India's film industry struggles to perform well

By Money Times

Oct 26, 2015 02:29 AM EDT

India, the world's largest democracy and home to highest number of movies, is struggling to perform at box office collections. There's no correlation between the number of movies released every year and revenues they generate for the film industry. The India's film industry is just grossing mere $2billion every year at the box office while it registers about 2,000 movies annually. Considering the number of movies it makes every year, India should have been leading the world in terms of revenues as well. But it couldn't as the piracy alone eating into INR19,000 crore ($3.34billion) revenues every year.

Indian film industry's revenues are just one-fifth of gross collections in North America. The US population is just one-third of Indian population. Indian film industry gross collections are one-third of China's industry and it's even less than that of Japan, which accounts for one-tenth size of Indian population.

Indian film industry is facing several challenges including under-screened territories, infrastructure problems, linguistic politicization, higher production costs, high tax rates, lower ticket pricing, piracy, etc.

The INR12,640-crore Indian film industry is suffering from low margins and stagnated revenues. Indian film industry started corporatizing for the past 14 years but lacks the combined effort of all fractions in the industry. The film industry is sluggish for the past two years. 

The revenues from TV rights are also declining for the Indian film industry. The average TV rights dropped to INR20crore from INR50-60crore. Star India is one of the biggest players in buying movie rights. Star India is focusing more on sports and entertainment. Indian viewership for watching movies on TVs is also dropping from 20 percent to 18 percent or below.

The gap between box office collections of top-10 films and rest of the industry has been widening every year. Only category-A films with good content and top-notch star cast are doing well in attracting audiences to the theater. 

Of late, the entry of corporate firms into the film industry is bringing some professionalism in film making. The entry of corporate firms has introduced some practices of film production from western markets including concept development and audience research, etc. The corporatization process also results in entry of investment funds. Some venture funds are also focusing on Indian film industry.

The digitization of screens has been enabling producers to collect 60-80 percent of revenues in the first week itself. This is major development for the benefit of film industry and an answer to check piracy problem. It's estimated that piracy alone eating into INR19,000 crore ($3.34billion) revenues every year.

The Hindi film industry popularly known as Bollywood is the largest chunk of Indian film sector followed by Telugu, Tamil and other regional languages. Indian films mostly made in over 20 different languages as against the one language in North America, China, Japan and so on. Lack of integration is another major challenge to Indian film industry.

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