The movie industry dubbed them as flops. But films like Fiza, Yaadein and Ram Gopal Verma ki Aag delivered profits. Films like Om Shanti Om (OSO) and Namaste London delivered over 100 per cent returns while still under production.
It is success stories like these are driving the new script being written for Bollywood. Private equity funds are now preparing to make use of this opportunity too. ICICI is backing a Cinema Capital Venture Fund (CCVF), the first of its kind, which is looking to raise Rs 500 crore from high net worth investors.
As rapidly changing consumption patterns for entertainment and digital technology change the contours of the entertainment business, big funds are now getting ready to make their presence felt in the business.
For movies, it is the pictures that you see that tell the story. For funds that are tracking the sector, it is the numbers. Between 2004 and 2007 box office revenues have jumped from Rs.264 core to Rs.485 crore, nearly doubling, albeit on a small base, in three years. Till the year 2005, only two films had grossed over $4 million in revenues in UK, one of the largest overseas markets for Indian films. In just the year 2007, 16 films could manage to achieve that mark.
And there’s enough reason why the numbers are looking so healthy. While theatre and music were the only rights sold till the 1990s, the options before a film maker have multiplied now. Global rights, mobile right, satellite rights, ringtones, wallpapers, internet, retailing and merchandising, besides branding and sponsorship rights are just some of the 30-odd rights that are sold by movie makers. And one good deal is enough to recover the cost of making the movie.
No other country in the world makes the 1000 plus movies that are made annually in India. The number of multiplex screens across the country is expected to jump fourfold to 5000 in another four years time. The tickets are priced much higher at these multiplexes, and obviously so, than what several of us have been used to till the 1990s. The food at most multiplexes sucks since most of it is not fresh, but we still pay Rs.100 for that tub of popcorn, don’t we. So, even the multiplex owners are seeing, well, a hit movie ahead.
But it does not always require a hit movie to draw the crowd at the multiplexes to recover its cost. A movie like Om Shanti Om, which cost nearly Rs.30 crore to make, was sold to Eros for Rs.70 crore, making a neat profit in the bargain. Even a small budget film like Bheja Fry, which cost nearly Rs.1.5 crore managed to gross Rs.8 crore. Or Khosla ka Ghosla, for which Rs.2 crore was spent, returned Rs.10 crore.
For a lot of those involved in the trade, this is just the beginning of the changes being seen in the industry. How about stealing a line from the movie Om Shanti Om and saying, ‘Picture abhi baaki hai’.
There is funding easily available from banks after the moviemaking was declared an industry by the government. IDBI Bank, which has been aggressive with financing of movies, has not reported any bad loans since it started financing film companies.
So, does this film – call it The Emerging Indian Entertainment Industry –have no villainous characters? Most would argue that it was the dubious means of finance that was the biggest villain and had a crippling effect on the industry. Still 70 per cent of the movies made in the last two year were by companies that are privately held. And when investors with deep pockets like George Soros, Reliance Big Entertainment, Walt Disney, Warner Group enter the business, it is clear that a major change is round the corner.
Of course, the mobile boom is adding to the growing opportunities. Rajshri Media is already producing a “drama” that can be downloaded on the mobile. A Mumbai-based company released the first song that did not have any CDs or audio tapes but was only meant to be downloaded on the mobile. Mobile value added companies are looking to compose their own music. At the Barcelona GSM Congress recently, a large number of film makers made their presence felt, hoping to ride the mobile boom.
It seems the fat moneybags are ready to back the industry. Entertainment industry veterans seem to have sensed the opportunity. Technology is making it easier and easier to consume more and more of entertainment. And the consumer just does not seem to have enough of it!
It is this emerging opportunity that the fund is looking to invest in. So, if you a high net worth investor, willing to invest Rs.10 lakh or more, the opportunity to be part of the movie industry’s box office hits, is, well, just a signature away!