COCCOVEROVVEER SSTORYORORY FFILMSILMLMS BEYOND THE BOX OFFICE SATELLITE, MUSIC AND DISTRIBUTION DEALS ARE HELPING PRODUCERS RECOVER MUCH OF THEIR INVESTMENT EVEN BEFORE A IS RELEA SED, SECURING THEM AGAINST BOX-OFFICE FAILURES.

Studio: UTV Studio: Viacom 18 Studio: Studio: Yashraj 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 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 -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 ( 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 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 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

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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 (, If a studio releases 12 fi lms in a year it produces at least 6-7 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 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 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 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, 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. 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. Aamir, it doesn’t mean the studios strike similar deals with of it,” remarks Vijay Singh, CEO, Fox Star. Th e studio has also “Th e acquisition model didn’t work for the studios at all. We all production houses. “In most cases a studio partners with followed a strategy of not releasing too many fi lms. “Our tar- all made losses,” admits Sanjeev Lamba, CEO, Reliance En- a production house, gives them a production fee, but retains get is not to make more than 4-5 fi lms in a year.” tertainment. “We look at the high acquisition costs as a price 100% IPR monetisation with itself,” explains Jain of Eros. “Th e we paid to enter the market,” he adds. revenue sharing in most cases is 60:40 in favour of the studio, Th e industry Money From Above and in some cases it is 50:50.” Today, satellite TV rights con- Typically, if a fi lm earns #100 crore, the studio retains 20%; should now look tribute anywhere between 30- another 10% goes toward marketing and advertising, and the for the next big 35% of the revenue of a fi lm, THANK YOU rest is shared with the production house. revenue stream. sometimes even more. Band Many believe the co-production model has made the system It could be a new Baaja Baaraat, for instance, Studio: UTV Motion Pictures transparent. “Since we are part of the project right from the did moderately well in cine- concept stage, we have complete control on the cost of produc- geography or even a mas. Th e #12 crore fi lm man- Cost: 60 crore tion,” says Lamba of Reliance. “Now the fi nancial risk from the new technology. aged to break even with a box Box Offi ce Revenue: 22 crore start is ours. Aft er we recover the costs and the fi lm goes into offi ce earning of #12 crore. It profi t, we share the profi t with our co-production partner.” eventually made profi ts aft er Satellite Revenue: 15 crore —SIDDHARTH ROY KAPUR Vikram Malhotra, COO of Viacom18 Motion Pictures, con- CEO, UTV Motion Pictures selling its satellite rights for

42 OutlookBusiness > September 17, 2011 OutlookBusiness > September 17, 2011 43

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#11 crore. Satellite rights are pre- A studio has to be involved from sold depending on the na- scripting to post-production, which ture of the fi lm, star cast enables greater control of its costs. and the pedigree of the production house. While —TANUJ GARG, CEO, Balaji Motion Pictures the satellite rights of fi lms such as Zindagi Na Milegi Dobara and Ra.One were pre-sold at astronomical- ly high prices, Dabanng, READY which earned box offi ce Distributor: T-Series revenues of #214 crore, was pre-sold to Colors for only Cost: 40 crore #10 crore. Th is was because Box Offi ce Revenue: 60 crore ’s credentials as a producer were not es- Satellite Revenue: 25 crore tablished. Nobody expected Dabanng to be such a blockbuster. Sony and Zee. Today, Sahara and Colours are clearly important Th e cable and satellite rights revenue segment has grown players.” Kapoor adds that acquisition prices for satellite rights by more than 33% in 2010-11, according to a recent FICCI- will continue to rise since there is clear demand. KPMG report. Th e report adds that this segment is likely to Many studios are also getting into bulk deals with channels grow at least 10%-13% in the coming year. through which they bundle fi lms that have not performed well According to Boney Kapoor, who produced the box-offi ce along with their blockbusters. Eros, according to Jain, has re- hit Wanted, it is not unusual that TV has become an important cently signed a #240 crore satellite rights deal with a leading source of revenue. “Television channels are acquiring fi lms in broadcaster. “We clubbed some of our low-budget fi lms such large numbers. Earlier, it was just three channels—Star Gold, as Chalo Dilli with our blockbusters and sold it to a leading broadcaster.” Viacom 18 is also known to have inked a bulk deal with Zee TV to club its blockbusters such as Tanu Weds With diff erent revenue streams, Manu and Pyaar Ka Punchnama along with the not so suc- the dependence on theatrical cessful Bbuddah Hoga Terra Baap. revenues has defi nitely come down. The Distribution Pie —VIKRAM MALHOTRA, COO, Viacom18 Motion Pictures In the television industry, there is a popular saying: “If content is king, distribution is God.” Distri- bution has also become an important revenue spinner for fi lm studios. Prior to the advent of these studios, pro- duction companies gave distribution rights to a distributor for a minimum guarantee and later shared 15%-20% of the revenue. Most studios today have their own distribution set up. Reliance Enter- tainment, for instance, has 10 distri- bution offi ces across the country and offi ces in the UK and the US as well. In addition, it has alliances with dis- tributors in the UAE and South Africa. It has also picked up a stake in US fi lm distribution company, IM Glo- bal, to be able to distribute its movies in international markets. Distribu- tion contributes close to 40% of the company’s revenues, says Lamba of Reliance Entertainment. In fact Reliance also partners with production companies to merely

44 OutlookBusiness > September 17, 2011

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distribute their fi lms. One of its recent distribution tie-ups was with Prakash Jha Films, to distribute Aarakshan. “We were only involved in the distri- bution and had nothing to do with the making of the fi lm or its marketing,” clarifi es Lamba. According to the FICCI-KPMG Media and Entertainment report, the number of prints for domestic theatrical release has grown 50% in the last year. Not only have domestic releases increased, there has also been a surge in the release of Indian fi lms in the international market. For instance, Karan Johar’s My Name Is Khan earned gross revenues of #180 crore, of which overseas earnings ac- counted for #82 crore. Fox Star Stu- dios had bagged the fi lm’s worldwide marketing and distribution rights for #100 crore before its By distributing and taking my fi lms release. Th e fi lm even screened in untapped markets such as to newer territories, studios enable Poland, Russia, Lebanon and Egypt. Again, Zindagi Na Mi- more people to experience my work. legi Dobara, a more recent fi lm, earned #60 crore from the domestic market and #22 crore overseas in the fi rst 10 days —AMOL GUPTE, Writer and Producer of its release. Th ough most studios have their own distribution set up, they also sell the distribution rights of some of their fi lms to independent distributors. Reliance, for instance, sold the DUM MARO DUM Studio: Cost: 45 crore Box Offi ce Revenue: 15 crore Satellite Revenue: 15 crore

rights of in some territories to independent distribu- tors such as Raksha Entertainment for #11.70 crore. Similarly, Eros sold the distribution rights of Game to an independent distributor. Eros distributed Dabanng in 60% of the territories and sold the the rest. Balaji Telefi lms sold the rights of Ragini MMS. “Derisking is key and maximising pre sales of all rights is defi nitely the way forward,” explains Garg of Balaji. “Distribution has become a science and a key business strat- Viacom 18 egy tool for most studios,” re- was extremely marks Jain of Eros. He claims that more than 40% of his stu- serious and dio’s revenues come from dis- committed even tribution. Jain cites the example though Pyaar of Zindagi Na Milegi Dobara in which they consciously decid- Ka Punchnama ed to distribute 90% of the fi lm was a in multiplexes and only 10% in 5 crore fi lm. single screens. “Since the fi lm catered more to an urban au- —LUV RANJAN dience, we felt that it would do Director better business in multiplexes,”

46 OutlookBusiness > September 17, 2011

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Th ough our as Bodyguard and Ra.One, the profi ts have studios ’t want to sell to the distributors as those fi lms would narrowed, we for sure get them high returns.” prefer to partner with studios as Still Risky Despite all the derisking strate- they take a lot of gies, only 25% of the 150-odd responsibility Hindi fi lms produced every year off us. make money. “I will not say it is a less risky business now, but with —VIPUL SHAH more revenue streams coming Producer in, the dependence on theatri- cal revenues has defi nitely come down,” says Malhotra of Viacom18. In addition, many of the studios continue to carry losses from their earlier misadventures. “We are yet to recover our accumu- lated losses,” admits Lamba of Reliance. Industry sources say Viacom 18 Motion Pictures also registered a loss in FY2011. Eros International’s profi ts in FY2011 went up by almost 40% from #82 crore to #118 crore, while UTV Motion Pictures’

he explains. SINGHAM However, Ramesh Sippy, Chairman of Raksha Entertain- Studio: Reliance Entertainment ment, a distribution company, says that the corporates that have entered the fi lm business are yet to learn the tricks of the Cost: 45 crore trade. He believes these studios lose revenues by releasing fi lms Box Offi ce Revenue: 80 crore across all the theatres in a territory. “You can’t distribute fi lms Satellite Revenue: from your laptop. One needs to understand the nuances of the 32 crore business in order to get the maximum bang for the buck,” says Sippy. He points to the recent blockbuster Singham, which he distributed in South Mumbai. “While we ensured that the fi lm was exhibited in all the multiplexes, we released it only in two single-screen theatres. Th ese single screens had packed shows and as a result my revenues went up by 60%. With studios consolidating a large part of the distribution pie, the business of the independent distributors has dropped considerably. Many have either joined hands with studios to only distribute fi lms or have become secondary buyers such as Sippy, who buy individual projects. Acquiring fi lms for distribution has become expensive says Kumar Mangat, CEO, Big Screen, who distributes fi lms in Punjab You can’t and Western Mumbai. “A few years ago, I bought the rights for distribute fi lms Black for #2 crore, but earlier this from a laptop. year, even though I was prepared Th e nuances need to pay #10 crore for Guzaarish, I couldn’t get the rights.” to be understood Mangat insists that studios to get bang for don’t share distribution unless they are uncertain of the fi lm’s your buck. success. “Even though distribu- —RAMESH SIPPY tors are willing to pay a premi- Chairman, Raksha um for upcoming releases such Entertainment

48 OutlookBusiness > September 17, 2011

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studio co-produce a fi lm when they don’t have a proper pro- duction team in place?” A senior trade analyst agrees, saying CLOSE TO THE MADDING CROWD that most of them, barring UTV and Balaji, “are yet to have Indie filmmakers are turning to a proper production team in place”. alternative means of fi nancing. Th e biggest benefi ciaries of the entire value chain continue to be the fi lm production companies. Th ough the honeymoon nirban Dhar AKA Onir’s fi lm, I Am, has been in the period, when studios gave them whatever they asked for, is Anews for the way the fi lmmaker raised funds. Onir over, production companies continue to be more than willing raised over N1 crore through Facebook, winning support to partner with studios. from 400 people across 45 cities. Vipul Shah says that though his profi ts have defi nitely nar- Bollywood studios have been ducking new talent rowed, he still prefers to partner with studios as they take a in favour of more established big-ticket names.This lot of responsibility off his shoulders. “When you partner with has left smaller fi lm-makers little choice but to resort a studio they get involved in the project from day one and to alternative platforms. Ashvin Kumar, director of share the risks,” he says. “One can concentrate completely on Little Terrorist that was making a great fi lm, unlike earlier, when the producer had nominated for the Oscars, to take care of everything from distribution to exhibition.” raised $10,000 through Writer Amol Gupte, who recently made his debut as a pro- crowd funding. This is ducer with Stanley Ka Dabba, backs such partnerships. “By essentially a collective effort distributing my fi lms and taking them to newer territories, by a network of people the studios enable more and more people to experience my to fund entrepreneurial work,” says Gupte, who partnered Fox Star studio for his fi lm. endeavours of an individual. Luv Ranjan, Director, Pyaar Ka Punchnama, feels his fi lm Crowd funding has even wouldn’t have had a wide release had Viacom 18 not been attracted the attention of venture capitalists (VC). Springboard Ventures, Crowd a start-up VC fund, is funding gives launching the popular ANJAANA ANJAANI US-based crowd funding Studio: Eros International fi lmmakers platform, Filminteractor, a platform to in India. “This will give Cost: 50 crore raise funds. fi lm-makers a platform to Box Offi ce Revenue: 40 crore raise funds for their fi lms,” Satellite Revenue: 22 crore —SATISH KATARIA explains Satish Kataria, MD, MD, Springboard Ventures Springboard Ventures. This is how it works: if a part of the project. “Th ey were extremely serious and com- fi lm-maker looking to raise N1 crore for his project, he mitted even though it was a #5 crore fi lm.” Kumar Mangat, gets N10 lakh each from fi ve investors. And N50 lakh the producer, says working with a studio instantly lowers the from one person, who is then invited to become co- risk. “Th e studio takes charge of funding, allowing me to make producer. “The co-producer gets a share in the revenue more fi lms. Today, I am looking at making 3-4 fi lms a year, of the fi lm,” says Kataria. unlike earlier when I never dared to make more than one.” Yogesh Karikurve, CEO, Magus Entertainment, According to Uday Singh, CEO, Motion Pictures Associa- specialises in generating funds from various international tion, in addition to strengthening their business models, it is markets by roping in funders from across the globe. high time studios paid attention to larger issues such as the Recently, he co-produced Serda Dreams, a documentary huge threat broadband penetration could pose to the various that described the craze for Bollywood dancing in monetisation platforms. Singh believes the industry needs Germany. “Since it was co-produced, the risk was to ensure that broadband users pay for the content and don’t mitigated,” says Karikurve. consume it free. “Th ere are hundreds of ways by which one can easily download even the latest blockbusters and watch them for free,” he points out. revenues went up from #315 crore to #454 crore in FY11. But UTV’s Kapur feels the #90 billion industry (according to some aren’t too sure if the picture is indeed that clear. “Even the Ficci-KPMG report), should now look for the next big the so-called profi table companies are bleeding,” says trade revenue stream. “It could be in terms of a new market, new consultant Mehra. “Th ey are postponing their losses by am- geography or even a new technology. I think that it is high ortising them over a period of three-four years.” time we look at the next level of evolution.” Raksha’s Sippy feels that the entire co-production claim With inputs from Krishna Gopalan of most studios is a farce. “I think the term co-production Email us at [email protected] is misleading. It’s more a case of co-ownership. How can a or SMS OLB at 575758 

50 OutlookBusiness > September 17, 2011

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KRISHNA GOPALAN

huge poster of from his recent blockbuster Ready is perched comfortably behind Bhushan Kumar in his sprawling western Mumbai offi ce. “Yes, the fi lm did pretty well,” says Ku- mar, Chairman and Managing Director, T-Series. “Pretty well” is an understate- ment: Ready is the biggest Bollywood hit of the year, gross- ingA over #180 crore globally on a #40 crore budget. T-Series not only holds the music rights to the fi lm, it also produced the blockbuster. Kumar doesn’t say how big his profi ts were but his rivals jealously concede that the cash registers haven’t stopped ringing. T-Series, known to some people as Super Cassettes Indus- tries, is the largest player in the . Kumar MUSIC RIGHTS HAVE SAVED decided to hold on to the music rights of Ready when he could have sold it for a handsome sum. He says the thought never MANY A BOLLYWOOD FLICK entered his mind. “Th e fact is we have a great label and the THEFROM GOING SOUND UNDER. musicOF business is oneMONEY we understand really well.” Th e track

record bears out that claim: in the past year alone, T-Series released the music for fi lms such as , Once Upon a Time in Mumbaai, Murder 2, Ready and Zindagi Na Milegi Dobara—each of which earned upwards of 20% on their in- vestment. “Th is year, we have picked up the music rights of 60 Hindi fi lms,” Kumar says. Th at’s nearly half of all planned Bollywood releases in 2011. A New Tune Music sales add to the revenue of fi lms, in some Striking The Right Note cases bringing in almost a third of the budget. As anyone in the music industry will aver, getting the audience’s pulse right is anything but easy. Besides, music in Bollywood FILM BUDGET MUSIC RIGHTS BUYER is almost always sold without a music company ever getting Ready 40 9 T-Series a chance to listen to its soundtrack. Sounds ridiculous, but Delhi Belly 25 8 UTV Music that’s exactly how this high-risk, uncertain-return industry Zindagi Na Milegi Dobara 55 12 T-Series operates. If that’s not enough, supply continues to be at the Aarakshan 42 6 Sony same level. In 2009, there were 94 releases, while in 2010, 129 fi lms hit the theatres. “With the number of fi lms not increas- Bodyguard 60 9 T-Series ing dramatically accompanied by the fact that there are barely Ra.One 100+ 15 T-Series three or four large players, there is bound to be an infl ationary Krrish2* N/A* 8 T-Series mindset,” points out Shridhar Subramaniam, President (India & Middle East), Sony Music Entertainment India. His company * To be released in 2012. All others are 2011 releases. Source: Industry All fi gures in Ncr picked up the rights to Prakash Jha’s Aarakshan for #6 crore

52 OutlookBusiness > September 17, 2011 ILLUSTRATION BY MANISH MARWAH; PHOTOGRAPHS BY SOUMIK KAR OutlookBusiness > September 17, 2011 53

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past, Saregama has acquired the music rights to No One Killed Th e model is simple: when a user watches a scene (or song) Jessica and Ragini MMS. “Th e plan is to produce three or four Th e plan is to produce three or from the fi lm, it either starts off with an advertisement or there fi lms in the next 18 months,” says the company’s Business is a crawler at the bottom of the screen. Th e revenue gener- Head (Films), Aditya Shastri. four fi lms in the next 18 months. ated by YouTube through these ads is shared with Shemaroo. If there is a feeling that music prices for large fi lms have hit —ADITYA SHASTRI “Digital is a medium for the future and we expect that to the roof, it is worthwhile to recall the phase between 2001 and Business Head, Films, Saregama contribute more than 10% of the fi lm producer’s revenues in 2002, when the rights for Kabhi Khushi Kabhie Gham were the next three years,” says Gada. sold for #10 crore while Devdas went for #13 crore. Taurani’s Tips acquired Yaadein for #8.5 crore where he is said to have The Mobile Connection recovered just #1.5 crore. “Th e reality is that music prices have Th e mobile operators and hand- remained relatively stable unlike home video. A song typically set manufacturers second digit- gives a fi lm more longevity,” points out Subramaniam. Today, al’s dominance. Consider Nokia, no fi lm fetches more than #1 crore for its home video rights. which already has a strong on- Th at probably explains how the music of a fi lm actually mini- line music presence globally. It is mises the damage at the box-offi ce as well. Take the case of estimated that Nokia has over 1 Tum Mile, a #20 crore fi lm that saw its music alone bring in million users in India, who, ac- #5 crore. Eventually, the theatrical collection for the fi lm was cording to KPMG, account for barely #10 crore. Likewise, Patiala House, made on a budget 16% of its global downloads. of #20 crore saw its music bring in over #4 crore. Th e fi lm From an operator’s point of tanked at the box-offi ce. view, it is estimated that mu- Th e fact is we have a great label sic brings in close to 60% of its and the music business is one we Go Digital non-voice revenue (more com- understand really well. Contrary to popular perception, the fi lm music business in monly referred to as value-added India is alive and thriving. What’s really helped is the ubiquity services or VAS). Within this are —BHUSHAN KUMAR of the mobile phone and the digital revolution that’s come alive caller tunes, ringtones and music Chairman and Managing Director, T-Series through DTH, radio and the slew of music channels. Today, clips, to name just a few. Th is is music reaches the end user in various forms, with physical in addition to legal downloads and has also signed a three-fi lm deal with Vashu Bhagnani. (older formats like CDs and cassettes come here) now a poor of music from sources such as Clearly, one person who is not complaining is the producer, second to digital. For 2010, according to a KPMG report, digital Music Bharti ( a part of Bharti who manages to put in place a derisking model that works— brought in #420 crore, while physical contributed #320 crore Airtel), which claims to be In- get in some useful money by selling the music, which takes of a total industry size of #850 crore. By contrast, in 2007, dig- dia’s largest music company in care of a good part of the cash fl ows. And if you are making ital accounted for #140 crore, while physical was #560 crore. revenue terms. “Th e good part a big-budget fi lm like Zindagi Na Milegi Dobara, Ra.One or Other numbers also bear out the digital boom in the music about this is that revenue can Krrish2, you can be assured that at least 15% of your budget industry. In 2006, it accounted for just 14% of the #700 crore KPMG’s estimates suggest that it will move to a much larger Yes, there is be generated over a period of will come from the sale of music rights (see accompanying industry’s revenues. Today, the fi gure is just a shade under 50%. 79% by 2015, with barely 6% coming from physical. Kumar time,” thinks Taurani. graphic). “For a fi lm with a budget of #12 crore, music can agrees on the potential for digital. “Th ere’s no doubt that digital money to be It’s not all positive. Only 30% of # bring in as much as 35%, while for a fi lm with a 60 crore # is a big story. Th ere is a lot of action waiting to play out on all made in music, the revenue on a mobile down- budget, that number could well be 25%,” adds Subramaniam. For a 12 crore fi lm, its platforms, be it radio, internet, mobile or television.” Th at though we will load comes to the music com- Tips’ Taurani should know a little bit about that. His com- music can bring in as will be the take-off point for the industry, as its dependence pany; the mobile operator takes pany, which in the past has picked up rights to musical hits on theatrical revenues will come down substantially. take a measured the rest. And that shows no signs like Khalnayak and , had a huge success with much as 35%, while Other players, too, are convinced that the digital space will of changing. “Operators facili- # approach to the Ajab Prem Ki Ghazab Kahani, its home production, in 2009. for a 60 crore fi lm, it be the growth driver in the coming years. , for business. tate the music reaching the end Made on a budget of #40 crore, the fi lm grossed close to #90 could be 25%. instance, has virtually stopped physical production of music. consumer. With the kind of in- crore at the box offi ce. According to Taurani, the producer’s “Th e only time we make CDs these days is when someone —APURV NAGPAL vestments we have made, we will share of domestic box-offi ce revenue was #33 crore, while it —SHRIDHAR SUBRAMANIAM comes to us with a large order and makes a down payment,” Managing Director, Saregama naturally get a larger share,” says earned #10 crore from the overseas markets. “More impor- President (India & Middle East), Sony says Kumar Taurani, the company’s Chairman and Manag- an offi cial with a large operator. tantly, it earned #4 crore from music, which I did not have to Music Entertainment India ing Director. Consider this: the revenue from VAS for operators is pegged share. Th at’s the good part about music as a revenue stream,” Meanwhile, Shemaroo, the largest independent aggregator at $1.4 billion (over #6,400 crore). Music is said to account for he says. Not surprisingly, it is a model that he will employ in in Bollywood with over 2,500 titles, has put in place a team least half of that. Th erefore, when Kumar speaks of recent hits the time to come—produce a fi lm and retain the music rights. of 80 to execute its digital plans. “Th ese people work on key from his stable, such as Pee Loon, Munni Badnaam Hui and Th is is a model that seems to have appealed to Saregama as platforms like mobile, internet and IPTV,” points out Hiren , it translates to digital applications in vari- well. India’s oldest music company will release Soundtrack, Gada, Director, Shemaroo Entertainment. His company owns ous forms. For that matter, the songs from Dabangg are said its home production, in September this year. Th is #5.7 crore the perpetual rights for over 300 fi lms like Amar Akbar An- to have been played over 200,000 times across radio stations. fi lm will have as many as 12 songs with some from Sarega- thony, Chupke Chupke, Namak Halaal and Jab Jab Phool Khile. If the digital medium continues to rake in the moolah fi lm- ma’s existing catalogue. Th e music rights will remain with the Rather than depend on uncertain sales of home video, the makers can rest assured that at least one variable from their company. “Yes, there is money to be made in music, though company is trying out innovative revenue-sharing agreements derisking equation will continue to work wonders. we will take a measured approach to the business,” says the with online players. For instance, Shemaroo makes money Email us at [email protected] company’s Managing Director Apurv Nagpal. In the recent each time a clip from any of its fi lms is watched on YouTube. or SMS OLB at 575758 

54 OutlookBusiness > September 17, 2011 OutlookBusiness > September 17, 2011 55

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