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See where India is beating China

August 22, 2006 05:34 IST

The film industry is among the few sectors where the elephant is miles ahead of the dragon. Consider this: China's movie industry revenue crossed $600 million in 2005 and is estimated to top $1 billion by 2010. That will, however, be less than a third of the estimated $3.5 billion ($1.5 billion in 2005) earnings of the Indian film industry in the same year.

China has been trying to create blockbusters – of Titanic proportions – for quite some time now and has managed to make a few films that sell in the US. But success at the domestic box-office has proved elusive. Compare that with India. Successful Indian films make 50 per cent of their money in the domestic market, and supplement that with ticket sales overseas.

The poor run in the domestic market has meant that in China, there is less than one movie theatre for every one million people: That's something like 2,000 people for every seat. The government's policy of maintaining a quota of about 20 foreign films a year (there is no such quota in India) and poor quality have added to the mess. What takes the cake is rampant piracy.

Those of you who complain about bootlegging in India should visit China. It can be an eye opener. A friend who visited Shanghai last week says he saw even local grocery stores selling "export quality" pirated DVDs of latest Hollywood films for less than a $1 apiece.

While the Chinese movie industry has little systemic support for international distribution, a quarter of the revenue of Indian films comes from international markets. One of India's largest film producers and distributors, Yash Raj Films, says Bollywood films in the US earn over $100 million a year.

The company's Kabhi Alvida Na Kehna has already crossed $1.5 million - the highest collection ever by an Indian film overseas – in its opening weekend in the US. This was just a month after Krrish, a Rajesh Roshan production, grossed around $1.3 million in the same period. A key benefit of overseas exhibitions by Indian films is that the income earned abroad is tax-free, since export earnings of cinema and television programmes are tax-exempt.

Filmmaking, distribution and exhibition are also increasingly becoming a business controlled by a dozen or so companies, and not thousands of producers and distributors, as was the case earlier.

More than half of the 1000-odd films last year were made and released by organised film companies. So average costs are down significantly leading to higher profitability. These organised film production and distribution companies get loans at an amazingly low annual interest rate of 8-10 per cent. For instance, Exim Bank, which offers loans provided the film has export potential, has already sanctioned loans worth Rs 100 crore over the last 18 months.

No wonder, big entertainment conglomerates like Sony Pictures have now entered the Indian film industry. Others like Paramount, Walt Disney and Ashok Amritraj's Hyde Park Entertainment are also waiting in the wings.

The flip side, however, is that though India is the globe's largest producer of films, annually cranking out some 1000 titles in 20 languages, its share of global cinema revenue is a paltry one per cent.

In fact, the combined revenue of the Indian film industry now would not cover the takings from even one Harry Potter film. Hollywood last year made around 300 movies that grossed $35 billion worldwide. India in contrast made 1000 films, which did business of just over $1.5 billion.

But there is reason to feel hopeful. According to estimates, the global entertainment industry, which is projected to touch a whopping $1.8 trillion by 2015, is gravitating towards the Asian region, and India has the potential to garner a major chunk of it.
Shyamal Majumdar in Mumbai
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