Big studio houses of Bollywood are staring at a grim picture and a dark future. Every project they touch seems to be ending up as a big dud. Worse still, everyone but the studio is making money! Why is this happening? The answer is simple. It’s the studios’ inability to say no to the crazy demands and prices of production houses that has landed them in this mess. Everyone, including the big guns like Walt Disney, don’t have in-house content creating or assembling ability, so they partner with production houses to make films. The problem with this is that producers are charging crazy premiums to deliver the film. For example, the latest box office turkey, Ashutosh Gowariker’s magnum opus Mohenjo Daro was apparently sold to Disney for over Rs 100 crore. Gowariker made his money, but Disney recorded a huge loss.
A trade analyst on condition of anonymity says if the film was bought at Rs 50 crore, it would have been a profitable venture. Films like Vicky Donor and Ragini MMS 2 were made at approximately Rs 6 crore budgets and became profit makers due to the sensible pricing. Ironically, most studio heads are corporates who don’t understand the grassroots of filmmaking. They are excellent at excel sheet presentations, but are scared to tell producers to take a walk if the demand is unreasonable. Their key worry — another production house will lap up the offer and they will lose out.
Star-struck decisions
Another major problem with studio heads is that they are star-struck, says well-known trade analyst Komal Nahta . “They are so excited at the thought of announcing a film with Shah Rukh Khan or Aamir Khan that nothing else matters.” Komal laughs and adds that this is the only business where the employer (studio head) acts like the employee’s (actor’s) slave. Once the producer is getting whatever crazy price he demands, others in the supply chain like directors and actors are demanding unrealistic fees too. And they are all making money. Actors have figured out that for a studio head, getting a big star trumps over script. Since the studio guys are mainly MBAs with strong finance and marketing skills that make them adept at selling a product, they don’t mind just concentrating on getting a huge star.
Their high lies in announcing four or six projects with big names. They feel if an Amitabh Bachchan has said yes to a movie it has to be good, and that decides their keenness to buy the project from the production house. This has made monsters of stars, says Komal, because now instead of Rs 5 crore per film they are getting paid Rs 15 crore. So a star will do one good film and sign up four other random movies since they are getting paid in millions. They feel that one hit will ensure they keep rocking while the duds make them very, very rich. Komal points out that there is another area where studios are going wrong. They want to kill the independent producer. So they offer to pay stars 10 times more money than the producer, and lure them to come on board and sign deals with them.
Bombay Velvet Total Budget Rs 120 crore, Net Rs 24 crore Approximate loss Rs 80-90 crore
Studio model going bust?
There has also been talk about Karan Johar’s Dharma Productions not doing too well either. An industry insider on condition of anonymity says, “Karan is very lavish with his projects, so sometimes there is no margin left for any profit even after he has sold his film to a foreign studio.” So does this mean the studio model is dead and will be going bust soon as some media reports have been suggesting? Not really. Tanuj Garg, a former studio CEO in Bollywood, and currently a partner in a new age production company, Elipsis Entertainment, explains, “Certain doomsday reports in the media have been painting an exaggerated picture of gloom in Bollywood. Lampooning the process of corporatisation of Bollywood is incorrect. If anything, it has been a huge boon for the industry, making the business more clean and transparent, with structured marketing and access to newer revenue streams. Thanks to the studios, black money and underworld money have found their way out of the industry.”
Unlike Tollywood, which is still run like an old boys club controlled by a handful of families, Bollywood is a much larger industry and needs the studio model. This model works perfectly well for Hollywood, so why not for us? Tanuj says, “If studios correct their acquisition pricing and content selection criteria, it will have a ripple effect downward on the value chain, and bring about an automatic correction.” Tanuj is right because movies are the staple form of entertainment in our country and this is actually a recession-proof industry as people are always up for watching a movie.
Sarabjit Total Budget Rs 16 crore, Net Rs 14.5 crore Approximate loss Rs 1-1.5 crore
‘No correct accountability’
The issue now is that the time span of films has become shorter; it’s just three days. Friday, Saturday and Sunday, and then you forget the film. Therefore, in order to collect your money, you make it visible to as many people as possible. Yes, it’s horrible when somebody loses money. But there are different departments that come into play. There is a producer, the distributor, the exhibitor... and there are all kinds of people. There is a foreign distributor too. Some sections work, like the producer earns money and the distributor doesn’t. He may make money but someone else won’t. The middle man will make money, so there is no final correct accountability yet about our films. In the West, when the tickets are bought, it goes into a computer which has a central station in Chicago I think.
The entire computerised collections come there, which gives you a correct accountability. In France, for example, they judge the success of a film by footfalls. How many people went to see and that is their gauge. We don’t have a method for correct accountability. Having said that, if you are taking a film actor who has the strength and the capacity to be able to draw Rs 30-40 crore as first day collections, that’s a massive amount of money. If he asks for a fee which may look too big, he is guaranteeing your collections as well. Similarly, in a small budget film, the artists are treated relatively. Like for my film you will not get a huge budget because my first day will be Rs 2 or 3 or 4 crore at the very max, as opposed to a Shah Rukh Khan, or a Salman or Aamir movie which will collect Rs 30-40 crore. So the budgets are made accordingly.
— As told to Mehul Thakkar
Why facts are fudged
Pre-release hype projects most films as a sure-shot success. And when the results are otherwise, in case of big banners, the truth is not easily revealed. It’s assumed that the film did reasonably well. Leading distributor Rajesh Thadani explains, “Yes, producers do it because if a film is a genuine hit, it helps in increasing the satellite value of the film. A lot of theatrical business, if pre-sold, are sometimes under contract that if a film makes a certain amount of money, then it will demand a higher satellite value for the film. Also, if it’s a listed company, then such news keeps the investors happy.”
And if the film flops?
“Everyone is known by their last film and so, no one wants to be known by a flop. By putting out stories that the film is a hit, it helps in creating a positive perception and eventually, the funding for your next film becomes easy.”
Take the film Akira. Some reports say the film is a hit, some say the collections are poor. What is the truth?
“The film is an average, not a flop. It’s great for Sonakshi to garner such good numbers as a solo actor.” Some reviews that give great rating are believed to be paid for. There’s so much manipulation that nobody knows the truth. Hype is created but no longer is the audience fooled. A producer cannot stop word of mouth and post Friday, they are the ultimate deciding factor.
Rustom wasn’t a great film, yet collections are reported to be good.
Rustom came with Mohenjo Daro and much hype was created for both the films. Fortunately for Rustom, the other film didn’t work. Secondly, that week had many holidays and audiences wanted to see a film and picked Rustom. I won’t say Rustom was an exceptional film, but it was a decent watch.”
— As told to Mehul Thakkar
