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Bollywood films – economic sense!

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Bollywood is India’s answer to Hollywood. This part of the story is known to almost anyone from the film fraternity. What is possibly not that common are the earnings comparisons between the Bollywood films and their Hollywood counterparts.

According to a recent analysis by the consulting behemoth, PricewaterhouseCoopers (PwC), Bollywood revenues were about $1.25 billion for 2004. This has been predicted to double up by 2009 – that part of it is speculation and as always, speculation is yet to be proven.

Some of the recent Bollywood films I have seen are:

Omkara, Kabhi alvida na kehna (KANK), Dor, Don, Krrish, Taxi  no 9211, Rang de Basanti, Kabul Express, Guru, Babul, Dhoom2, Pyaar ke side effects, Woh lamhe, Khosla ka ghosla, Lage raho munna bhai, Corporate, Phir hera pheri, Fanaa, 36 China town, Gangster a love story, Aksar 2006, Rocking etc. – these are the ones I can remember!

The ones I made up for not watching in 2005 were:

Shikhar, Home delivery, Kalyug, Ramji londonwale, Iqbal the rampur express, Salaam namaste, Dus, Bunty aur babli, My brother Nikhil, Tango Charlie, Kaal, Black etc.

The ones I made up for not watching in 2004 were:

Shabdh, Kisna, Morning raga, Socha na tha, Page 3, Raincoat, Aitraaz, Bride and prejudice, Swades, Veer Zaara, Dhoom, Fida, Gayab, Taarzan, Mujhse Shaadi karoge, Girl friend, Lakshya, Hum tum, Yuva, Masti, Murder, Krishna cottage etc.

There are so many good films that I find it hard to believe they are not able to make a bigger mark on the bigger picture of the world playing field to compete more effectively with Hollywood.

I have always been a Hindi and an English film buff. The list above is very much partial. I must’ve seen close to 20+ films every year in the years before that too!

Now, lets look at this film industry carefully to see how it fits in into the economic equation:

Food for thought: Bollywood sold about 3.6 billion tickets and earned revenues (theater tickets, DVD’s, TV rights to telecast the film) of about $1.25 billion.

In comparison, Hollywood sold only about 2.6 billion tickets but earned revenues of almost $50+ billion!

The Bollywood equation

Supply side – Close to 100+ films released every year, only 10% make the cut in terms of being box office hits. Assuming the average cost of producing, marketing and distribution of a single film is about $1.5 million or Rs. 7-8 crores per film. So, the cost to the film industry is about $150 million or $0.15 billion per year.

Demand side – A huge populace of about 1.1 billion people (both locals and expatriates). Assuming ticket cost to be Rs. 25 – Rs. 30 (a rough average/estimate) per ticket in a typical PVR type of a multiplex –http://www.pvrcinemas.com/pvr/index.asp/iNox – http://www.inoxmovies.com/inox/wcms/en/home/index.html/conventional theater house in India and about 2 billion – 3 billion visiting (both first timers and repeat visitors combined for the year) these multiplexes and theaters combined in an year, the revenues are about $1.25 billion.

Again, the film industry is clustered with the powerhouses such as YashRaj films/productions http://www.yashrajfilms.com/, Raj Kapoor (RK) films and Studio, Boney Kapoor productions, Vidhu Vinod Chopra http://www.vinodchopra.com/ etc.

This is obvious but chances of a film making it big are more if it employs the lead actors/actresses such as Shahrukh Khan, Aamir Khan, Kajol, Rani Mukherjee, Hrithik Roshan, Priyanka Chopra, Akshay Kumar, Salman Khan, Amitabh Bachhan, Abhishek Bachhan, Aishwarya Rai etc.

Assuming the top stars (actors) command anywhere between Rs. 2 crores to a whopping 10 crores per film (think about the latest Amitabh Bachhan film – Eklavya where the producer, Vidhu Vinod Chopra gifted him (the Big B) a Rs. 3.3 crore Rolls Royce Phantom! – http://www.indiafm.com/broadband/video/Parties-and-Events/7BWbOY92/3/Vidhu-Vinod-Chopra-gifts-a-Rolls-Royce-to-Big-B.html), the costs to the producers are humungous!

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Written by Naveen Athresh

March 18, 2007 at 10:36 pm

Posted in Bollywood

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