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BW Businessworld

Lights, Camera, Action: Spotlight On The Indian Film Industry’s Growth

It is always a gratifying feeling for a viewer when we get to watch a good film, more so to the artists involved in its making, to see the appreciation they get for their work. Filling one’s coffers in the process is just the perfect icing on the cake

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It is always a gratifying feeling for a viewer when we get to watch a good film, more so to the artists involved in its making, to see the appreciation they get for their work. Filling one’s coffers in the process is just the perfect icing on the cake.

Indian movies of late have been raking up the moolah big time and have even managed to put Hollywood bigwigs to shame. It's not a hidden fact that Bollywood is huge worldwide. However, the business Indian films have been making in the past one year or so have forced the overseas market and trade pundits to take notice of the enormity of India's film industry.

BW Businessworld spoke to various industry experts to unveil the mystery.

The Indian film industry is soaring to new heights. With Baahubali 2: The Conclusion crossing the Rs 2,000-crore mark and the Aamir Khan-starrer Dangal trailing by only a few crores in the international box-office, these two movies have set new milestones in the Indian film fraternity and beyond. Surprise successes of regional films such as Sairat, Natsamrat, Ventilator were a breath of fresh air as well.

“Multiplexes and digitisation of content have changed the business scenario drastically. Easy availability of entertainment and global reach has changed the depth of content and the revenue formulae,” said filmmaker Manjri Prabhu while speaking to BW Businessworld.

The formula to make a film a sensation is no more just about having superstars, grand budgets and holiday releases. The trends and dynamics of the industry have changed. Now, the question that pops up is: is it the quality of content or the intense marketing behind such big openings? Is the entertainment industry really growing or is it a myth disguised in voluminous figures?

“For any film to be a success, it has to have excellent content presented in a unique manner. Take films such as Queen and Dangal, which contain strong, touching content presented in an engaging and gripping style. Intense marketing is an intrinsic part of post-production nowadays. But then, almost every film does it and it doesn't necessarily ensure a hit film,” she added.

Box-office collection is to film as GDP is to a country; it is an output indicator but not a real one. Even films that are trashed by critics and audience make huge money by capitalising on the media hype and vice versa.

Chaitanya Chinchlikar, vice-president, Whistling Woods International, said that despite these figures, the box-office size has barely changed compared to other countries. The film industry needs introspection pertaining to their business model and investments as the profitability of films is going down; it stood at 60 per cent for top 50 Hindi films in 2012, which slumped to 36 per cent in 2016. In addition, the numbers of films that have breached the Rs 100-crore collection margin are countable since years, even though the growth of infrastructure and reach of cinema has increased due to numerous marketing mediums.

Filmmakers are leaving no stone unturned to increase the market penetration. Not only actors, but also the entire production teams are using social media platforms for promotions. Audiences do not necessarily need to be glued to media channels for latest updates on projects and their favourite stars. The game of social media marketing has been so strong that besides different pages for films, hashtag campaigns, dubsmash competitions, live interactions are on the money. Recently, Tubelight has become first film to get a twitter Emoji.

“A good and a bad film is a subjective concept and tastes of audience change very frequently; hence, numbers are the only standard barometer to judge a film. Audiences take a film having a good opening to be good and word-of-mouth spreads like wildfire these days due to social media. Even in the era of intense marketing and PR stunts, a film like Baahubali 2: The Conclusion, which was not marketed like big Hindi projects, distorted these preconceived notions. The biggest marketing tool is the content of the film. Hence, it is very important for a film to have a universal speech,” said Akshaye Rathi, film trade and business expert.

Further, Rathi said the growth of Indian cinema is an illusion, and that the industry is dying and the government must amend its policies for it to grow, not just survive.

“In the existing tax regime, cinema exhibitors were exempted from service tax and state VAT, and entertainment tax was the only tax imposed on movie tickets by states and local bodies. The average entertainment tax collected nationally by the government across all states and languages was in the range of 8-10 per cent of gross box-office revenue. Hence, logically, the GST rate should not have been more than 12 per cent in order to avoid any loss to the exchequer,” said Utkarsh Sanghvi, Tax Partner, Media and Entertainment, EY India.

“Instead, the government has equated the film industry with gambling and betting industries and taxed it at the highest slab of 28 per cent. In addition to this, local bodies across states have also been empowered to impose entertainment tax, which was earlier to be subsumed within GST. This means that, effectively, the total tax on cinema exhibition sector can be as high as 70 per cent to 80 per cent in states like Maharashtra. This will impact the sector negatively and drive up the prices of movie tickets,” he added.

The Indian Media and Entertainment (M&E) industry is a sunrise sector for the economy and is taking high growth strides. Proving its resilience to the world, the Indian M&E industry is on the cusp of a strong phase of growth. The Indian media and entertainment sector is expected to grow at a compound annual growth rate of 14.3 per cent to touch Rs 2.26 trillion ($33.9 billion) by 2020, according to India Brand Equity Foundation.