market opportunity profile | india

FILM
MAR KE T O P P O R T UNI T Y P R O F I L E | I N D I A
E X E C U T I V E S U M M A RY
MARKET OVERVIEW
The Indian Film Industry, with its century-old historical legacy,
is causing ripples worldwide with its ability to attract numbers.
Whether it is in the number of films per year, number of regional
language films within one single country, revenue or box office
hits, the Indian Film Industry continues to make, break and
remake records.
The Indian film industry is big business. Not only in terms of
viewers worldwide but for the number of films released per year,
the number of regional language films within one single country,
the number of minutes of run-time, and most importantly, the
annual growth rate which continues to rise at a steady 11 per
cent annually and is now worth an impressive US$2.3 billion.
Global filmmakers, producers and technicians have realized the
Indian film industry’s potential with governments, institutions
and organizations worldwide looking at various ways to create
and build lucrative co-opportunities. Whether to leverage
skill sets, capture overseas rights, co-produce to expand or for
revenue generation, countries are finding newer and better ways
to partner with the Indian film industry.
For most outsiders, Indian films mean Bollywood. While
Bollywood (Hindi-language films) does dominate mainstream
cinema in India and typically makes up a significant portion of
the total domestic box office, it is the regional language films that
govern the future of this industry. In any given year, at least 1,000
movies are released in Hindi, Tamil, Telugu, Kannada, Punjabi,
Gujarati, Bengali and other Indian languages.
This report gives a three-dimensional view into what makes this
industry the oldest, strongest and largest.
Two decades ago, the Indian film industry did not have the
organized and systematic corporate philosophy that now makes
it a prominent segment. As a result of its growing potential, a
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large number of corporations have emerged that run smoothly,
systematically and efficiently. These organizations run on sound
corporate principles and adhere to strict time schedules, cost
budgeting and governance standards. The result has been a
much larger inflow of funds to produce, distribute and exhibit
films, as well as clear improvements in the quality and variety of
films being released, in technical standards and in cost control.
In turn, this has generated greater revenues, boosted profitability
and lowered the probability of failure.
At a Glance
Market Size
2009
2014
Rs 95 Billion
Rs 170 Billion
USD 1.98 Billion
USD 3.5 Billion
2014
Rs 70 Billion
Rs 124 Billion
USD 1.45 Billion
USD 2.47 Billion
2014
Rs 8 Billion
Rs 14.5 Billion
USD 0.17 Billion
USD 0.3 Billion
CAGR
12.1%
CAGR
8.8%
Admissions
2009
2014
Box Office Collection – Domestic Domestic box office revenues comprise theatrical revenues
from multiplexes and single screen theatres. There are
approximately 10,000 theatres in India, with 900 multiplexes.
It is estimated that there are there billion viewer admissions
in India which is comparatively higher than that in the U.S.
The revenues from multiplexes and single screen were
around US$1.5 billion in 2009.
•
Box Office Collection – Overseas Overseas distribution is primarily divided into three
territories, U.S., U.K. and rest of the world with the U.S.
contributing the most. It is estimated that overseas box
office revenues are US$150–200 million.
•
Home Video The home video segment was estimated to be US$22 million
in 2009 and showed significant growth in 2010. There is an
inherent change in the business model for home video in
India. The home video market is converting to sell-through
from rental, which constituted 100 per cent of sales in 2004.
By 2014, sell-through is expected to capture 90 per cent of
the market. This change in business model was spurred by
the entry of Moser Baer into the market in 2007. For Category
A movies, the cost of acquiring home video rights is in the
range of US$0.6–1 million. For Category B movies, the cost
of acquiring home video rights is in the range of US$ 0.2-0.4
million.
12.4%
Overseas Box Office
2009
•
CAGR
Domestic Box Office
200
Some key revenue streams from the Indian filmed entertainment
industry include:
CAGR
2.1 Billion
3.5 Billion
Figure 1 - Image courtesy PricewaterhouseCoopers ’Indian Media
Report 2010’
While India’s GDP ranks 11th in the world in absolute terms, it
ranks among the top five economies when assessed in terms
of purchasing power parity. In the last decade, a growing
consuming class with spending power is determining the
growth of the entertainment industry. Revenue generation is
triggered by consumer spending at the domestic and overseas
box office in the form of ticket sales, home filmed entertainment
(which includes buying and renting CDs and DVDs) and ancillary
revenues consisting of spending on broadcast syndication rights,
mobile VAS and other new age media sales related to films. With
more than 20 million Indians living abroad, the entertainment
industry is in overdrive to satisfy this growing demand. Globally,
several international films with Indian content, themes and
performers are receiving wide visibility and acclaim.
India’s software success is extending into the creative field. It is
now blending IT skills with its historic talent for storytelling to
produce interesting entertainment. With English as the second
language and inexpensive manpower, India is using these
two advantages to offer cost-effective solutions to the global
animation market. While animation is just one dimension of
digital entertainment, it is still a big business — the worldwide
market for digital animation is over US$90 billion. Of that, India is
estimated to have earned revenues between US$200 and US$300
million with a growth of more than 20 per cent every year.
India has the potential to become an attractive destination for
international broadcasters and production houses, despite its low
per capita income, as the larger population base makes a viable
case for high-volume consumption. India has seen improved
income levels across a large section of its population, with a
significant number of people willing to spend on entertainment.
OPPORTUNITIES
For overseas investors, opportunities abound across the value
chain, as skill and maturity levels differ from country to country.
For example, while India may be robust in development, it might
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require help with post-production which could be a strong area
for another country.
LOCATION B.C.
Increased Viewership for Indian Films in B.C.
With a legacy of almost 100 years (the first full-length Indian
film was released in 1913) and 1,000 films a year, the Indian film
industry has reached a point where the focus is on content
quality. The increase in the number of films made has not seen
a proportionate increase in their commercial success. To reduce
the pressures of television programming, the Indian film industry
is turning to technological developments like advanced visual
effects, special effects, sound sync, animation and sheer star
power. The growing adoption of digital television around the
world has forced leading global broadcasting companies to
put development and use of new technologies at the centre of
their core strategies. The Indian film industry, which generated
US$1.96 billion in 2009, is expected to nearly double itself by
2014 according to PricewaterhouseCooper’s Indian Media Report
2010.
Indo-Canadians constitute more than five percent of British
Columbia’s population. To cater to this segment, British Columbia
can facilitate the release of Indian cinema in B.C. theatres which
would contribute to revenue in the form of entertainment taxes
and levies.
To increase viewership, B.C. can encourage more films to be shot
in Canada by capitalizing on the natural advantages that make it
an ideal film location with great scenic views, urban landscapes,
different climatic zones, and most importantly, advanced
technology. Cash-back offers, funding and quick visa processing are
some of the ways B.C. can attract Indian production houses. Also
required is a more transparent environment, especially in terms of
advantages for Indian film producers.
For the Indian entertainment industry, this is a pivotal time.
Beyond linear growth projections, there is a bigger story waiting
to unfold if a concerted and accelerated effort is made now. The
industry is entering a second phase of growth, with technology
as one of the key drivers. This growth phase will result from
combining quality infrastructure with the gradual penetration of
digital connectivity, which will redefine the way entertainment
content is delivered and consumed.
Hollywood Films Shot in India
1. Eat, Pray, Love
2. Gandhi
3. A Passage to India
4. Octopussy
5. The Borne Supremacy
6. The Deceivers
7. Around the World in 80 Days
8. Holy Smoke
9. The Far Pavilions
10. Close Encounters of the Third Kind
11. Vanity Fair
12. Code 46
13. A Mighty Heart
CO-PRODUCTION
Official co-productions are made possible by agreements
between countries and seek to achieve economic, cultural
and diplomatic goals. Canada and India have committed to
negotiating and closing a co-production treaty in the near future
that could create phenomenal benefits. Some of these are listed
below:
•
The ability to pool financial resources
Film Distribution
•
Access to the partner government’s incentives and subsidies
There are three distinct film distribution models that include:
•
Access to the partner’s market or to a third market
•
Distributor and producer belong to the same group of
companies
•
Access to a particular project initiated by the partner
•
•
Access to a desired location or to cheaper inputs
Distributors give financial assistance to producers in exchange
for distribution rights
•
Cultural benefits
•
Distributor purchases the rights for distribution
•
The opportunity to learn from the partner
The distribution model ensures that the producer, distributor and
the exhibitor stand to gain. The distributor gives the producer a
minimum guarantee fee in return for the rights to a territory. This
way producers can recover up to 30 per cent of their cost. The
distributor on the other hand, earns 20 per cent commission on
promotional spending and gets to share in the profit. The exhibitor
(theatre) operates in a revenue-sharing model – in the first week of
a film’s release the share is 50-50 and in the second week it is 60 per
cent for the exhibitor and 40 per cent for the producer.
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Joint Ventures in the Areas of 3D Effects and VFX
Three-dimensional or stereoscopic effects are growing rapidly
to become the next step in cinema technology. Stereoscopic
images displayed in 3D increase visual impact and heighten
the viewers experience. The successful adoption of 3D by
the general public will depend on technological advances
in stereoscopic 3D displays as well as on the availability of a
wide variety of 3D program content. Indian production houses
have accumulated content over the years. B.C. can provide the
technology to convert these resources into different formats
towards monetizing them, even after they have lost their “new
movie” sheen. On the flip side, India’s talent pool in the field of
VFX can be advantageous for B.C. companies looking to have a
local presence in India.
Content and Script Writing Skills in India
Rich in suspense, drama, romance and emotion, Indian
film scripts provide variety for audiences with a thirst for
entertainment, which is probably why mainstream Indian films
made early inroads into the Soviet Union, Middle East, Southeast
Asia and China. With Indian film stars gaining an international
reputation and recognition at film festivals, there is abundant
evidence that Indian films are not just about song and dance
sequences.
Danny Boyle’s Oscar-winning film SlumDog
Millionaire (2008) was an onscreen depiction
of Indian author Chetan Bhagat’s work of
fiction titled Q&A.
of flux. Manufacturers of digital cinema systems must balance
development costs against a possible, undefined return on
investment that is dependent on the success and swiftness
of the transition. With the emergence of digital presentations
featuring release print quality comes a daunting new challenge
for movie distribution — security. Each digital data copy is a
virtually perfect copy of the original, immune from degradation
in the act of duplication. Since several hundred million dollars
can be at stake with a movie release, new and highly-effective
content protection measures must be incorporated. This provides
an immense opportunity for B.C. media companies interested
in partnering or participating in Indian film industry’s digital
evolution.
Stereoscopic Conversion
Several large media houses in India are providing conversion
services to major Hollywood studios. For B.C. companies that do
the same, partnering with Indian companies or opening an office
in India will allow it grow its market and expand its customer
base.
CO-PRODUCTION
1. Production Integration
2. Joint Ventures: Joint work in 3D effects / VFX in
movies
3. Leveraging local content and script writing skills
4. Leveraging IPs across platforms
5. Digital film restoration
6. Stereoscopic conversion
7. Film distribution
Leveraging IPs
Attraction for Indian Film Industry in B.C.
A recent media and animation report promises a bright future for
the Indian media industry. According to the report, the domestic
market for animation has grown significantly over the past two
years. Animation companies have started focusing on building
original IP, which they can leverage in terms of merchandising
and TV broadcast revenues. Currently, custom content
development is the largest segment with an estimated industry
size of US$187.5 million, followed by animation entertainment at
US$120 million.
1. Locational advantage - scenic beauty of
mountain, ocean, ice can serve as one-stop location.
2. Attractive subsidies like cash back offer, funding,
quick visa processing for crew members.
3. Advanced technical knowhow of B.C. film houses
TECHNOLOGY COLLABORATIONS
Digital film Restoration
There is a growing need for digital installations with lowrisk modular system architectures that will support future
improvements, help establish new business models and create
consumer demand. Physical interface standards sufficient
to support digital cinema are already available in India, but
the image format, compression algorithms, encryption key
management protocols and other aspects are still in a state
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Attraction for B.C. in the Indian Film Industry
1. Strength in numbers from trained technicians to
directors
2. Lower production costs
3. Experienced Industry-Internationally proclaimed
movies, actor/actress, directors
4. Native English-speaking population
R E G U L ATO RY A N D CO M P E T I V E
ENVIRONMENT
The Reserve Bank of India has issued some broad guidelines to
commercial banks for financing Indian films and some production
houses have gone public to generate funds. Apart from
these local options, foreign participation is also being actively
encouraged. Many other international locations have encouraged
Indian movie shoots by providing incentives that include:
• Percentage cash-back offer
With increased foreign participation, the Indian film industry is
changing rapidly. This is a two-way relationship as new producers/
directors and productions houses are coming to India for its
facilities and are entering into joint venture agreements. The
government is also working with institutions like NFDC and
the Film & Television Institute of India towards developing a
comprehensive legal structure for insuring all kinds of movies
which will definitely give a great boost to the film industry, and
more importantly, to the film finance sector.
M A R K E T E N T RY S T R AT E G Y
• Subsidized stay of crew members
• Co-funding by foreign film association and tourism
• Quick visas for crew members
The benefits of a film shoot increase tourism in the location
countries while attracting additional film production houses.
The U.S./international film industry in India is estimated at Rs 300
crores ($66 million) and is growing steadily. This industry revenue
is from the box office of US/international films released in India.
It is relatively easy for foreign companies to enter the Indian film
industry, which can be seen in the ever-increasing international
industry presence. Reliance ADA Group has entered into a
production deal with DreamWorks Studios promoted by Steven
Spielberg to produce films with initial funding of US$825 million
for the first three years. Walt Disney has partnered with Yash Raj
Films to make animated movies, the Warner Group is funding the
Sippys’ film projects, Viacom has a joint venture with the TV 18
group to form Viacom-18 and Sony Pictures Entertainment has
co-produced with Sanjay Leela Bansali Films.
• A foreign company can enter through a liaison office/
representative office, project office or branch office.
• It can also enter as an Indian company through a JV (Joint
Venture) or as a wholly owned subsidiary.
• The film production, exhibition, marketing and distributionrelated services and products have 100 per cent foreign
direct investment (FDI) allowed under the automatic route.
Foreign investors seeking to acquire shares of an existing
Indian company engaged in film production, exhibition
or distribution are granted general permission. However, if
the foreign investor had or has any existing joint venture or
technology transfer/trademark agreement in the same or
allied field in India, then prior approval is required from the
Foreign Investment Promotion Board (FIPB). If the foreign
partner has entered into a JV in the same field before
then NOC of the previous JV partner and approval of the
government is also required.
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As mentioned above, the easiest way for foreign companies to
enter India is through a liaison office, through joint ventures or
as wholly owned subsidiaries. But the question is why would a
foreign film production company want to come to India? And
why would an Indian film company choose to go to a foreign
location?
In looking at how the respective film industries in British Columbia
and India can collaborate, it is helpful to review the strengths and
opportunities of the two countries.
India’s inherent advantage is in numbers and that is where British
Columbia can gain. It can be in terms of larger production support
or crew or it could be in the pure power of audience numbers.
Distribution rights would be an attractive proposition for B.C.
investors and co- production or partnership with Indian film
production houses would also be a viable proposition for revenue
generation or for global expansion.
The Indian film industry would find that B.C. offers the advantage
of natural scenic views combined with a metropolitan
background, and would be captivated by B.C.’s natural wonders as
well as its skyscrapers.
The Indian film industry is evolving strongly in terms of
technology and innovation, and it can leverage B.C. companies
that need to bridge a gap.
Looking at the cross advantages of partnership, the two countries
have much to gain. Clear regulations for co-productions and
tax benefits are needed from both governments to ensure that
participants understand the implications and advantages of joint
partnerships.
With liaison offices or representatives of both countries taking on
active participatory roles, B.C. and India could find that the barriers
are mostly imagined.
Blockbuster Indian films shot in North America
INDIAN FILMS SHOT IN CANADA
1. 8 x 10 Tasveer
2. Aapko Pehle Bhi Kahin Dekha Hai
3. Apne
4. Bekhudi
5. By Chance Milta Hai Chance
6. Dus
7. Hum Ko Deewana Kar Gaye
8. International Khiladi
9. Kaash Aap Hamare Hote
10. Kal Ho Naa Ho
11. Khiladi 420
12. Khiladiyon Ka Khiladi
13. Koi Mil Gaya
14. Mere Jeevan Saathi
15. Monopoly - The Game Of Money
16. Mr And Mrs Khiladi
17. Neal ‘N’ Nikki
18. Pardes
19. Partner
20. Taal
21. The Hero
22. The Lookalike
23. Tum Bin
24. Zameer -The Fire Within
Movie
Budget
Leading
star
Location
Director
Producer
Production &
Distribution
Swades,
We the
people
INR 20
crore (US5
Mn)
Shah Rukh
Khan
USA
Ashutosh
Gowariker
Ashutosh
Gowariker
Ashutosh Gowariker
Productions Pvt.
Ltd.
Kabhi Alvida
Naa Kehna
INR 50
crore
(US$10.85
Mn)
Shah Rukh
Khan
USA
Karan Johar
Hiroo Johar
Dharma
Productions
Kambakkht
Ishq
INR 60
crore
(US$13.02
million)
Akshay
Kumar
Sabbir Khan
Sajid
Nadiadwala
Nadiadwala
Grandson
Entertainment &
Eros Entertainment
Kites
INR 60
crore
(US$13.02
million)
LV, USA &
Mexico
Anurag Basu
Rakesh
Roshan
Reliance BIG
Pictures
Filmkraft
Productions
Blue
INR 100
crore
(US$21.7
million)
Akshay
Kumar
Sanjay Dutt
Bahamas,
USA
Anthony
D'Souza
Dhillin
Mehta
Shree Ashtavinayak
Cine Vision Ltd
Kal Ho Naa
Ho
INR 30
crore
(US$6.51
million)
Shahrukh
Khan
Saif Ali
Khan
Preity Zinta
NY USA
Nikhil Advani
Karan Johar
Yash Johar
Dharma
Productions
My Name Is
Khan
INR 38
crore
(US$8.25
million)
Shah Rukh
Khan
Karan Johar
Hiroo Johar
Dharma
Productions
Fox Star Studios
Fox Searchlight
Pictures
Red Chillies
Entertainment
Enthiran-The
Robot
INR 175
crore (~US
$ 40 Mn)
Rajinikanth
Aishwarya
Rai
S. Shankar
Kalanithi
Maran
W. Hansraj
Saxena
Sun Pictures
Gemini Film Circuit
Ayngaran
International
Eros Labs
B4U Network
Hrithik
Roshan
Barbara
Mori
LA, USA
USA
USA/
Brazil
LI NK S A ND R EF ER ENCE S
http://www.iifa.com/Indianfilmindustry.html
http://www.imdb.com
http://indianmotionpictures.com
http://www.indiamarks.com/guide/Interesting-Facts-aboutIndian-Films-and-Indian-Cinema/9494/
JUNE 2011-05-25
http://www.merinews.com/article/globalisation-of-the-indianfilm-industry/15802285.shtml
http://www.televisionpoint.com/research/ieif2010.html
http://chaisamosa.net/index.php/businessupdate/201102032654/apa-eyes-indian-growth/menu-id-386html
http://www.dealmemo.com/Legal/How_Foreign_Film_
Commissions.htm
http://www.mediasarkar.com/en/index.php?option=com_co
ntent&view=article&id=424:latest-trends-in-film-financing-inindia&catid=123:3&Itemid=522
C A S E S T U DY
http://en.wikipedia.org/wiki/Bollywood
http://www.business-standard.com/india/news/foreign-filmsmade-in-india/295225/
http://www.televisionpoint.com/research/wtmcmi.html
http://en.wikipedia.org/wiki/International_co-production
KE Y CO NTAC TS
Asia-Pacific Business Centre
Suite 288 - 800 Hornby Street
(corner of Robson and Hornby)
Vancouver, B.C.
V6Z 2C5
Tel: 1-604-660-9727
Toll free: 1-888-880-ASIA (2742)
www.britishcolumbia.ca
[email protected]
British Columbia Trade and Investment Representative
Office
#660/1, Akshaya, First Floor
100 Feet Road, Indiranagar
Bangalore - 560 038
Tel #s +91 80 41161216 / 40933650
[email protected]
A multi-million dollar media and entertainment fund based
in Bangalore acquired a substantial stake in a new media firm
operating out of British Columbia. Comic books and graphic
novels, web comics, video games, short-form animation
and live action shorts, toys and merchandise, as well as
feature length films are just some of the tools the B.C-based
animation company uses to establish brands and intellectual
properties. Both companies have worked with big brand
names like DreamWorks on various projects in the past.
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DISCLAIMER:
This report has been prepared for the Government of British
Columbia, Canada based on primary and secondary sources
of information. Readers should take note that neither the
author nor the Government of British Columbia guarantee the
accuracy of any of the information contained in this report, nor
does it necessarily endorse the organizations mentioned within.
Readers should independently verify the accuracy and reliability
of the information before making any decisions related to their
business.
Produced for the Government of British Columbia by:
Abroader Consultancy India Pvt. Ltd.
JUNE 2011-05-25
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