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Entertainment - the very name conjures images of perfOlmers, of

color, of sagas, of pleasure and of relaxation. Each and everyone

of us has been touched by the various facets of the entertainment
industry, viz, films, television, radio, music, live enteltainment
to name a few. These together comprise the popular, evergreen, ever
expanding "Entertainment Industry". This industry has always been
successful in drawing, the masses from the days of Roman gladiators
to Shakespeare to Sholay to Taal. Performers and entertainers since
time inunemorial have immense themselves in entertainment masses.
Given the inevitable convergence between entertainment

The main issues faced by the film industry

(1) A lack of transparency, unorganized financing and piracy: -have been the major
barriers to attracting investment from venture capital, private equity, public, bank
and institutional financing into the sector. The challenge facing the major
production houses is to become corporate entities - to implement sound accounting
practices and adopt corporate governance as a code of conduct. The industry also
needs to adopt security mechanisms such as legal contracts with artists and other
agencies, film insurance and film completion bonds.

(2) Lack of screening facilities: - India has around 12900 cinema screens (a UN
Study). This leads to a serious shortage of screening facilities in India. Even the
existing screens aren't technically up to the standards required. Most of them are
also closing down or being converted to -a multiplex or shopping malls. The
economics for a multiplex works better. The success rate for movies has gone down
drastically since the last year. States like Rajasthan, Maharashtra Haryana, Uttar
Pradesh and Madhya Pradesh have given tax breaks for multiplexes. Halls with
smaller capacities also are better for niche films.

(3) Lack of exhibition and distribution infrastructure: - The average seating capacity
of a theatre in India is between 700-800. General attendances are only 35% of
capacity. The high level of taxation has led to under investment in the exhibition
infrastructure resulting in decrepit cinema halls. High taxation has also led to
exhibitors under-reporting the levels of ticket sales to avoid paying taxes and
sharing the box office profits with the producers/directors and distributors. The film
industry needs to explore other revenue streams such as home video, DVD sales and
rentals, cable television rights, pay per view, video on demand and merchandising.
(4) Training .and education: - There is a dearth of technical and creative talent in India. With the
exception of the Film Institute in Pune, there is no credible

4) Training .and education: - There is a dearth of technical and creative talent in

India. With the exception of the Film Institute in Pune, there is no credible
organization in India providing professional training in acting, directing, and
scriptwriting or cinematography skills. There are however, a significant number of
private organizations delivering such training. The industry is facing an acute
shortage of trained personnel and there is an urgent need to establish institutions
providing the latest technical training.

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(5) Up gradation of existing movie theatres -The existing halls need to be
renovated so that'·
more viewers are attracted to cinema house. As per the current market trend most
hall owners don't earn enough to be able to upgrade the existing theatres. The
answer could be flexible ticket pricing. Black marketing of tickets is common
feature whose advantage is taken by unsocial elements. A system could perhaps
be introduced whereby the film industry or the theatre owners to whom it
rightfully belongs derive this advantage. This can possibly be achieved by
introducing the concept of flexible pricing of tickets. Theatres should be allowed
to collect higher revenues for more popular movies· by temporarily increasing (or
decreasing in the case of a non - hit movie) the ticket prices. This would generate
higher revenues for the industry, which in turn would encourage them to spend
more to upgrade the standards.

(6) Lack of adequate infrastructure for movie production: - There is a serious

dearth of movie production facilities in India. Most of the movies are produced at
shoestring budget. Though there are adequate creative ideas, implementation is
poor. The primary cause is lack of facilities. Examples like Ramoji Rao City
Studio in Hyderabad, Whistling Woods from the house of Mukta Arts are recent
examples of where the country is headed.

(7) Financing: - In terms of volume, India produces the largest number of movies
in the world, 800 on an average annually. But the Film industry structure has been
highly non-corporatized till date. It has generally been family run companies with
no access to institutional finance. Finance is tapped from family friends and other
sources with high rate f interest (up to 40%) being charged. With the Film
industry being granted the official 'industry status', it has propelled companies like
Mukta Arts to go in for institutional sources. Still not many Film companies have
availed finance from these sources. This is because corporate structure in place is
a pre requisite for such a venture. This means that the company has to clearly
define the following:

A. Documented scripts in place

B. Legaily enforceable contracts with the artists and technicians

C. The entire time schedule documented .

D. The producer has to make sure the filming activity is completed in time and there are
no time J
and cost overruns.
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Companies like Hinduja TMT, which has earmarked Rs 20 crores for Film financing this year,
and UTV which made Fiza, are entering this arena while the emerging finance sources encourage
corporate to invest: These sources of finance are available only to companies and not to individuals,
thus the need for corporatisation. cn & CRISIL are also working at developing a fmancing
model that would enable the banks to weigh the risks in this industry.

(8) Piracy: - Indian film industry loses about Rs.300 crores annually to piracy. The industry
is worried that while the avenues of piracy are increasing at an alarming rate and the laws
are either inadequate and where they aren't, the problem is enforcement. The fines paid
when caught are inadequate and so is the punishment. They also cite the non-cooperation
of cable operators as a major handicap in their efforts to curb piracy. The cable industry on
the other hand finds it difficult to check it on its own.