Hollywood has decided to marry Bollywood.

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Hollywood has decided to marry Bollywood. It’s a deal that will help both. Now, SRK may star in an English flick, and Brad Pitt in an Indian movie. By PALLAVI SRIVASTAVA

Move over Tom Cruise and Brad Pitt. Welcome SRK and Aamir Khan. Bollywood stars are set to take global audiences by storm. And this isn’t a claim made by Indian producers, but this is what is being planned in the huge studios in Hollywood. The recent movie, Saawariya, marked the beginning of a second revolution in Bollywood. Mumbai. After initial experiments of co-production with foreign filmmakers and production houses decades ago, this film marked a second wave, when international studios decided to join reels to produce local content in India.

Sony Pictures Entertainment co-produced Saawariya with the iconic Director, Sanjay Leela Bhansali, and it was the opening of the first innings for Sony. And it turned out to be a decent opening stand. The movie grossed about Rs.120 million. Feels Deborah Schindler, President, International Motion Picture Production Group, Sony Pictures Entertainment, “In the next couple of years, we would like to make about four-six movies a year in India. So, our larger focus won’t be the number of movies; rather it would be making movies that we care about.”

Warner Brothers and Walt Disney are the other elite names who are busy shooting their strategies to produce Indian movies. Warner Brothers is banking on the Khiladi, Akshay Kumar for its first movie, Made in China. On the contrary, Walt Disney plans to concentrate on animation movies in India. It has tied-up with Yash Raj Films, and the first movie from the co-production stable will be Roadside Romeo. Paramount Pictures International is also contemplating Indian productions. The list goes on.

There are three major factors that are wooing the huge Hollywood studios to cross the seven seas and set up bases in Bollywood. The first is the possible arbitrage opportunity, given the ever-expanding growth in the Indian entertainment sector. The second is the fact that the Indian film industry is largely driven by domestic business and, hence, one has to be in India to take advantage of the potential market. In fact, Hollywood films account for less than 10% of the overall annual revenues earned by movies in India. Finally, there is growing attractiveness for Indian films globally.

“To say that India is growing rapidly is definitely an understatement,” says Kunal Kohli, Film Critic and Director of movies like Fanaa. According to the 2007 annual edition of the FICCI - PricewaterhouseCoopers report on the Indian Entertainment and Media Industry - A Growth Story Unfolds, the Indian film industry is expected to grow at a CAGR of 16% to Rs.175 billion by 2011. Such a market is seducing global players to join the Bollywood bandwagon. Not to forget that Bollywood is the largest market with over 1,000 movies released every year, and 3.7 billion tickets sold annually. Although these numbers don’t stand too tall in front of Hollywood grossers in terms of revenues, things have begun to change rapidly in the past few years.

As Amit Kumar, Media Analyst, Kotak Securities, points out, “In terms of eyeballs and footfalls, the Indian movie market is the largest in the world; however, in terms of value, it is still minuscule. This fact itself asserts that there is a huge scope for growth in the industry. On the contrary, the US and European markets are becoming saturated by the day.” Moreover, the demographics of India hint at an even more rapidly growing film viewership in the near future. Shyam Benegal, renowned filmmaker, explains, “Largely, those who watch movies are in the age group of 10-40 years and this profile is growing like never before. If statistics are to be believed, they will continue to grow for many more years. This will definitely scale up the revenues of the industry and this lures the global studios.”

It would have been ideal for global players to market Hollywood movies in India. This strategy would have allowed them to rake in moolah without any major investments. But those who watch English movies constitute a minority. In addition, the Indian movie market is largely driven by local content. To cite statistics, Indian films accounted for 95% of the country’s total box-office sales in 2006, according to the Indian Entertainment and Media Industry report by FICCI- PwC. Nowhere in the world, except for the US, is the market so skewed in favour of domestic movies. So, if you need to fish in Indian film waters, you need a bait that’s local. That’s possible only through local content.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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