Business of bollywood

BollywoodEveryone sees a number of ads, articles and other information regarding the “business” a film has done. Never has there been a more vague description of what a film actually earns than “business” or “gross”.

The film revenue waterfall goes like this:

Gross: Rs. 100
Less Entertainment Tax: 33% (this goes straight to respective state governments)

Net (or Net Gross as it’s known in the industry): Rs. 67
Less Exhibitor Share: 50% (this is what goes to the cinema owners)

Distributor Share: Rs. 33.5
Less Print, Advertising and Distribution Costs: ~25-30% (30% for the calculation but this includes physical prints, marketing and the distributor’s commission)

Producer’s Share: Rs. 23.45

So, a film that grosses Rs. 100 at the Box Office actually returns only about Rs. 23.45 to the producer from the theatrical sales. Of course there are a number of other rights that a producer sells or exploits for a film – chiefly Satellite, Home Video and Music and now to some extent mobile and internet rights. There are also a number of smaller rights, like airline rights, hotel rights etc. which can be exploited.

Theatrical though, still forms the bulk of a film’s revenue for Indian films (as opposed to western ones where Home Video is the largest component).

The split is as follows:

Right Big Film Small Film
Domestic Theatrical 35% 39%
International Theatrical 18% 6%
Home 7% 7%
Music 14% 14%
Satellite 25% 33%
Ancillary 2% 2%
TOTAL 100% 100%

So let’s take the example of Ghajini. Ghajini had an Indian BO Gross of Rs. 164,08,16,736 (that’s 164 crores). The actual payout to the distributor (in this case the distributor had acquired the rights from the producer for a fixed amount) was Rs. 54,96,73,606 (about 55 crores). Studio 18, the distributor, bought the film for Rs. 53 crores (including print and advertising) and so made a profit. Total ROI for Ghajini was 78 Crore against 63 Crore worldwide distribution price. Distributors made handsome profit of 15 Crore from movie.

The producers, on the other hand made Rs. 53 crores + Rs. 8.5 crores (music) + Rs. 10 crores (international BO) and have yet to sell satellite and home video rights, which should fetch them another Rs. 25 crores or so for a total of about Rs. 96 crores. This is a HUGE hit as the cost of production would be in the Rs. 40 crore range and prints & advertising would be another Rs. 12 – 15 crores.

Chandni Chowk to China, on the other hand has a domestic gross (till last week) of Rs. 32,58,23,295 (Rs. 32.5 crores), which gives us a distributor total of Rs. 10,91,50,803 (Rs. 10.9 crores). Internationally the gross is about Rs. 29,33,57,022 (Rs. 29.3 crores) which gives us a distributor total of Rs. 13,49,44,230 (Rs. 13.5 crores). This gives us a total of Rs. 10.9 + Rs. 13.5 crores and another Rs. 12 crores at most (flop film gets less) = Rs. 37 crores. Rs. The cost of production, prints and advertising in this case, however, was a mindboggling Rs. 90 crores. This is a HUGE flop.

Regards

BollyBusiness