Indian Film Industry Back In The Spotlight

The Indian Film industry eclipses Hollywood both in terms of number of films produced and theatrical admissions. Overall, 2009 was a difficult year for the film industry. While the multiplex – producer stalemate left the industry with significant losses, the general elections and the swine flu scare also kept audiences away in early 2009. The total annual theatrical admissions in Indian cinemas are around 3 bn, as compared to 1.5 bn tickets sold annually in the US.  

Indian Film Industry

 KPMG India along with FICCI has come out with a report on Indian media & entertain- ment industry, according to which the filmed entertainment sector had grown by over 15 percent between 2006 and 2008. In 2009 the industry is estimated to have declined by nearly 14 percent to INR 89.3 bn from INR 104.4 bn in 2008. This was largely on account of lower domestic theatrical collections in 2009 compared to the previous year. Overseas theatrical revenues were also significantly impacted last year, de-growing by nearly 30 percent in 2009 over the previous year. As a result of the worldwide economic downturn, dearth of good quality content, Increased number of illegal downloads over the internet due to higher broadband speeds, and lower number of films with stars such as the Khans, Akshay Kumar, Hrithik Roshan, etc. led to a decline in the overseas theatrical revenues. The trend is likely to reverse in 2010 to grow at a CAGR of 8.9 percent to reach INR 136.7 bn by 2014. While the share of the domestic theatrical revenues to the industry’s revenue is expected to decline marginally, it is expected to remain the dominant revenue source for the industry contributing as much as 74 percent of the total revenues in 2014.

Technological advancements used effectively can be a key growth enabler for the industry; the industry needs to proactively embrace technology which may fuel their growth plans. In India, players such as Real Images, UFO and E-City are estimated to have equipped close to 3,000 theatres34 across the country with digital technology and have aggressive expansion plans for the next 3 years. Filmmakers are delivering film-based content like music, videos, images and games on mobile phones and the internet. Filmmakers are also opting to monetise their content by releasing movies on the DTH and cable platforms through ‘Pay Per View’ services soon after their theatrical release. Releasing films on the internet is another trend adopted by filmmakers.

Rising talent and production costs is one of the key challenges faced by Indian film industry. The talent cost in some cases, can constitute 40-60 percent of the total cost of a south Indian language film. Continued reliance on domestic box office as a revenue source not only makes such films risky but also prevents filmmakers from effectively monetising their movies to its full potential. Regulated ticket prices in certain parts of south India stymies the full potential of domestic box office revenues.