Rediff.com  » Business » Why making movies makes sense

Why making movies makes sense

January 19, 2004 08:46 IST

With audiences flocking to cinema houses, film production has once again come under the arclights.

From broadcasters, music companies, television software houses to film distributors and exhibitors, they are all gunning for the big screen.

Clearly, this is backward integration of a different kind. Just when the rest of corporate India has been talking about "outsourcing", the country's Rs 4,000 crore (Rs 40 billion) film industry, where Bollywood alone churns out 150 films a year, is using a different language.

If all this while it sourced its key raw material, namely, movies, it now believes that there is no better way than to make it inhouse.

So after Star, Zee and Sahara, the Adhikari brothers' promoted SAB Television Network is the latest broadcaster to hit the Rs 900 crore (Rs 9 billion) film production marquee.

And while television software houses like Balaji, Cinevista, Optymystix and UTV are producing films, Creative Eye and Aditya Narayan Singh's Contiloe Films are currently scripting their strategy on film production.

For Mumbai-based film distribution and exhibition house Shringar Films production is a gradual extension.

After being in the business for 20 years, Shravan Shroff, director, Shringar, says: "We are looking at the production business for strategic reasons. We intend to evolve as a vertically integrated film company. While we will concentrate on our exhibition projects, we plan to commence production in 2005."

It is the same for the Kanakia group of film exhibitors. After establishing its Cine range of multiplexes in Mumbai, film production is an affiliated activity.

Why are companies queuing outside the Rs 900 crore (Rs 9 billion) film production industry? For one, according to Shroff, the mushrooming of multiplexes countrywide is fuelling the demand for films.

"With the infrastructure in place, the demand will outstrip supply in the near future," he says.

Also, while big-budget extravaganzas continue to draw audiences, the recent box office success of a spate of small budget films is making the business more viable today.

Says SAB's vice-chairman & managing director Markand Adhikari, "The success of new generation small- and medium-budget films has prompted our production foray."

He claims that typically, a Rs 3-5 crore Rs 30-50 million) film project easily breaks even. "Besides the limited risk factor, the multiplex-culture has brought in a lot of transparency in the exhibition business," he adds.

That's why, Komal Nahata, editor Film Information, says that even big banners are thinking s     mall. Subhash Ghai's Mukta Arts produced a low-budget Jogger's Park. And Ram Gopal Verma went on to produce Bhoot and Darna Mana Hai.

SAB has an equal partnership venture with Anand Pandit's Lotus Films. It will initially invest around Rs 20 crore (Rs 200 million) over a year, with four to five film projects in the pipeline, three to be produced by Gautam Adhikari, SAB's chairman.

Or look at Star's tie-up with UTV. While the partners will share the production costs, Star gets the cable and satellite telecast rights with UTV bagging the music and home video rights. However, Star hints at a solo appearance in future.

"For us, film production is more of a backward integration. Once a film is released, the cost of acquiring the telecast right goes up," says a Star executive.

And with the film industry likely to touch Rs 9,300 crore (Rs 93 billion) by 2007, everyone wants to be part of the big screen.
Rumi Dutta in Mumbai
SHARE THIS STORY