This year's much awaited Bollywood film Saawariya, with a mega budget of over Rs 50 crore (Rs 500 million), will be the first movie to be produced by a Hollywood studio. Co-production of Bollywood movies is on the rise, with more Hollywood production houses -- Paramount Films and Warner Brothers -- eyeing the space. And this trend is catching up.
The co-production between renowned filmmaker Sanjay Leela Bhansali and motion picture company Sony Pictures marks Sony's foray into the Bollywood production space.
"Given the growth potential and scope in the Indian cinema, the market is very important for us. India figures in the top-15 markets for Sony Pictures' business plans," said Uday Singh, managing director, Sony Pictures. Adds Sarabjit Singh, general manager (India operations), Paramount Films, "Co-productions are strategic alliances wherein one makes use of the other's network strength in a particular region."
Paramount Films too is believed to be in talks with Subhash Ghai-promoted Mukta Arts for crossover movies. Confirmed an official of Paramount, "The discussions with Mukta Arts is at a nascent stage." Warner Brothers too is following suit.
Hollywood studio experts explain that making a Hollywood film is becoming an expensive business with audiences' expectations on the rise. A Hollywood production budget could range anything between $30 million and $120 million, apart from an additional $60 million for marketing and promotional activities.
The overseas market for Indian films continues to be growing rapidly. The overseas market for Bollywood movies is currently estimated to be Rs 850 crore (Rs 8.5 billion) and is expected to grow at a compound annual growth rate of 18 per cent (higher than the estimated 16 per cent CAGR of the domestic box office collections), according to the latest PwC Report.
"For Hollywood studios to go up the value chain, producing Indian films is a natural extension," said an official of a well-known Hollywood studio.
To be sure, it is not just the Hollywood biggies that have their eyes set on the Indian film industry. Indian production houses are also going all out to produce Hollywood movies.
For instance, Mira Nair's much acclaimed movie The Namesake was co-produced by UTV Motion Pictures and FOX Searchlight. If that wasn't enough, UTV Motion Pictures and 20th Century Fox recently announced their strategic tie-up for the co-production of director Manoj Night Shyamalan's forthcoming Hollywood thriller The Happening. The movie has a budget of $ 57 million. UTV and Fox will co-produce and enjoy global revenues equally.
Said UTV's CEO Ronnie Screwvala, "The key to a successful international co-production is that you have global distribution partner from day one and that partner needs to be a co-producer." UTV has five foreign co-productions up its sleeve with studios such as Sony Columbia, 20th Century Fox and Disney.
Co-production alliances are mainly to make use of one another's business network and expertise. "Bollywood movie budgets are shooting up. Collaboration of international and domestic studios provides the essential money and helps entry into each other's territory, thereby opening newer markets," said film analyst Komal Nahata.
Using each other's resources is the major driving factor for co-production. Like in the case of Sony Pictures' tie-up with Sanjay Leela Bhansali, while Sony has the money, Bhansali has an understanding of Indian cinema and audience appeal. The same holds true for UTV and 20th Century Fox. UTV has its own business expansion agenda, Hollywood movies being one of them.
Consequently, being a new market for UTV, Hollywood sought partnership with an established player. "It is a de-risk model for new players wanting to enter a new territory for operations. Most of the production houses are now looking at increasing their level of film production, thereby increasing their intellectual property rights value and market capitalisation," said movie financier Sanjay Bhandari.
According to the PwC report, the Indian film industry in 2007 is estimated to be Rs 9,680 crore (Rs 96.8 billion) and is expected to grow at a CAGR of 16 per cent to Rs 17,500 crore (Rs 175 billion) by 2011.
With the numbers the Indian filmdom is expected to churn out this year, the entry of Hollywood studios is not surprising.
Going forward, Sony Pictures plans to increase its footprints across three verticals, co-production of Bollywood films, production of Indian cinema and movie distribution. Consequently, last month it has named Deborah Schindler as the president of International Motion Picture Production and Gareth Wigan (vice-chairman of Sony's Columbia TriStar Motion Picture Group) to head the new international movie division.
The newly created wing will facilitate 'increasing production in India' and other countries. "At the moment, our focus is on Saawariya. The movie will mark the beginning of the state we intend to develop in India. We will look at similar ventures in the near future. However, acquiring distribution rights, co-production and production are on our agenda," said Uday Singh.
Sony Pictures in the past has distributed nearly 20 Hindi movies such as Monsoon Wedding, Bend it like Beckham, among others.
Film experts are of the opinion that co-productions will further facilitate growth of the India film industry. "Co-productions are opening new avenues for Indian producers, which imply that Indian filmmakers are no longer limited to just the domestic market. The trend will widen the audience base and also the scope of production houses," said film analyst Taran Adarsh.