The film industry has been buzzing with the news of big studios closing shop. It’s not that Bollywood films aren’t doing well. But the business of making them is leaving producers with a thin margin, given their astronomical production budgets, and the even more ridiculous costs at which they are being bought by the studios. While corporate bigwigs seem to be getting the formula wrong, family run establishments are managing to keep afloat.
Also Read: An Insider’s View: Why is Bollywood Going Bust?
But there’s a counter argument to the whole debacle and it present a valid viewpoint too. According to a Business Standard report, film corporates are simply going through a bad time financially, and the temporary phase shouldn’t be seen as a worrying end.
There is no question of stopping or shutting down. There is too much hullabaloo and gloom. Sometimes movies and studios do well, sometimes they don’t.Sameer Nair (Group CEO, Balaji Telefilms)
Ekta Kapoor’s Balaji Telefilms, has had a bad year with film productions, unlike their primary business in television content. Great Grand Masti and Flying Jatt didn’t help their situation either. Viacom18 Motion Pictures also seems to be going slow on the film front with no release in the last two months. But Ajit Andhare (COO, Viacom18 Motion Pictures) says that they’re not feeling any pressure.
Group CEO and Managing Director of Eros International, Jyoti Deshpande, also says that players are going through a learning curve that they’ve already emerged from. The report also shows that while the industry’s overall revenue has been on a steady rise, its footfalls are falling.
The report also suggests that in the last three years, the Indian film industry, that stands at a value of Rs 13,800 Crore, has been fighting slimming margins, increasing costs of production and an almost stagnant box office.
According to the report, Disney’s decision to close down it’s film production arm is purely a reaction to poor profits.
It (Disney’s decision) is a bit of a shock. They spent half a billion dollars in buying a majority in UTV and part of that was buying the leading studio and that has come undone. It tells you that something else is going on in Indian filmmaking.Patrick Frater (Asia Editor, Variety)
The Indian film industry has come a long way in the last 15 years, having moved away from its creative process being funded by the underworld in the late 90s. When Disney, Paramount and Fox entered as big players, they transformed the landscape forever. They brought clean money into the business and ironed out the chaos in distribution and screening. Profitability however still remained hard to achieve with a limited number of screens and the stubborn problem of piracy.
We need to step back and review. Sure talent costs are high, but that holds true for many industries. The fundamentals of the film business remain intact. South India continues to take bolder steps and they are finding success… it is time perhaps to rethink the business.Rakesh Jariwala (Partner, Ernst & Young, Media and Entertainment)
With digital platforms evolving with Netflix, Amazon Prime, Eros Now and others introducing new models of entertainment consumption, there is a possibility that traditional film producing models alone need an overhauling.
Suddenly a lot of people are saying that studios are not working. That is an oversimplification. The problem is one of business model.Shailesh Kapoor (CEO, Ormax Media)
The report also suggests that Indian theatre audiences have fallen from 82 million in 2010 to about 78 million in 2014. That’s the reason why box office revenues have taken a hit. But this is a sign of transformation. Audiences are increasingly viewing content on TV, online and other platforms, more than ever before. So it could well be that the studios are simply trying to find a way to monetize these new revenue sources better than they have in the past.
(Source: Business Standard)
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