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Rediff News  All News  » Business » Grim plot twist for Bollywood

Grim plot twist for Bollywood

May 06, 2009 10:04 IST

India's Bollywood film business is facing its own version of a horror movie as it reels from a crash in the price of film rights, competition from cricket broadcasts and a dispute with multiplex operators.

Acting stars in the world's most prolific movie-making industry have seen their fees plunge by up to 80 per cent from the peaks they reached last year, leading producers say.

In addition, there has been a "30 to 40 per cent fall" in the number of new films being approved for production, according to Ronnie Screwvala, chief executive officer of UTV Motion Pictures, which has produced movies in partnership with Twentieth Century Fox.

The problems have come after Bollywood saw an influx of funds and the entry of large business houses, such as Reliance Big Entertainment, controlled by billionaire businessman Anil Ambani.

The industry has also attracted the eye of Hollywood studios, with Viacom, NBC, Sony and Time Warner investing $1.5bn in India's movie and pay TV sectors.

But the increased interest has led to inflated costs. Some new entrants tried to build up movie libraries quickly by buying content, which led to a bubble in the cost of new movies that has been pricked by the economic crisis.

"The model before this was: 'I make the content and then sell it -- somebody would have bought it.' Now there's nobody to buy it," said Mr Screwvala.

A jump in the number of new cable channels being launched in India also helped fuel the bubble, but many of these broadcasters are struggling because of a crash in advertising, leading to a drop in prices for Bollywood movie broadcast rights.

The industry is also being squeezed by the new made-for-TV Indian Premier League (IPL) cricket tournament.

Based on the shortened Twenty20 format of the game, the IPL is designed to screen over two months between 4pm and 12am, mostly over weekends, which also happen to be prime viewing time for movies.

The other challenge for the industry is a dispute with the multiplex operators, who are refusing to screen Bollywood movies amid an argument with producers over how to split revenues from films.

Bollywood and its regional language cousins in southern India produce more than 1,000 movies a year, nearly double the number from Hollywood, and in 2007 generated $2.4bn in revenue.

Copyright: The Financial Times Limited 2009

Joe Leahy in Colombo,