As an exchange student to Spain, I was rather amused to find that the theatres in Madrid were playing two Indian movies -- Mira Nair's Monsoon Wedding and Gurinder Chaddha's Bend It Like Beckham.
Neither of these movies is classified as 'mainstream' (read Bollywood) movies. That they were seen mostly for their unambiguous Indian nature does provide some interesting pointers.
There are other indicators that Bollywood is gaining some measure of global acceptance. Nicole Kidman wearing an Indian choli in an almost Indian-style song (Chamma chamma) in Baz Luhrmann's Moulin Rouge, emphasises this exciting trend.
Indian talent has also gained a kind of foothold with the likes of Shekhar Kapur directing big budget movies like Elizabeth and Four Feathers.
Though Bollywood has still a long way to go before it attains some kind of global dominance, it has serious incentives to make a bid for the $300 billion American entertainment industry.
First, Bollywood has to figure out a way of selling a cultural product. Indian food, yoga and Indian movies (complete with 14 songs) are part of a larger entity, the Indian cultural product. In the entertainment business, the value of a cultural product cannot be understated. It occupies mindspace and provides opportunities for selling multiple products all linked to one single idea or entity.
For instance, the success of the Harry Potter books led to a largely successful feature film. What this means is that the success of Indian movies could help promote the success of other Indian products such as clothes, jewellery and food. The customer could also be looking for the complete product and would demand a richer experience than just the movie.
Though it would appear as if Hollywood movie ticket sales (around $14 billion worldwide) form a comparatively small part of the total US entertainment industry, it should be understood that movie ticket sales fuel sales of a whole umbrella of other products, including video games, television sales and toys.
All these product extensions are dependent on the movie's success.
It seems daunting to challenge the dominant cultural product of American movies with a frontal attack on its territory. But to imagine that American culture is dominant in all spheres is simplistic. For instance, the French have always been capable of packaging their culture in their wines and perfumes. Italy, with its designer clothes, has considerable success in exporting its cultural products.
It seems worthwhile to speculate whether the Bollywood movie could capture a lucrative market for itself.
It is often difficult to predict the success of entertainment industry products. The good part is there is evidence to show that success is correlated to access to distribution channels and the size of the advertising and promotion budgets. Does Bollywood have the financial muscle to compete with the global majors? The way Bollywood is structured seems to indicate that there would be resource shortages in key areas.
The Indian entertainment industry is largely unorganised and often said to be funded by sources less than savoury. The cost of raising capital then is extremely high. The ability of key players to take the requisite risks is restricted by the cost of capital that varies from 25 per cent for established players to 48 per cent for a beginner.
Deriving safe profits from an internal market would seem to be the ideal strategy when resources to go global are prohibitively expensive.
Indian movies are made at the average cost of around $1 million to $1.5 million. A Hollywood movie takes around $200 million to make. With a similar proportion of distribution and promotion budgets, chances of Indian companies competing effectively in the same distribution chain as a Hollywood movie seem remote. Bollywood has always had to maintain a degree of studied isolation from the world outside India.
Most exports of Indian movies go to the US and the UK. Their target customer is the 20 million-strong Indian Diaspora. Here, risks are low and, often, rights are purchased after the distributor sees a couple of songs. Movie exports are in the region of $9 million to $10 million. This is roughly 10 per cent of the total ticket sales.
Governments often play a key role in promoting cultural products. To that end, current government efforts to promote the Indian motion picture business, including providing industry status, are largely feeble. It cannot be stressed enough that a strong government presence is required to ensure that funds are made available to make movies that sell the Indian experience worldwide. The existing film development initiatives are often plagued by too many government imposed strictures and too little funds.
Drawing from the French experience with Canal Plus, a quasi government initiative could be the primary driver. Though Canal Plus is not government-owned, it tends to be a primary agent in funding and promoting the French motion picture business.
One way of promoting the Indian entertainment business would be to encourage foreign studios into the Indian market. This might sound heretic, but it would primarily provide a benchmark for reluctant bankers to loosen their strings. For instance, there is no way for an Indian bank to evaluate the kind of interest to charge for the next Subhash Ghai movie, as they do not have credit risk models.
Here, the visible presence of foreign players would help providing examples. Also, there are considerable visibility effects as talent gets to work in professional organisation-based efforts as opposed to the one man run it all efforts, characteristic to Indian movie production.
Also, foreign players would ensure access to distribution channels worldwide.
Restructuring the Indian movie business could be an interesting exercise in building a cooperative model. There could be considerable opposition to foreign-made Indian films with key lobby groups questioning their intrinsic Indian values. Without obvious competitive models around, a cooperative model has the best chance of succeeding.
How to initiate this kind of a cooperative interaction is the challenging question. One opportunity would be related to the outsourcing of key parts of the moviemaking value chain. This would give local filmmakers access to better facilities as well as give incentives for local talent to upgrade.
Interestingly, a large number of Hollywood movies are not made in Hollywood. This would sound like a no-brainer, but Hollywood movies are made in South Africa, Toronto, Australia and a little Spanish town called Alicante.
With so much talent lying around, Bollywood could provide considerable cost advantages in the manufacture of movies. Around 6 million people are employed directly or indirectly by the movies. Bollywood has in its possession a considerable resource in the outsourcing battle.
Ramoji Rao Studios in Hyderabad is involved in Hollywood's animation motion pictures. With high quality information technology professionals around, there are distinct advantages for this kind of cooperation.
George Francis is a student at the Indian Institute of Management, Kolkata, and chief editor of IIM Kolkata's online magazine