FICCI-KPMG-Report-13-FRAMES

The power of a billion: Realizing the Indian dream
59
Introduction
After several years of muted growth, 2012 was an exciting
year for the Indian film industry with the audience returning
to the theaters. India’s domestic theatrical revenues grew
by 23.8 percent Y-o-Y, contributing 76 percent to the INR
112.4 billion film industry 1 . Digital distribution played a
significant role in increasing the reach of the industry. The
industry has begun penetrating tier II and III markets and
entertaining the un-served population which sits near the
bottom of the pyramid. All this has been made possible
by leveraging technology which is allows for a movie
watching experience at an affordable cost and in a secure
environment.
Indian cinema has continued to enchant the Indian
audience for almost a century now and it is expected to
continue on its growth trajectory and be worth INR 193.3
billion by 2017 1 . Domestic theatricals will continue to be the
major growth driver for the industry while ancillary revenue
streams will also grow rapidly albeit off a smaller base.
“
The Indian Film industry has continued to
enchant and entertain not only Indians but
audiences across the globe. Celebrating the
100th year of Indian Film industry, I believe
we have come a long way and matured as an
industry. India is the land of captivating story
tellers and our strong cultural heritage adds
to our image of the land of romance, mystery
and entertainment. The industry is at the cusp
of another change with digital technologies
enabling greater reach of the medium thus
ensuring exciting times ahead.
“
- Ramesh Sippy
Co-Chairman,
FICCI Media and Entertainment Committee
Production
Professionally-run production houses are competing with
the family-run banners to bring in greater sophistication and
efficiency across the value chain. The approach has shifted
from producing pure star driven films to experimenting with
content and providing a platform to newer talent. Films
such as ‘Paan Singh Tomar’ and ‘Gangs of Wasseypur’ have
pushed the envelope on the kind of content that works in
India and have managed to achieve unanticipated box office
success.
Although production costs have escalated by 15-20 percent
in 2012 2 , these have been more than offset by strong
box office performance. While the cost structure varies
based on the budget and star cast, artist fees continue to
form a major component of film’s budget for most large
productions.
Bollywood and Hollywood production houses are moving
into regional markets which are also observing a tectonic
shift in the consumption pattern of the audience. The new
generation in regional markets is more receptive to nonmainstream
films and is encouraging experimentation with
content.
01. KPMG in India analysis
02. Industry discussions conducted by KPMG in India
For these films, co-production continues to be the preferred
business model. Production houses see prudence in
teaming with peers who know those local markets. Both
international and Bollywood studios are leveraging coproductions
deals for entering newer markets as they learn
the pulse of the vernacular audience. Local producers
are leveraging the national and international distribution
strength of their co-producers and taking their content to
newer geographies.
“
2012 was a fantastic year for the film industry
with differentiated content and talented
debutants attracting audiences to the
theatres in larger numbers. This was also
aided by superb promotions by production
houses and studios, as everyone battled it out
to enjoy a big opening weekend. 2013 has
begun on a great note and promises to set new
benchmarks in promotions and pre release
efforts, and thereby achieve bigger and better
opening figures.
“
- Apoorva Mehta
CEO,
Dharma Productions
“
Last year, we have seen a huge pool of
new talent come into the industry and taste
success. That’s a great sign for the industry.
However, we need to keep a check on
the production and marketing costs. The
production costs are disproportionately high.
Meanwhile, marketing needs to be aggressive
but cost effective. While we have a rich INR 1
billion plus club, we need to see how much ROI
are we really getting on the projects. Small is
big literally with some tightly budgeted films
making a gold run at the box office. It looks
likely that the revenues from C&S are going to
slowdown as well, so it matters more to us that
we keep production costs in check because
our dependence on theatricals is bound to
increase. We need adequate support from
Government of India. There is tremendous
pressure due to high entertainment tax rate
and service tax and the industry needs to
engage Government seriously in this regard.
“
- Vijay Singh
CEO,
Fox Star Studios
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