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Indywood the Indian Film Industry September 2016 Indywood | the Indian Film Industry Indywood The Indian Film Industry September 2016 Indywood | The Indian Film Industry 2 Indywood | The Indian Film Industry Contents Foreword 3 Executive Summary 5 Make in India Initiative and the Film Industry 6 India’s Film Industry 6 Industry Overview 7 Key Trends in the Indian Film Industry 10 Growth Drivers and Opportunities 15 Key Challenges in the Industry 17 Key Focus Areas for the Film Industry 21 Technological Advancements in the Film Industry 24 Skill Development in the Film Industry 32 Film Tourism in India 34 Background and Global Perspective 34 Film Tourism in India: An Overview 40 Recent initiatives to Improve Film Tourism 40 Next Steps and Initiatives 46 International Best Practices: Case Studies 50 Case Study: Film Tourism in the UK 50 Case Study: Film Tourism in New Zealand 54 Shooting of Foreign Films in India – Tax Aspects 59 Authors, Acknowledgments and Contacts 62 3 Indywood | The Indian Film Industry Foreword Welcome to the Indian Film Industry Report critical to remain at the forefront of global for the Indywood Film Carnival taking place trends. The report analyses the methods to during September 24 – 27, 2016 in Ramoji achieve this including technology transfers, Film City, Hyderabad. The film industry collaboration with international studios and has been earmarked as a key sector in the development of technical skills in-country. Make in India campaign. As part of this, Another endeavour of the Make in India the Government of India is taking several campaign has been to develop technical initiatives to effect growth in the sector skills for film production, post production as well as promote foreign film shootings and VFX. Given the low labour cost, this locally. Deloitte India’s objective with this could be a key factor in attracting foreign publication is to provide an overview of filmmakers to the country. The report Hemant Joshi the film sector in India and analyse the key elucidates the current initiatives being trends impacting the sector today. taken by the Government of India under the Make in India campaign to improve Our endeavour is to provide a considered availability of skill and talent in filmmaking. point of view on key initiatives required The report also analyses other actions going forward in the film industry to propel that can have an impact on increasing growth and promote film tourism. In order availability of skills locally. to do so, the report delves into the current state of the industry to identify key focus In this report, the international best areas and requirements to increase box practices in thriving film sectors globally office realizations, improve occupancy and have been studied including initiatives address the infrastructure constraints. taken by various regions to attract foreign film shooting. The report also includes Ashesh Jani As the Indian film industry moves into the case studies on the UK and New Zealand, next phase of growth, it is imperative to countries that have successfully been keep pace with the global technological able to position themselves as key filming advances and innovation. Historically, destinations as was witnessed by the Harry the Indian film sector has lagged behind Potter Series and Lord of the Rings Trilogy. in its counterparts in the deployment of emerging technologies such as virtual Deloitte hopes that you and your reality, augmented reality, drone shootings, colleagues find this report a useful etc. The development and deployment stimulant in your strategic thinking. of key technologies in Indian films will be 4 Indywood | The Indian Film Industry Executive Summary of the total industry. Cable and satellite rights and online/digital aggregation produced with between 1,500 to 2,000 revenues are the fastest growing segments, and expected to grow at a 20 languages. In terms of revenue, the CAGR of about 15% over the period FY15 of $2.1 billion which is expected to grow is dominated by Bollywood, the Hindi at 11% CAGR reaching $3.7 billion by 2020. The key growth drivers for the industry revenue while regional and international are: • Increasing per capita income and currently a small, but growing segment, growing middle class driven by rising numbers of English and • Demand from Tier 2 and Tier 3 cities other foreign languagespeakers, as well as rising numbers of international movies • Diversifying into international markets witnessing dubbed releases across the • Releasing the potential of digitization country. Other key recent trends in the industry include: • Upside from ancillary revenue streams • E ntry of international studios through • acquisitions and collaborations in movies • Rise of regional cinema produced in India, the industry gross • Digital adoption across the value chain realization has been substantially lower than its global counterparts. For example, • Organic and inorganic growth in multiplexes Canada stand at $11 billion whereas • Emergence of alternative streams of revenue Going forward, the industry needs to focus on the following factors to ensure • Low infrastructure penetration • Film tourism • Slow growth in average ticket price (ATP) • Skill enhancement • Complicated tax regime • Shortening window of release through better planning • Rising costs and lack of access to funding • Updating current technology • Piracy • Countering piracy • Multiple layers of bureaucracy • Growth of multiplexes • Prevailing strict censorship norms majority of the revenue, representing 74% 5 Indywood | The Indian Film Industry Make in India Initiative and the Film Industry Overview of the Make in India Make in India initiative. Till now, several Campaign steps have been taken in the sector The Make in India campaign, launched to improve investments and increase by Prime Minister Narendra Modi in business opportunities. The following September 2014, is aimed at enhancing steps, specific to the film segment, have local manufacturing, fostering innovation, been initiated under the campaign: and facilitating investments in the Indian • A Film Facilitation Office has been industries. The initiative is being led by established under the operatorship the Department of Industrial Policy and of the National Film Development Promotion (DIPP) and the Department Corporation (NFDC) for facilitation of film of Commerce and Industry and covers shooting in India and promotion of India 25 key sectors, including media and as a destination for foreign production entertainment. houses. The Make in India programme endeavours • Media and Entertainment Skills Council to create additional employment (MESC) is being promoted by Federation opportunities through improving business of Indian Chambers of Commerce and opportunities and positioning India as Industry (FICCI) with financial support by a destination for manufacturing and National Skill Development Corporation services. The programme also aims to (NSDC) to create 1.2 million skilled facilitate businesses and entry of new workforce by 2022 in the media and players in India by instating clear and entertainment sector across 74 job transparent processes, enabling Ease of profiles. Doing Business, and simplifying laws and • Additional film treaties are being explored regulations. Since the inception of the by the Government of India, having Make in India program, there has been recently entered into film treaties with a significant increase in Foreign Direct China and South Korea, to not only avail Investment (FDI) owing to the growing film production benefits but also widen positive perception of India in the global the reach of Indian cinema. scenario. The Make in India campaign for the film Objectives and Initiatives in the Film sector aims at driving growth and creating Sector employment opportunities in the sector as Media and entertainment has been well as making India one of the leading film identified as one of the key sectors for the tourism destinations globally. 6 Indywood | The Indian Film Industry 7 Indywood | The Indian Film Industry 8 Indywood | The Indian Film Industry India’s Film Industry Industry Overview Historically, the film industry in India 15% over the period FY15 – FY20, The Indian film industry is the largest has grown at a CAGR of over 10%. driven by rising demand for movies in the world in terms of number of Currently, the film industry grosses on TV and increasing smartphone films produced with around 1,500 to total revenue of INR 138 billion ($2.1 penetration across the country 2,000 films produced every year in billion). Going forward, the industry respectively. On the other hand, more than 20 languages. The industry is expected to grow at 11.5% year-on- home videos have been shrinking also had the second highest footfalls year reaching total gross realization due to increasing piracy and growing in the world in 2015 (over 2.1 billion) of INR 238 billion ($3.7 billion) by popularity of digital platforms. Home following China (almost 2.2 billion). 2020. The key growth drivers are video has lost share to Video on Despite the large number of films expansion of multiplexes in smaller Demand (VOD) through Direct-to-home and theatre admissions, the industry cities, investments by foreign studios (DTH) operators and Over-the-top continues to remain small with respect in domestic and regional productions, (OTT) platforms. to other global industries in terms of growing popularity of niche movies, revenue. In India, the film industries and the emergence of digital and The Indian film industry is dominated gross realization stands at $2.1 billion ancillary revenue streams. by Bollywood, the Hindi film industry, versus gross realization of $11 billion contributing 43% of the revenue in the US and Canada which produces The domestic box office contributes while regional and international films significantly lower number of films to the majority of the revenue, contribute the remaining 50% and (approximately 700 films).1 This is representing 74% of the total industry. 7% respectively. Within the regional mainly due to low ticket realizations Cable and satellite rights and online/ film industry, Tamil and Telugu are and occupancy levels, lack of quality digital aggregation revenues are the the largest segments comprising content, and rampant piracy.
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