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1. Executive Summary
2. Scope of the Report – Indian Movie Industry
3. Value chain of Movie Industry
3.1 Understanding of Key Elements
Analysis of value chain Factors Involved in Valuation of a Movie
4. Recent developments which influenced the Movie Industry 5. Key Revenue Streams 6. Value Chain Owners 6.1 Yash Raj Production
6,2 Dharma Productions 6.3 Reliance Media Works
6.4 UTV Motion Pictures
6.5 6.6 6.7 6.8
PVR Ltd Ramoji Film Cit Red Chilies Shemaroo/ Eros
7. Opportunities and Challenges – Indian Movie Industry
in 1913. It is the largest producer of movies and produces more than 1000 movies in various Indian languages. In 2009. was produced in 1931. Indian Film industry consists of movies produced in various languages and genres. The linkage of India with movies goes back to the early 20th century when Dadasaheb Phalke produced Raja Harischandra. The first talking film. since then the cinema in India gained .3. Cinema at that time gained popularity as a medium of entertainment mainly due to low ticket price. 1288 movies were produced in 24 different languages. Scope of the report – Indian Film Industry: To build an understanding of value chain in movies we have limited our research on Indian film industry. Alam Ara. a silent film in Marathi.
for some of the movies.momentum and then from the late 1940’s to the 1960’s India witnessed the Golden Age of Indian Cinema. The gross output is the aggregate revenues of all the companies in the industry whereas Gross value added measures the returns to labour and capital. Bollywood has come a long way ahead. mainly due to Multiplex strikes. revenue generated from the overseas market has been greater than that from the Indian market. South Asia. To understand the economic contribution if the film industry we can look for Gross Output. Indian film industry was estimated to be at Rs 95 billion which showed a de-growth of 11. Overseas. The interest from the expatriates in the regions of Middle East. Recession and swine flu. Mehboob Khan. Raj Kumar. Bimal Roy and some of the most critically acclaimed movies were made that time. UK. in particular. Australia and USA has helped the industry to make inroads in the international market. It has made a significant growth in the areas of financing. There are four key revenue stream Box Office – Domestic. Gross value added. In fact. In the last two decades India movie Industry. The popular cinema shifted its social concerns towards more romantic genres but from era to era the Indian Cinema has been the reflection of developments in the Indian society. This was the era of Guru Dutt. Growth of Indian Film Industry – 2005-09 .5% of the Gross Domestic Product (GDP) of India and provides employment to close to 2 million workers. Net Indirect Taxes and Employment. In 2009. marketing and distribution. Home Video and Ancillary Rights.3% from 2008. The total contribution of film industry is around 0.
Source: Indian Entertainment and Media Outlook 2010 .PWC .
The main focus of the production houses is to .Valuation of a Movie: Valuation of a movie is an integral part of the value chain that comes after the post production stage.
Thriller or Action movie. Prediction takes into account the numerous factors like the target audience. mobile. 3D. 3. visual effects. The distributors are ready to pay the higher prices as they also count on the bankability factor of the star cast of a movie. Business Expectation – Estimation is done on the financial performance of a particular movie and this also reflects in the valuation of a movie. sound mixing. territories in which the film will be released. script writers and music directors. Horror. If the recent movies associated with the star cast had a good financial response then it further enhance the bargaining power of the producer and the raises the market value of the movie. content (genre) of the movie. digitising and other technical works. visual effects.hedge their risk and recover as much production cost prior to the release of movie. banner/production house. This sets the expectations on the return of investment. There are three major factors through which the value of the movie is assessed. competition. choreography. 2. music rights. There is a direct relation between the market value of the star cast and the value and also the cost of production of the movie. Sci-Fi. promotional activities and others. time of the release. 1. The fact that audience associate the movie with the star cast be it the actors. home video rights (DVD). internet and other new age media avenues. broadcasting rights (Satellite and cable operator). directors. languages in which the film will be released. sequel factor. Star cast of the movie: The star cast of the movie include actors. Technical Team – The technical team of the movie involves in the cinematography. The various means to recover these prices is through the theatrical distribution rights. . editing. It adds up a lot of value of the movie and plays an instrumental role in the valuation of the movie specially if it is Animated. There is no fixed rule to do the value assessment of a movie and it depends on both the internal and external factors. production house or the directors makes it easier for the producer to recover its cost. number of prints (no of screens).
Sometimes producers also organise the premier shows for the distributors and critics and based on their responses.All these factors are taken into consideration while assessing the valuation of the movies. Key Revenue Streams . negotiation is done to finalise the valuation of rights.
. The key revenue streams for Indian film industry are: Domestic box office collection It constitutes revenues from Multiplexes and Single screen theatres.Average seating capacity of multiplexes is around 300 and single screen theatres are around 500. is highly dependent on appealing content and certain individual stars.The revenue from multiplexes and single screens were estimated to be 70 billion rupees in 2009. Tamil. There were around 900 multiplexes and 9000 single screen theatres in 2009 having two digit growth rate and 3 billion admissions. The number of movies produced in south Indian movie industry (Telugu.Despite such a high growth india have one of the lowest screen penetration as compared to other countries globally . As seen from the chart above South India accommodates for more than half of the single screens. According to industry sources revenues from multiplex and single screen theatres was around 7000 crore rupees.Indian filmed industry. like most film industries globally. while the lack of good content or lack of new movies from few superstars can set back the industry and can impact all the revenue streams. The state wise distribution of single screens is given below. Kannada. Malayalam) in 2009 accounts for more than 50 percent of the total number of movies produced in India. A few good movies in a year can spell an excellent year for the industry as well as for its participants.
Shemaroo launched many other famous english movies.The figure below depicts the value chain of the DVD and VCD segment Movie Producers Catalogue Owners Content Owners Internationa l Content Owners Home Video Entertainment/Rights owner Sell through Rental Retail Store Online .Overseas box office collection The number of Indians residing abroad is significant. The revenue from this segment grew by 10.6 million in Gulf States.6% in 2009 to 650 crore from 590 crore.4 million in UK. Revenue from overseas market mainly comes from US and UK. This has created a market for Indian cinemas abroad. only 10% of the revenue comes to the industry. Overseas revenues were estimated to be 800 crore rupees in 2009.3 million Non resident Indians in North America.1 million in South Africa and 1. Due to such a rise many new initiative are taken by leading players to augment this segment i. 2. There is a huge market in Singapore for Tamil movies. Moser Baer entered DVD and VCD business in 2008 and slashed the prices of VCD’s and DVD’s to tackle the menace of piracy. This led to the change in dynamics of this segment. DVD and VCD sales This segment consists of rental and sell-through segment. There are 3. 1. Piracy being the biggest bane for this segment.e Reliance BIG Home video launched many oscar winning movies.
Broadcasting syndication consist of film content. cable.so broadcasting of new movies was done in association with theDTH service providers.Broadcasting Syndication and mobile emeeges as two new major segment in the revenue system.Many telecom operators provide subscription to movie content such as upcoming film soundtracks. Telecasting movie through DTH and e-market are the emerging markets in India. With the arrival of 3G the content available on mobile increased significantly.Due to rise in prices of production cost broadcasting rights shot up and broadcasters were not willing to pay the increased price. ringtones.live action and animation content.storyline etc.Other revenues This consists of revenue from DTH. online selling.key dialouge. .
PVR Limited Profile: PVR Limited was incorporated in April 1995 pursuant to a joint venture agreement between Priya Exhibitors Private Limited and Village Roadshow .
PVR Pictures made a successful film production debut in 2007 with 'Taare Zameen Par' & 'Jaane Tu Ya Jaane Na'. ‘Omkara’ and nearly 25 Regional films since inception. however for unspecified reasons was later re-branded. ‘Sarkar Raj’. it sold its entire shareholding to Priya Exhibitors Private Limited.Limited. currently. PVR Pictures is the flagship film production and distribution arm of PVR Group. ‘Kill Bill’ ‘The Hurt Locker’. PVR’s cinemas serve an aggregate of more than 17. over 100 Bollywood films including blockbusters such as ‘Ghajini’. ‘Don'. Market presence: Regarded as the pioneers of the multiplex revolution in India. In November 2002. one of the largest non-U. It is a subsidiary of PVR Limited. distribution and exhibition) and retail entertainment landscape.S. cinema exhibition companies in the world. ‘Mission: Impossible III’. ‘The Twilight Saga’ and ‘Chicago’. which holds 60% shareholding in the subsidiary with the balance 40% stake held by JP Morgan Mauritius Holding Ltd and ICICI Venture in equal proportion. . Activities: PVR Limited is among India’s leading integrated media & entertainment players with a significant presence in film entertainment (film production. as part of Village Roadshow's planned divestment of its investments in 18 countries. The production company was initially conceived as Dreamz Unlimited in 2001.5 million patrons annually. It operates a geographically diverse cinema circuit of 136 screens with presence in 18 cities across India. Red Chillies Entertainment Profile: The company was founded in 2002 by Bollywood actor Shahrukh Khan and his wife Gauri Khan. ‘All The Best’. ‘Golmaal Returns’. It has distributed over 200 Hollywood films including ‘The Aviator’.
Paheli. production. the company also has a visual effects studio known as Red Chillies VFX.Chalte Chalte. Its upcoming movies are . online retail and distribution through . Market Presence: Phir Bhi Dil Hai Hindustani (2001) (The studio's first release as Dreamz Unlimited) Main Hoon Na (2004) (The studio's first release as Red Chillies Entertainment). Apart from film production.Billu . Om Shanti Om. Kaal (2005) (co-produced with Dharma Productions).Always Kabhi Kabhi. exhibition & digital cinema. co-produced with Dharma Productions) Reliance Entertainment Profile: It was formerly known as Reliance BIG Entertainment) is a wholly owned subsidiary of the Reliance Anil Dhirubhai Ambani Group handling its media and entertainment business. Dostana. and provides multi-media production equipment leasing services. Chak De India. one of the largest entertainment companies in India. across content and distribution platforms.Activities: It is an Indian motion picture production and distribution company.Ra. Drona. Jhoom Barabar Jhoom. and Kurbaan. Activities: Reliance Entertainment is involved in movie production and distribution through Reliance Big Pictures . which has interests in film processing.Student Of The Year (Announced. 1. Reliance ADA Group acquired Adlabs Films Limited in 2005. My Name Is Khan (2010) (co-produced with Dharma Productions and Fox Searchlight Pictures). . Asoka .
IPTV. home video through Big Home Entertainment. It is listed on the London Stock Exchange's Alternative Investment Market since 2007. it launched its second motion picture brand 'Spotboy'. Mumbai based media and entertainment production company. Key Focus Areas: The key content initiative are across Movies. Market Presence: Big Cinema is India’s largest cinema chain with over 516 screens spread across India. Movies: Production & Distribution:Kutty Srank. leading to direct opportunities in delivery across the emerging digital distribution platforms: digital cinema. Gaming. Activities: . Besides this. made with an investment of rupees 100 crores. Music. US.BIGFlix. Internet & mobile portals.Abohomaan.It is a wholly owned subsidiary of UTV Software Communications Ltd. It is termed to be among the most hi-tech studios in the world. DTH and Mobile TV. Malaysia and Netherlands and caters to over 35 million consumers. in the same year. Well Done Abba Distribution: 3 Idiots UTV Motion Pictures Profile: UTV Motion Pictures was started in 1996. Sports. where it was valued at $321m at the start of trading.Paa. BIG Cinemas has established leadership in film exhibition in India with 253 screens and accounts for 10 to 15% of box office contributions of large movies. (UTV). it has Big Cinemas which is the movie multiplex chain and Reliance Media Works Studio which is a Filmcity.
UTV Motion Pictures is pioneering the studio model in movie production. IT has relationships across leading brands and advertisers. In FMCG. UTV's portfolio includes Hindi Movies. Airtel. Hero Honda. Regional Movies. UTV World Movies showcases the most diversified movies across 40 countries UTV Action the latest addition to the network is a genrespecific movie channel showcasing fast-paced action films from Hollywood and Bollywood. production. Vodafone. merchandising and syndication worldwide. when its releases grossed $5. Maruti. Cadbury. Idea. The Walt Disney Company and Sony Pictures. making it the leading Indian motion picture distributor in the US. UTV Movies is the new age Hindi movie channel Market Presence: In 2008. Hyundai. UTV entered the broadcasting business in Sept 2007 with a clearly differentiated strategy based on extensive studies on changing viewership patterns of Indian audiences. in Media advertisers include The Star Network. where it partners with other leading film studios like20th Century Fox. Key Focus Areas: UTV's Motion Pictures business spans the integrated model of creative development. Honda. It produces films both in Bollywood as well as in Hollywood. as it established operations in the US only four years ago. Reliance. marketing. in Telecom. Tata Motors. it made to US top 20 distributors.48 million in the first 28 weeks of the year. BSNL and Virgin Mobile. the advertisers include Hindustan Unilever. distribution. The NDTV Network and the Sahara Network. international productions and co-productions Movies: . it was also one of the youngest Indian film distributors in North America. Procter & Gamble. in Auto. Colgate. Animation Films.
films like Dev D.Khosla ka Ghosla and A Wednesday! were among those that did not boast of a lavish budget or a power-packed star cast.From Rang De Basanti and Jodhaa Akbar to Raajneeti. At the same time. Fashion and No One Killed Jessica led by an all female star cast. bucked the trend of women oriented subjects not performing at the box office and performed well as compared to most big solo hero starrers in the same period. UTV has produced blockbusters in Indian cinema. Is projected to Grow at CAGR of 14 per cent Over Next Five Years and is expected to TOUCH INR 1275 BILLION BY 2015 says THE FICCI-KPMG REPORT-2011. UTV Motion Pictures and IBC Motion Pictures have tied up for producing films together since 2010 Opportunities and Challenges – Indian Movie Industry INDIAN MEDIA & ENTERTAINMENT INDUSTRY has achieved 11 per cent Growth in 2010. . By the same token. Television accounts for almost half of the Indian M&E industry revenues. and yet created history at the box office because of the inherent strength of their content.
Businesses should understand the power of this tool and integrate it into their core marketing plan to reach out to their target audience in a better way. Film studios can go for digital prints over physical ones and focus more on digital music sales as compared to physical unit sales. lifestyles and media buying habits and incorporate the understanding in focused content. Opportunity lies in assessing the trends for continually changing customer preferences. a deeper understanding of cultural and social references through focused study groups will enable players to target their consumers specifically and build loyalty. With increasing fragmentation and intensity of competition. thus releasing more prints and combat piracy. Also With the regulatory push on digitization. increasing media penetration and per capita consumption and increasing importance of New Media driven by changing media consumption patterns. increasing mobile and broadband penetration.5 per cent in 2010 and is expected to grow at a CAGR of 16 per cent to touch INR 630 billion by 2015. Social media offers advertisers and content owners the ability to directly connect with their consumers/audiences. ongoing 3G rollouts. A digital print costs around one-tenth of the physical print. Backed by growth in advertising and subscription revenues. 4. . marketing and delivery strategies for each target audience segment. Opportunities lie in making the most of the growing potential of the regional markets. 5. 2. This will reduce costs. the television industry grew by 15.Television saw a tremendous increase in the net DTH subscriber base totaling to 28 million at the end of 2010. Opportunities: 1. Digitization continues to be a key growth driver for the Indian M&E industry and this trend is expected to be even more pronounced in the coming years. the market for digital distribution platforms is only expected to grow. Movies targeted at specific segments of the society seem to capture the vibe of the local audience and their social issues appear to have found an audience. 3.
New formats for entertainment such as computers.6. Regional content is growing and the challenge lies in penetrating the regional market which is dominated by regional film industries . If the focus is on profitability. 4. 7. 3. More content should be generated for youth and emerging niche audiences. Challenge lies in understanding consumer preferences to develop content and subscription models that can help them acquire and retain the right consumers. Challenges: 1. Mature players should try to scale across the media value chain and explore cross media synergies. 2.the entertainment companies. The challenge lies in matching the standards of the global studios.For the Entertainment companies the Challenge lies in developing a focused new media strategy to monetize their content better. Existing foreign players can look to expand their Indian portfolio and new players can try to make an entry into the movie industry which is now turning global. mobiles and other handheld devices are likely to be the most significant channels in the future. Global studios have entered the Indian film industry to co-produce Indian and international films. India is witnessing significant growth in mobile penetration. will have to reset their business model and focus on changing consumer preferences. then Entertainment companies will have to generate content that appeals to specific target audiences. both Indian and international in order to make a presence in the regional market. Indian companies should either partner with global studios for doing visual effect and post production work or they should go for revamping of their business models. .
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