FICCI-KPMG-Report-13-FRAMES

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68 The power of a billion: Realizing the Indian dream 2012 also saw an increase in exhibition of vernacular content in overseas markets. Telegu film ‘Eega’ and Tamil film ‘Billa 2’ both did very well in UK, USA, Malaysia and Australia 21 . Tamil movie ‘Thuppakki’ collected INR 11.8 million in UK and INR 17.6 million in USA 22 in its first week of release. The industry also saw studios tapping into the regional opportunity. Reliance Big Pictures, Disney UTV Motion Pictures and Eros International are increasingly investing in the regional space 23 . Actor-Producer Akshay Kumar is also venturing into Marathi, Gujarati and Punjabi film production. Favorable cost economics could be one of the drivers. Regional movies are not only cheaper to produce but also have low marketing costs and longer theatrical windows. The average cost of producing a Hindi commercial movie is above INR 150 million as opposed to a Marathi or Punjabi movie which costs between INR 10-40 million 24 . International theatrical While the domestic theatrical business performed extremely well, the overseas segment experienced moderate growth this year. The market witnessed a growth of 9 percent in 2012. UK, USA and Middle East together generated about 70 percent of the international revenues – UK accounted for 20 percent, USA 20 percent and Middle East 30 percent 24 . USA, UK, Australia, New Zealand and U.A.E accounted for 98 percent of all the overseas revenue for the top 20 Bollywood movies of 2012. In the Tamil film industry, for the top 10 movies, Malaysia generated 75 percent of the revenues followed by UK, USA and Australia. Korea, China, Taiwan and Pakistan are also fast gaining traction for the Hindi film industry 24 . Pakistan, for instance, has widened the release of Hindi movies from 15 screens to 30-35 screens. This year also saw relatively low budget movies with strong content do well overseas. Barfi generated revenues of INR 320 million 25 and English Vinglish garnered revenues of INR 97.5 million 26 overseas. television; whereas genres such as suspense thrillers do not perform well on the small screen as the customer base is quite different from a multiplex audience. Also, the advertisement breaks on small screen intrude the continuous attention span required for such films 24 . An example of this is that despite grossing more than INR 1 billion at box office, there was limited interest in ‘Barfi!’’s satellite rights 29 . While ‘Agent Vinod’ fared only INR 450 million at the box office, its satellite rights were sold at around INR 300 million 30 . The industry is of the view that the repeat value of content like ‘Barfi!’ is quite low on television as compared to action and comedy genres. Top 10 Hindi Films on Hindi Movie Channels Rank Movie Genre TVR 1 Ra-one Action 6.72 2 Bol bachchan Comedy 4.83 3 Agneepath [Hrithik Roshan) Action 4.73 4 Housefull 2 Comedy 3.78 5 Singham Action 2.59 6 Ferrari Ki Sawaari Comedy 2.47 7 Bodyguard Action 2.45 8 Don 2 Action 2.21 © 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. Cable and satellite rights Revenue from Cable and satellite (C&S) rights grew at 20 percent in 2012. C&S rights for high budget Bollywood movies were sold at an average of INR 300-400 million 24 . While the satellite rights of ‘Ek Tha Tiger’ were sold at INR 750 million, ‘Student of the Year’ and ‘Dabangg2’ were sold at INR 500 million each, satellite rights of ‘Kahaani’ were sold for as low as INR 80 million. However, industry is of the view that satellite right rates may remain flat for a while, but are likely to increase in the medium to long run. This is keeping in mind the increasing competition among movie channels, the limited supply of ‘ appropriate’ movies for TV given censor guidelines and the rising trend of pre-release selling and bundling of C&S rights of movies. After Salman Khan signed an INR 5 billion 27 deal with Star TV network for rights of his upcoming films, Ajay Devgn has recenty signed a five year deal for his upcoming movies with Star India for INR 4 billion 28 . While big budget films draw in handsome amounts for satellite rights, small budget films with no star cast struggle to sell their rights to satellite channels and are usually bundled with larger films. On one hand, formulaic ‘masala’ movies and genres such as romance, comedy and action perform equally well at the box office and on 21. ‘Foreign Return’, The Indian Express, August 2012 22. ‘Thuppakki Movie Rocking at Overseas Box Office’, Southnews.in, November 2012 23. ‘Regional cinema reels in corporate movie investors’, Business Line, April 2012 24. Industry discussions conducted by KPMG in India 25. ‘ Barfi Worldwide Lifetime Collections | Updated’, BoxOfficeDay.com, January 2013 26. ‘English Vinglish earns Rs.27 crore on weekend’, India Today, October 2012 9 Players Action 2.1 10 3 Idiots Comedy/Drama/ Romance 2.08 Source: TAM Media Research Notes: Period- Week 1 to 52, 2012; Channels- Hindi Movies; Market- HSM; TG- CS4+; Language- Hindi Feature Films Disclaimer: Copyright reserved with TAM MEDIA RESEARCH PVT. LTD. Any use of TAM data (or derivative thereof) mentioned herein without express permission of TAM shall be treated as illegal With digitization likely to provide greater clarity in terms of TRPs, Video-On-Demand (VOD) services, and greater number of movie channels, the demand for all genres of films on cable and satellite platforms is expected to increase. The theatre-to-television window is reducing with movies being broadcast on television within 60 to 90 days of their theatrical release. Recent examples would be films such as ‘Kahaani’, ‘Ek Tha Tiger’, and ‘Son of Sardar’. 27. ‘Salman Khan signs 500 crore deal with TV channel’, India Today, January 2013 28. ‘Ajay Devgn Signs 400 crore deal with Star India’, Addatoday, March 2013 29. ‘Is Barfi! too sweet for television?’, DNAIndia.com, February 2013 30. ‘Agent Vinod has recovered 50% of its cost: Dinesh Vijan’, OneIndia Entertainment, March 2012
The power of a billion: Realizing the Indian dream 69 Movie 31 Theatrical Release Date TV Premiere Days of difference Kahaani March 9, 2012 June 3, 2012 86 days Ek Tha Tiger Son of Sardar August 15, 2012 November 11, 2012 November 13, 2012 January 26, 2013 88 days 74 days Ancillary revenue streams Rising production costs, global economic slowdown, and increasing competition for exhibition screens has given rise to a pressing need for alternative sources of revenue. Ancillary revenue streams constituted 4.8 percent of film revenue in 2012 and are expected to contribute 5.7 percent by 2017 32 . However, these revenue streams will continue to be a small number relative to box office. Indian cinema is still very much dependent on the theatrical revenue with 76 percent of revenue coming from this segment. The South Indian film industry for instance derives 90 percent of its revenues from theatrical exhibition 33 . Reflecting a reversal of the trend of showcasing new movies on GECs, television networks are now premiering new movies back on the movie channels. They are also launching strong marketing campaigns to mark the premiere of movies. For example, Zee Cinema conducted a strong marketing campaign to drive buzz around the world TV premiere of ‘Agneepath’. STAR India has also been strengthening its movie channels ‘Star Gold’ and the newly launched ‘Movies Ok’ through rebranding and marketing initiatives. In-Cinema advertising: The growing penetration of digital distribution has given rise to the growth of cinema advertising, giving the advertiser the flexibility to target a captive audience in the desired region. Currently an exhibitor’s revenue comprises 70 percent ticket sales, 20 percent food and beverage and 10 percent cinema advertising. While the proportion of each is expected to remain the same, the volume in absolute terms is expected to go up 33 . Home video The home video market continued to decline in 2012, with market size shrinking by 15 percent from INR 2 billion to INR 1.7 billion 32 . Piracy and the growing popularity of digital technology are the primary factors leading to a fall in market size. Moreover, Value Added Service (VAS) and Video on Demand (VoD) are an evolution of the home video market and are expected to take away significant share of the DVD/VCD market. For big budget films with a star cast, for instance, the number of DVDs sold in the entire country ranges between 30,000-40,000 33 units only. Niche content such as lifestyle videos, educational videos and classic series continues to grow in the home video segment. Demand for such content has a long tail and has grown at a CAGR of 20-25 percent from 2007-2012, accounting for 10 percent of total home video sales 33 . Reliance Home Video and Games for instance has entered into a tie up with the British Broadcasting Corporation (BBC) 34 to distribute the latter’s productions in India. The BBC has a large library of documentaries and classic works. Such content entails sentimental value for customers seeking to build library and sales for this genre are expected to gather pace. 31. ‘Bollywood no longer talks of piracy; but ignoring dangers of online can be costly’, The Economic Times, February 2013 32. KPMG in India analysis “ Home video segment is down but not out - the need for home consumption will always remain, whether through physical or digital delivery. While slashing prices have not been able to combat piracy, it has destroyed consumer’s value perception of the physical format. The niche special interest content is observing robust demand and growing at 20-25 percent. We are investing in the special interest category such as self-development and health and fitness content. “ - Hiren Gada Director, Shemaroo Entertainment Ltd. 33. Industry discussions conducted by KPMG in India 34. ‘Reliance Home Video inks distribution deal with BBC’, Screen.indianexpress.com, May 2012 “ Driven by us and UFO, there has been greater than 100 percent y-o-y growth in cinema advertising. Digital scheduling and rule-based advertising have been pioneered by Qube in digital screens. But we still have a long way to go. In India CPTs (cost per thousand) of cinema advertising are lower than television if you look outside multiplexes whereas in the US, the CPT of cinema advertising is three times that of television. Cinema should at least target 10 percent of television advertising revenues. The key pain point is that unlike TRPs in television, we do not have any cinema audience measurement systems in place and that’s something we’re working to change. “ - Senthil Kumar Co-Founder, 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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01 The power of a billion: Realizin
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02 Introduction The power of a bill
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FICCI 2013 143 “ The Amendments t
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11 Technology The power of a billio
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Acknowledgement We acknowledge the
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