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Satellite, Music and Distribution Deals Are COVERCOCOVVEER STORYS ORORY FILMSFILMLMS BEYOND THE BOX OFFICE SATELLITE, MUSIC AND DISTRIBUTION DEALS ARE HELPING BOLLYWOOD PRODUCERS RECOVER MUCH OF THEIR INVESTMENT EVEN BEFORE A FILM IS RELEA SED, SECURING THEM AGAINST BOX-OFFICE FAILURES. Studio: UTV Studio: Viacom 18 Studio: Eros International Studio: Yashraj Films Cost: 25 crore Cost: 18 crore Cost: 55 crore Cost: 12 crore Box Offi ce Revenue: 40 crore Box Offi ce Revenue: 10 crore Box Offi ce Revenue: 80 crore Box Offi ce Revenue: 12 crore Satellite Revenue: Not Sold Satellite Revenue: 15 crore Satellite Revenue: 35 crore Satellite Revenue: 11 crore AJITA SHASHIDHAR a.One, Shahrukh Khan’s much awaited ac- on music rights on page 54). In addition, they have tied up Indian fi lm-makers are not only thinking big with ambi- Rai, the fi lm had a budget of around #40 crore. Shah presold tion fi lm, is all set to hit the screens around with Sony Computer Entertainment Europe to create a video tious projects such as Ra.One and Robot (Endhiran in Tamil; the movies satellite rights to Colors for close to #20 crore. It Diwali this year. With King Khan playing game around the fi lm, becoming the fi rst Bollywood fi lm to it made a net profi t of over #100 crore), they are also doing turned out to be a prudent move—the fi lm bombed badly at a superhero, and the likes of Kareena Ka- have one. Entitled Ra.One—Th e Game, will be available to everything they can to make the business less risky. Today, the box-offi ce. “It was a disaster. It wouldn’t have recovered poor and Arjun Rampal in the star cast, the PS2 and PS3 gamers, and will earn Khan and Eros a slice of the industry’s dependence on theatrical revenues has almost even half the money had it not been for the satellite rights,” #100 crore plus fi lm has all the makings of the revenues on every sale. Even independent distributors are halved. Even a fi lm with a moderate performance at the box says a leading Mumbai-based distributor. a blockbuster. Even so, Khan’s Red Chillies queuing up to buy distribution rights, which Eros has retained. offi ce manages to recover its costs to a great extent. Almost 35- Similarly Anjaana Anjaani (Priyanka Chopra and Ranbir Entertainment and its co-production partner, Eros Interna- Th en there are the international rights, which will bring in a 40% of the revenue comes from satellite rights alone, which, Kapoor), an Eros production, made a #16 crore profi t despite tional, R are not taking any chances. Th ey have derisked their signifi cant chunk of revenue. All in all, the co-producers won’t in most cases, are pre-sold to a TV channel even before the getting a tepid response at the box offi ce. Th e fi lm had a budget investment considerably even before the fi lm hits the screens. get hurt even if the fi lm were to flop badly. “By the time the fi lm hits the production fl oor. of #50 crore and the studio made #22 crore by pre-selling the Red Chilles and Eros have made a neat #35 crore selling the fi lm hits the theatres, we will try and recover at least 60% or Th us, even if a fi lm turns out to be a dud, the producers are satellite rights. Another #9 crore came from music, while dis- satellite television rights to Star India for fi ve years. Th e music even up to 80% of the cost. We do that for all our fi lms,” says protected to a great extent. Take Vipul Amrutlal Shah’s Action tribution earned it another #35 crore revenue. rights have been sold to T-Series for #15 crore (read the story Kamal Jain, COO, Eros International. Replayy for example. Starring Akshay Kumar and Aishwarya Th is trend of having multiple revenue streams is a welcome 40 OutlookBusiness > September 17, 2011 SOURCE FOR TRADE FIGURES: ENTERTAINMENT BUSINESS NETWORK PAGE DESIGN BY MANISH MARWAH; PHOTOGRAPHS BY SOUMIK KAR OutlookBusiness > September 17, 2011 41 CS-Music.indd 2-3 29/08/11 10:22 PM COVER STORY FILMS PRIYAM DHAR PRIYAM DHAR change for Indian fi lm-makers. In the old days, industry icons such as Raj Kapoor (Mera Naam Joker) and Sunil Dutt (Reshma GAME Aur Shera) would get burned Studio: Eros International just because their fi lms didn’t do well at the box offi ce. Th at Cost: 40 crore was an era when 90% of a fi lm’s Box Offi ce Revenue: 10 crore success depended on box-offi ce receipts. A fi lm-makers rise and Satellite Revenue: 10 crore fall was dictated purely on the theatrical performance of his curs: “When I was acquiring content, I had no idea for whom fi lm. Another example is Boney I was doing it. Now I have full control and I understand the Kapoor’s #9 crore extravaganza target audience I am trying to reach.” Roop Ki Rani Choron Ka Raja, which was a box-offi ce bomb. Going It Alone Th e multi-starrer (Anil Kapoor, If a studio releases 12 fi lms in a year it produces at least 6-7 Jackie Shroff and Sri Devi) fi lm of them in entirety. Th ese are ‘self-produced’ fi lms. In this was declared a ‘disaster’ on the model, everybody in the value chain is paid a fee and all the fi rst day of release itself. It raked profi ts are pocketed by the studio. Th e acquisition model didn’t work in just #3 crore and Kapoor end- Viacom18 Motion Pictures produced fi lms such as Shaitan for the studios at all. We all ended up ed up in a huge fi nancial mess. and Tanu Weds Manu. “We were involved right from the con- making losses. By the time Lessons Learned cept stage. In fact, in Tanu Weds Manu, I remember even re- Corporate Profl igacy Ra.One hits the Th e studios have since learnt a working the music in the climax scene because we felt that it —SANJEEV LAMBA, CEO, Reliance Entertainment Th e entry of corporates such as Eros International and Re- thing or two. Instead of acquir- could have been better,” says Malhotra. liance Entertainment in 2005-2006 gave a boost to the de- theatres, we will ing fi lms at outrageous prices, Tanuj Garg, CEO of Balaji Motion Pictures, fi rmly believes control of its cost from day one.” risking eff orts of production companies. Film-makers such try and recover at co-production has become the that a studio has to take on the onus of production to be able Garg says that though fi lms such as Shor in the City and as Rakesh Roshan and Vipul Shah earned crores selling their least 60% or even order of the day. For instance, to de-risk itself more effi ciently. “A studio has to be involved Once Upon A Time in Mumbaai were produced by Balaji, it projects to studios for unheard of sums. Shah is known to have Aamir Khan Productions part- from scripting to post-production, enabling it to be in greater partnered with Freshwater for Love Sex Aur Dhoka and iRock sold the rights of his blockbuster Singh Is Kinng to Studio 18 up to 80% of the nered with UTV for the recent for Ragini MMS. “On co-production deals, we are hands-on (now Viacom 18 Motion Pictures) for a whopping #70 crore cost. blockbuster, Delhi Belly. In this supervisory producers, apart from taking care of marketing when the actual cost of his fi lm was in the region of #30 crore. instance, UTV was involved in and sales.” While production companies had hit the jackpot, the stu- —KAMAL JAIN the production right from its in- On its part, UTV prides itself on being a studio-cum-pro- dios burnt their fi ngers. Th ey mindlessly acquired fi lms and COO, Eros International ception. Typically, in such cases, duction house. “We believe that the director is the captain were saddled with huge debts. Even if the fi lm did well at the the studio pays the production of the ship and we back him by being a sounding board,” box offi ce, the studio couldn’t recover its costs because it had house a producer’s fee (around 10% of the budget) and han- remarks Siddharth Roy Kapur, CEO, UTV Motion Pictures. shelled out huge sums to acquire it. Rock On!, for instance, dles all marketing and distribution activities. Th e two partners Th e #454 crore fi lm business of UTV (which was recently ac- was a huge box-offi ce hit, but Reliance Entertainment, which have a 50:50 share of the intellectual property rights (IPR) and quired by Walt Disney), produces close to 15-20 fi lms every released the fi lm, ended up making losses. Farhan Akhtar spent share revenues from the various revenue streams. year across languages. around #15 crore to produce the fi lm, but Reliance acquired it However, each co-production deal depends on the partners Fox Star, a newbie in the Indian studio business, adopted a for #50 crore. Th e fi lm recorded a net collection of #25 crore involved. While Eros would have shared the IPR for Ra.One co-production model from the beginning. “We were not in- at the box offi ce but Reliance was unable to recover its costs, with Shahrukh Khan and UTV would have shared it with vestment bankers who would fund a project and not be part let alone turn a profi t.
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