The biggest systemic challenges in the Hindi film industry are a tax system that makes little sense and lack of transparency in collections
Apoorva Mehta, CEO Dharma Productions
I, genuinely am of the opinion that the Indian film industry has evolved over the years to become better organized today. Currently, the industry is more promising than ever before. However, there are a few existing gaps that need to be filled, and the sooner this is done, the better it will be for the industry as a whole. Allow me to quickly list a few issues that I feel need to be tackled on an immediate basis.
The innumerable that are taxes levied are a major vexation. Essentially speaking, each state has varied tax slabs. For instance in Maharashtra the entertainment tax is approx 30 per cent of the gross collections while in UP it as high as 40 per cent. The problem here is the lack of a unified tax structure across the country. We’re hopeful that the proposed GST rollout should be able to take care of this unnecessary disparity in taxation. Additionally, with no current offset to entertainment tax, which was levied in the first place to generate revenue for multiplexes so they could sustain expensive infrastructure, the application of GST might rationalize a rather difficult system of taxation.
Transparency in Collections:
This is a major loophole in the system as not every cinema hall is linked to a central data surveillance system, which would have otherwise helped producers attain an accurate understanding of how much their film made at the box office. Moreover, collection figures aren’t uploaded in real time, which might lead to errors in the long run. Internationally, Rentrak is used by producers to track collections across a particular market. Even individual collections across cinema halls can be tapped. In India, we aren’t attached to a sophisticated data management system. Another shortcoming is that not all cinema houses, especially single screens, have an electronic ticketing system which makes them incapable of being linked to any kind of software.
The only way we can currently gauge how a film of ours is doing is by getting a sense of its performance in Mumbai and Delhi because the cinemas in these two cities are well networked. We then use these two territories as yardsticks to estimate the film’s performance in other centres. In short, we have no way to ensure that collections come in quickly, accurately, and across every market in which the film is released.
Brakes on Marketing:
Another major concern is that marketing costs are rising exponentially. Efforts have been made towards working with the guild to put in place specific guidelines which can help producers rein in these costs. However, rising pressure from actors regarding the scale of promotions directly impacts marketing costs, leading to such costs increasing to a maniacal amount.
For instance, if one avoids outdoor marketing for a particular film and other films go that way, one tends to regret it. Moreover, actors may question why the same wasn’t done for their film. It’s a difficult battle to fight every time.
Down South, the producers’ community is united; their dates are managed and everything is streamlined. I think collectively, we are not as strong or we would have been able to implement the same system here too. New platforms will emerge and a producer will always feel the need to promote one’s film everywhere possible. This implies that marketing budgets will rise even higher, and the only way to control them is by fixing a cap on spending and by using benchmarks. Admittedly, it’s difficult due to the unique nature of the business.
It’s become a known trend that stars with clout enter into satellite deals today. I personally think that it isn’t a smart decision as you are likely to lose your ability to hedge your risk from the theatrical medium, as against other mediums which may have yielded better returns.
So when you make a film sale outright to a studio or someone else, there is a certain leverage and hedgingthat you have to offer them. Given the situation that the theatrical business is a one time finite revenue stream, you still have additional rights that can make you consistent money over a sustained time period.
So when actors enter the fray, it puts a dent on the prospects of producers. It diminishes the leverage a producer enjoys. The situation that arises makes the producer incapable to incurring risk on a major project as there is no room to offer leverage. I am hoping the industry takes this into cognizance and ensures that this practice meets its end.
Declining Trends in Theatrical Business:
Analysis of the yearly films collections shows that that the number of films grossing Rs.100 crore has gone down from six (2014) to three (2016) and those grossing 200 crore from two (2014) to none so far in the year 2016. The unfortunate dip in business is evident.
I believe content is the biggest cause. Great content will always bring in the revenue. Sure, there have been instances where films have suffered due to poor luck and bad timing, but essentially the problem arises with the kind of content we create.
So rather than shifting blame around, let us be honest and review our own actions. Also, I believe very firmly that a film never fails, a budget fails. There is a viewer for every kind of film; you simply have to make sure what the ecosystem of that viewer is, and how many eye balls you can generate. After that, you decide whether it is feasible or not to make the film.
To summarize, I think the industry is definitely on an ascent. But I also believe that there is a lot of scope to make amends, and some of the problems listed above need to be looked at and plugged in on an immediate basis.