The South Indian region comprises of four states – Andhra Pradesh, Karnataka, Kerala and Tamil Nadu. Together these states account for 21 per cent (240 million) of the Indian population and 24 per cent (INR 7405 billion) of the countries gross domestic product (GDP). The region has high income levels as well. The per capita GDP of the four states is more than or marginally below the country’s per capita GDP.
The people of South India have unique cultures, tastes and media consumption habits which are quite different from those in the other parts of the country. Films and television are popular means of entertainment here. Films especially have an important place in the mind and the heart of South Indians. Leading actors enjoy a demi-god status and have large and fiercely loyal fan following.
The South Indian film industry has a long and rich history. It is a key contributor to the overall Indian film industry, in terms of number of films produced, revenues earned and employment generated. It has, by far, the largest share in the total number of films released per year.
Highlights from “Indian entertainment down South”, a report recently released by
FICCI and Ernst & Young
The aggregate market size of the Tamil, Telugu and Malayalam film industry segments in FY09 in terms of total revenues generated by films is estimated to be around INR 17.3 billion.
Market Size by language Segments
Of the aggregate market size, the Telugu segment contributes around INR 7.7 billion, the Tamil segment INR 7.7 billion, the Malayalam segment INR 1.4 billion and the Kannada segment INR 0.5 billion.
In terms of overall share, the Telugu and Tamil segments account for approximately 45 per cent each. While the Malayalam segment accounts for 8 per cent and Kannada segment for 2 per cent.
Market Size by revenue streams
Among the various revenue streams, domestic theatrical revenue is, by far, the most dominant, accounting for nearly three-fourth (around INR 12.6 billion) of the total revenues earned. Revenues from cable and satellite (C&S) television rights come next in the list, contributing around INR 3 billion (17 per cent of the total revenue pie), followed by international theatrical rights, which contribute around INR 0.9 billion or 5 per cent of the total revenue pie. Other revenue streams namely, music rights, domestic home video rights, internet and mobile rights, etc contribute an aggregate around INR 0.8 billion or 5 per cent of the total revenues earned.
Key Strengths of the South Indian film industry
• Large theatrical market:
A large number of people in South India watch movies on theatre screens. Domestic theatrical revenues are the most important source of revenue for the South Indian film industry. Despite a small geographic area, the theatrical collections from South Indian movies are high. The region houses 5,000 theatre screens, which is almost 50 per cent of the total number of operational theatre screens in India. In other words the proportion of people watching films to the overall population is much higher in Tamil Nadu and Andhra Pradesh than other parts of the country.
• High levels of discipline
The South Indian film industry works in a disciplined manner. The movies have a well defined script. The actors, directors and crews adhere to the schedule. Producers and support staff stick to the production plan and the actors report to shooting on time and comply to their call sheets. The productivity levels are also high in the industry. Proper planning is done before the commencement of the shooting, which helps in monitoring and effective cost controls. The producers are generally more cost conscious and aim to reduce the avoidable costs incurred.
• Technologically advanced
The technical professionals have been at the forefront of technological advancements in all areas – production, postproduction, distribution and exhibition. Presently most films incorporate digital intermediate (DI) and several of them have used computer graphics interface (CGI) for special effects or animation. The south film industry is ahead on its digitization curve with up to 40 per cent of the film prints released for the South Indian films are digital. Many players are adopting digital technology to combat piracy and improve transparency in revenue reporting.
The Tamil Film Industry
The Tamil film industry, on an average produces around 130 to 150 films per year. A significant number of films produced however are not released in the theatrical market owing to lack of market interest. Even among the films that are released, a large percentage fails to recover their costs. In fact these days flop films barely recover their print and publicity costs. The entire money invested in their production is lost. The number of films certified has increased over 2004-08 period, from 120 in 2004 to 173 in 2008. The time taken to make a film depends on several factors – the budget of the film and production values, the theme of the film, the availability of actors, the quantum of computer graphics usage, etc. On an average the industry takes about 8-12 months for a small budget film, 10-14 months for a medium budget film and 12-18 months for a large budget film. The number of days of shooting varies from 60-90 days for a small budget film to 90-120 days for a medium budget film to 140 -200 days for a large budget film.
In FY09, the market size of the Tamil film industry segment is estimated to be around INR 7.7 billion, in terms of total revenues generated by films. This market is shared between the key players in the industry, namely the producers, distributors and exhibitors.
The key territories in the international theatrical market for Tamil films are Malaysia, Singapore, Sri Lanka, the Middle East, the U.S and Canada, and the U.K, Europe and Australia-New Zealand. For a big budget film with a well known star cast, the U.S and Canada territory contributes 20 per cent of the international revenues. While the U.K, Europe and Australia-New Zealand territory contributes another 20 per cent. For a medium budget film, these two territories together contribute only 10 per cent of international revenues. Small budget films are not released at all in theatres in these markets.
The Telugu Film Industry
The Telugu film industry is the most prolific producer of films in the overall south Indian film industry. On an average, the industry produces around 250 to 270 films per year. Like the Tamil industry a significant number of films do not make it to the theatrical market. The success ratio, similarly, is low and a large percentage of films fail to recover the investment made in them.
The time taken to make a film depends on several factors – the budget of the film and its production values (represented by the shooting location, costumes, sets, action, scenes etc.), the genre and the theme of the film, the availability of the dates of the character actors, extent of usage of special effects and computer graphics etc. On an average the industry takes about eight to ten months for a small budget film, 10-12 for a medium budget film and 12-15 months for a large budget film. The number of days of shooting varies from 60-80 days for a small budget film to 80-100 days for a medium budget film to 150-200 days for a large budget film.
The market size of the Telugu film industry segment is estimated to be around INR 7.7 billion for FY09, in terms of total revenues generated by films. This market is shared between the key players in the industry, namely the producers, distributors and exhibitors.
For the purpose of distribution, the domestic theatrical market for Telugu films is divided into several territories. Those territories have varying venue potential. More than 80 per cent of theatrical revenues come from the AP market. Nizam, which earlier used to account for around 25 per cent of AP theatrical revenues, has increased its share to 35-40 per cent at present, primarily on account of development of multiplexes in Hyderabad. Ceeded, too, has increased its share marginally, from around 16 per cent earlier to around 20 per cent at present. Other than AP, Telugu films have a significant market in the states of Tamil Nadu and Karnataka. Around, 20-25 per cent Telugu films are released in Tamil Nadu. Earlier these films used to be dubbed or remade into Tamil films but of late, with increase in Telugu speaking population in Tamil Nadu, they are being released as straight films. Telugu films are also released as straight films in Karnataka, which contributes around 3 per cent of AP theatrical revenues. A few Telugu films (around 8-10 per year) are dubbed into Malayalam and released in Kerala. Some highly successful Telugu films are also remade in Hindi and other Indian languages.
The Malayalam film industry
The Malayalam film industry is smaller than its Tamil and Telugu counterparts. However, the industry is unique in the sense that the Malayalam films are based on more artistic values and the content is natural and realistic. Not all films are made for commercial value, many are made for aesthetic and cultural values. As a result, Malayalam films have won numerous national awards. Many successful Malayalam films have also been remade into films into other South Indian languages and Hindi. The industry has also contributed excellent technicians to the Hindi film industry and some of its directors are highly reputed for their skills. On an average, the Malayalam film industry produces around 70 -90 films per year. However, similar to Tamil and Telugu segments, many films are not released in the theatrical market owing to lack of market interest and a large percentage of films released fail to perform. The number of Malayalam films released from 2004 to 2008 has been declined from 69 in 2004 to 63 in 2008. The time taken to make a film depends on several factors – the budget of the film and its production values, the theme of the film, the availability of actors, the quantum of computer graphics usage, etc. In comparison to the Tamil and Telugu segments, the Malayalam industry is largely disciplined and completes films in a shorter time period with smaller budgets. The time taken to make a film varies from 90 days to 150 days, while the period of shooting is typically 45 to 50 days.
The market size of the Malayalam film industry segment is estimated to be around INR 1.4 billion FY09, in terms of total revenue generated by films. This market is shared between the key players in the industry, namely the producers, distributors and exhibitors.
The Kannada film industry
The cinema of Karnataka, sometimes colloquially referred to as Sandalwood, encompasses movies made in the Indian state of Karnataka. Kannada industry completed 75 years. The Kannada film industry, on an average produces 120 to 150 films a year. According to Karnataka Film Chamber of Commerce, only a handful of these recover costs, while most of the others incur losses.
The market size of the Kannada film industry segment is estimated to be around INR 500 million, in terms of total revenues generated by films in FY09. However the total cost of making films is much higher and hence the industry is making losses at present. The Kannada film industry depends mainly on domestic theatrical revenues, like its Tamil, Telugu and Malayalam counterparts. Domestic theatrical revenues contribute half of the total revenues earned by films (INR 250 million). The other major revenue stream is C&S television rights (INR 125 million), while other revenues streams such as home video rights, music rights and international theatrical form the balance. International rights are a miniscule portion as compared to the other two.