fees and astronomical movie budgets are hurting the industry. This will come down.

The financial crisis could also bring back good sense, respect for the craft of filmmaking and restore focus on creative issues in Bollywood,” says Pritish Nandy,PN The film costs were flying through the roof. In Drona, the special effects and the cost of creating the entire paraphernalia of the villain Ritz alone reached a reportedly whopping Rs 22 crore. This included hiring a castle in Prague that served as the villain’s den and re-creating its interiors in Mumbai’s Film City.

The current liquidity crunch resulted in bursting the bubble of overbidding for big projects, normally sold for double the returns. Even a middle budget film, Kidnap, was reportedly bought for a huge Rs 36 crore by Indian Films Company. In order to deal with the recession stars need to be paid what they are worth, but if successive projects turn unviable then their prices have to be reviewed.

The fees of top stars and the cost of the film budget cannot be more than the business potential of a movie in terms of theatrical collections and sale of rights. Internationally the talent cost is about 15-20% of the movie’s budget. In India, it is between 40-60% for some movies,” says Rajesh Sawhney, president, Reliance Big Entertainment. The industry hopes that the current economic situation will force the producers and stars to work together and correct this anomaly of film budgets as it needs to look at extraordinary cost consciousness because the consumer does not have enough money to throw around. They need quality and will successfully reject films which are not qualitative.

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