FICCI-KPMG-Report-13-FRAMES

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60 The power of a billion: Realizing the Indian dream Case study: Vicky Donor The success of Vicky Donor marks the change in the content strategy of the Indian film industry. Production houses are now focusing on producing films which are based on strong content (storyline), small budgets and non-star films with aggressive marketing and distribution spends. Economics of Vicky Donor domestic gross box office collections which were 9.2x (INR 460 million) the cost of production and C&S rights which were sold at 1.5x the cost of production. The film was released overseas with 125 prints and grossed USD 1.2 million (INR 65 million) at the international box office. The film which was produced with two newcomers as lead actors- Ayushmann Khurrana and Yami Gautam proved that even a non-star film with a strong storyline can achieve commercial success. Following its success, the remake rights of the film for the Tamil and Telugu versions have been sold, while producer John Abraham has announced its sequel will go into production in 2013. Source: Eros International Media Ltd. The comedy-drama film based on the concept of sperm donation and infertility emerged as one of the highly profitable productions of 2012. Produced at a cost of INR 50 million, the film was promoted just like any big budget film. Co-produced by actor John Abraham’s JA Entertainment and Eros International Media, the companies spent INR 70 million on marketing the movie across various media platforms. The commercial success of the film can be measured in terms of its “ Vicky Donor and English Vinglish , illustrated new trend that smaller budget , high concept films can achieve higher returns at box office and other channels of distribution , provided they are marketed and distributed like big high profile films. As part of strategy we will continue to support smaller budget- high concept films ,which ensures limited downside with unlimited upside. This also enable us to diversify and strengthen the overall business model. “ - Kamal Jain Group CFO-India, Eros International Media Ltd. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The power of a billion: Realizing the Indian dream 61 Distribution – Digital dominance is here Over the past few years the industry has steadily shifted from releasing films with physical prints to digital distribution. The share of the digital format has increased from roughly 50 percent 3 in 2010 to around 80-90 percent 4 in 2012. Digital distribution has enabled films to broaden their reach and do it far quicker than ever before. Distributors are now able to capture revenues in a shorter time frame by having same-day release across theatres and pre-selling C&S rights. Most films now garner about 60-80 percent of their revenue in the first week of release 4 . Box office success in the first week is considered critical and marketing plays an important role in determining turnout. Some reports indicate that pre-release marketing budget is found to be highly correlated with the opening weekend success of a movie 5 . With this trend increasingly becoming prominent, advertising spends are on the rise. Print and advertising (P&A) budgets witnessed a 20 percent Y-o-Y increase in 2012 4 with marketing spends dominating. In 2012, on an average 60 percent 4 of P&A budgets were spent on promotion and advertising of the film. Film marketing activities have progressed beyond posters and promos with the aggressive use of new marketing tools on social media, portals, search engines and even activation. Use of social media has become an important component of pre-release marketing strategy for any movie. Some players have gone a step ahead and developed mobile apps for promoting their movie. For instance, Disney UTV’s marketing team developed a mobile app for ‘Barfi’ which was used to create a strong connect between the protagonist and the audience. “ Cinema is going from India to Bharat, all thanks to digitization technology. Digital distribution has provided depth to the industry and made it possible to take cinema to the hinterland. We expect this trend to bring back INR 30 to 40 billion back from piracy to the system. “ - Kapil Agarwal Joint Managing Director, UFO Moviez India Ltd. In 2012, the average film marketing costs ranged anywhere between INR 80-120 million 4 . For high budget films, this went up to INR 150 million and for low budget films, in some cases, it exceeded their production cost. As per industry estimates, for a low budget film, a minimum budget of INR 35 to 50 million 4 is required to ensure a decent commercial release for the film. However, the economics are different in South India where marketing budgets are still low at INR 15 – 20 million per film 4 .It is anticipated that as media clutter grows, marketing budgets for films will continue to climb in order for products to get noticed. 03. Hitting the High Notes, FICCI-KPMG Indian Media and Entertainment Industry Report 2011 04. Industry discussions conducted by KPMG in India 05. ‘IIM-A cracks box office code to predict a film’s future’, Times of India, October 2012 06. ‘Star Movies India Goes All Social For ‘The Avengers’ Premiere’, Lighthouseinsights.in, January 2013 “ In film marketing the battle for eyeballs can be won or lost in the first 2 weeks of the campaign. First impressions are critical in our industry, so once our research on pre-campaign audience awareness is done, we ensure that our first creative (trailer and posters) has very high on appeal and reach amongst our target audience. Once a good base is created then further marketing interventions in the 6-8 week period prior to the film’s release, become that much more effective in achieving box office revenue targets. “ - Shikha Kapur Executive Director - Marketing, Studios, Disney UTV The distribution of Hollywood content is also evolving rapidly. While most big-budget English movies are distributed by the respective studios, several other films require local distributors. For example, PVR Pictures has identified this area as a potential opportunity and distributed 18 Hollywood titles last year. It also plans to distribute another 24 titles in next 15 months. In order to compete with domestic titles, Hollywood continues upping marketing budgets, some Hollywood films are now being marketed at spends as high as INR 50 million 4 . For instance, Avengers which was released in 1000 prints across English, Hindi and South Indian languages was marketed at pan India level. Star Movies India did a 360-degree marketing campaign comprising all mediums – print, online, OOH and television, to promote the action movie in India. The Star Movies Facebook page also offered an Avengers app featuring wallpapers, videos and puzzles related to the superheroes 6 . “ We have seen that superlative content, backed by innovative marketing, wide distribution and high C&S valuations have been the growth driver for the business. We have seen a lot of high concept content movies deliver good numbers at the box office and the risks taken by producers have paid off thus paving the way for the need for more such content. The increase in the number of multiplexes and increased digitisation of 2K screens and E-Cinema has helped us ensure cost effective reach and better show casing opportunities. 3D movies have also helped bring back audiences into the theatre especially for Hollywood and we will see a spurt in the number of 3D movies in Bollywood as well. “ - Vijay Singh CEO, Fox Star Studios © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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Acknowledgement We acknowledge the
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FICCI-KPMG-Report-13-FRAMES

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