FICCI-KPMG-Report-13-FRAMES

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66 The power of a billion: Realizing the Indian dream The exponential growth in domestic theatrical revenues can be attributed to the growth in number of screens via growth of multiplexes, coupled with increased ticket prices and delivery of robust content that appealed to both, the multiplex and single screen audiences. “ We are observing a definitive change in consumption pattern of our patrons. Not only there is a surge in footfalls, but patrons are also frequenting theatres more often. Because of these factors, 2012 has been a good year for film entertainment business and if the early signals are anything to go by, 2013 already looks quite promising. January to March is typically a lean period, however, we have seen a tremendous surge in February admissions due to a persistent supply of quality films. We are looking forward to a very strong 2013 “ - Mr. Kamal Gianchandani President, PVR Pictures Ltd. Shortening of the movie shelf life First week business has increased driven by the wider release and number of prints. The first week and weekend contribute almost 60-80 percent of a film’s total collection 14 . Even within the first week, the trend is getting skewed towards the weekend. Considering this, multiplex chains are experimenting with pricing models to maximize revenue. By adopting a differential pricing strategy for weekdays and weekends, they are able to maximize footfalls across the week. Hollywood also claims a share of the pie 2012 proved to be a blockbuster year not only for Bollywood but also for Hollywood films in India. The share of Hollywood movies in gross box office collections increased to 8.5 percent in 2012 with total collections of INR 9.5 billion 18 . A wider distribution network due to digitization, growth in multiplexes and robust marketing has aided the growth of Hollywood content. However for a movie to garner revenues on a large scale it is important to attain a pan India reach and the dubbing of Hollywood movies in regional languages such as Hindi, Tamil and Telegu has achieved that. Currently, English movies derive 35 percent of their revenues from dubbed formats 14 . The number of screens available for releasing a film is also rising, aided by greater use of digital prints. It is estimated that close to 77 percent 14 of screens have been digitized. The main driver behind this is the huge price difference between digital and physical prints, which now makes it affordable for a distributor to release a greater number of prints for a film. Big-budget movies are now released across as many as 3,500 screens now as compared to 1,000 three years ago. Revenue split of regional market for Hollywood films - 2012 © 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. Movie Hum Aapke Hain Kaun Year of release Number of screens for theatrical release 15 Growth 1994 500 - 3 Idiots 2009 1,000 2x in 15 years Dabangg 2 2012 3,500 3.5x in 3 years To cash in on the increasing footfalls and maximize profits, multiplex operators have increased ticket prices by 15 to 20 percent 16 . The average ticket price for multiplexes is now INR 160, compared with INR 60 at single screens 14 . This has not impacted the occupancy rates. In fact, the footfalls at PVR cinemas have increased by around 38 percent 17 from December 2011 to December 2012. 14. Industry discussions conducted by KPMG in India 15. ‘Bollywood no longer talks of piracy; but ignoring dangers of online can be costly’, The Economic Times, February 2013 16. ‘B-town on a roll’, Business Today, September 2012 Source: Industry discussions conducted by KPMG in India Innovative marketing strategies used by Hollywood studios have provided a fillip to growth. Many studios have tied up with local brands such as McDonalds, MCD, Crax Corn Rings, Perfetti Alpenliebe Swirl, LG Electronics 3D TV to promote their films 19 . The increase in number of 3D screens is also a driving factor for popularization of English films. In 2012, The Amazing Spider-man was released with 1236 prints in four languages - English, Hindi, Tamil and Telugu in 2D, 3D and IMAX formats 19 . The box office collections are usually in favour of 3D movies. As per industry estimates, for films which are released in 3D and 2D prints, box office collections are shared in the ratio of 6:4 14 . 17. PVR Ltd. Quarterly report ended December 2012 18. KPMG in India analysis based on Industry discussions 19. ‘Hollywood on an aggressive mode to market their films in India, bets big on brand tie-ups’, Business Today, July 2012
The power of a billion: Realizing the Indian dream 67 The performance of Hollywood movies still varies widely by genres. While franchises and big action movies such as Spiderman, Avengers or Skyfall are succeeding because of their mass appeal; dramas and comedies still find it difficult to grab audiences at a pan-India level. The strong box office performance of ‘Life of Pi’ was an exception to the drama genre. With Indian audiences’ increasing global outlook and more so, the successful strategies in marketing these movies to the right audiences, demand for international movies is on the rise. Top overseas films in India Movie Production House Indian Box Office (USD million) Amazing Spider Man Columbia Pictures, Marvel Studios, Marvel Enterprises, Laura Ziskin Productions 14.5 The Avengers Marvel Studios, Paramount Pictures 12.6 Skyfall Metro-Goldwyn-Mayer (MGM), Danjaq, Eon Productions 10.7 Life of Pi Fox 2000 Pictures, Haishang Films, Rhythm and Hues 10.3 The Dark Knight Rises MIB 3 Warner Bros. Pictures, DC Entertainment, Legendary Pictures, Syncopy Amblin Entertainment, Hemisphere Media Capital, Imagenation Abu Dhabi FZ, Media Magik Entertainment, Parkes/MacDonald Productions 9.2 5.0 Ice Age 4 Blue Sky Studios 4.2 Titanic 3D Twentieth Century Fox Film Corporation, Paramount Pictures, Lightstorm Entertainment 3.6 Madagascar 3 DreamWorks Animation, Pacific Data Images (PDI) 2.9 Resident Evil: Retribution Source: Internet movie database (IMDB) Regional performance It is not only Hindi or English films which are contributing to the elite INR 1 billion club. A Tamil action thriller film ‘Thuppakki’ was not only a blockbuster in the Southern market, but collected INR 1 billion within 11 days of its release 20 . Bengali film ‘Challenge 2’ also earned over INR 1.24 billion at the box office. The increasing preference amongst patrons for local taste in content has seen regional cinema growing over the years. While South India hitherto dominated the regional cinema segment, other regions such as Bengali, Marathi and Punjabi have also gathered pace. The Tamil and Telegu film industries are both major contributors to the growth of the South Indian film industry. The growth of regional cinema is led by digitization, boost of multiplexes, emergence of new talent and organized funding. The rise of regional channels has also given a boost to the regional industry as it presents more opportunities for cable and satellite monetization. 20. http://ibnlive.in.com/news/tamil-film-thuppakki-enters-rs-100-crore-club/307482-71-174.html Constantin Film International, Davis Films/Impact Pictures (RE5), Davis-Films, Impact Pictures 2.1 “ During the last 3 years there has been over 50 percent increase in small-budget movies. Especially in the Tamil, Marathi, Bengali & Hindi markets, such movies are doing good both in production numbers and collections. While in Hindi, these are referred to as ‘multiplex movies’, the opposite has happened in the other regional language markets where the movies usually have very native, grassroots themes and are made with a budget of INR 20 million or less. For example, in Tamil, small movies are distributed in just 20-30 screens in the first week, then grow to 60-70 screens in the second week and to even more screens if they meet with success. “ - Aravind Ranganathan Chief Executive Officer, Real Image © 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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