Roundtable : Distributors

BOI: Let’s move on to other issues.

AT: There are more issues?

RA: Achha, that’s why he ended this topic… to move on to the other! (Laughs)

PJ: I think tax is one of the biggest issues, like in UP or in Bihar. Taxes are so high that cinemas cannot invest and get returns.

BOI: Going forward, do you think a film like Masaan, for instance, or Manjhi will be easier to distribute or is it still fickle?

NG: Honestly, nothing is easy and nothing is difficult. It’s all about marrying strategy with content and you hope you get it right. It takes as much effort to release a film in 3,000 screens as it does in 300 screens. That effort doesn’t change.

BOI: But what about scarcity of screens?

AT: I don’t think there is a scarcity of screens. It’s more in our minds.

NG: The real challenge is me getting my collections the next morning when I need to inform the trade guys. That is a bigger challenge. I would like exhibitors to move on and I would like to know how much money my film made the previous day, the opening weekend and the first week.

RA: Again, we are talking about infrastructure.

NG: It is not being implemented because certain cinemas have certain issues. Why? All these cinemas are listed on the stock exchange, still they don’t want to report their collections. They don’t want to use tools that are available to bring about transparency in numbers. They shy away from this. You have got an international company in India saying, we will help you get your information to you in time.

BOI: Rentrak.

NG: Yes, why is it so difficult? I don’t need to know anybody else’s numbers if they don’t want to tell me. But can I know how many tickets I sold the previous night?

BOI: What do you think of the so-called fudging of numbers? Where does it come from, on whose orders?

NG: Some of it is due to insecurity among all the stakeholders. Let’s do some plain talking. Every actor wants his film to be big because their market value depends on it. Every producer wants his film to be big because there is another studio around the corner saying they make more money. Every studio, listed on the stock exchange or not, wants to make bigger headlines. So it comes from everywhere. All these insecurities come into play and the easiest thing to do is to put a number out there which says that we are the biggest. But when you look at your profit and loss, you know you are bleeding or you know just how successful you are. The day you can look yourself in the mirror and say, yes, this is the truth, and I can face it, this fudging of numbers will stop.

VK: We are the only industry that goes out and says, ‘We made `500 crore or we made `600 crore’. Show me any other industry which says they made `3,000 crore worth of sales.

RA: Who knows the actual gross. They have a formula that they use to convert it on their own before they announce their numbers. They don’t report revenue, they report gross.

NG: Yes, exactly.

NA: But they don’t really fudge. Everyone knows all the numbers. It is no secret, yaar. Everyone in the industry knows what’s what.

AT: (Laughs) Nandu, everybody knows but yet it is happening.

NA: Today, I would know the actual collections of Bahubali and you would know the numbers of Bajrangi Bhaijaan.

AT: Yet, everyone is doing it.

NA: Fudging is also dying out.

BOI: A last word from each of you?

SK: A lot of coordination is required, from filmmakers to distributor to exhibitors, and we need to work as an industry and not as separate verticals to improve infrastructure and the industry. There are so many issues which are affecting the industry.

PJ: I think the government should give more concessions to exhibitors so that more plexes will be built, especially in small towns. For instance, Dehradun was a `15-20 lakh centre seven to eight years ago. But after plexes came in, revenue has risen to more than `2 crore. Even a small town like Sangrur, which was a`1 lakh centre, is today at `50-60 lakh at the box office. So we need more concessions so that we can go to small towns. Right now, we release films in 150-200 cities while we have more than 400 towns, which have a population of 1 lakh. And 90 per cent of our revenue comes from the top 100-150 cities. So if we get better taxes and better cinema, the quality of cinema halls will improve. And, yes, also stable ticket prices.

RA: We should basically work on how we can improve infrastructure, which is how we can bring audiences to our cinemas, which will increase revenue. This would increase our base from 300 to 400 to 500. If we are really looking forward to being a `1,000 crore industry, we need to improve infrastructure in Tier II and Tier III sectors, through investments and by providing them some relief by working through the government. We really need to look into infrastructure. That will definitely help us.

NG: Things will only get better. So, yes, we are looking forward to more films, more money, and more box office success. And more

Box Office India issues!

VK: This was a very thought-provoking discussion. What is important is how you follow through and I think we raised several interesting issues here. Over a period of time, once people start talking about it, something can and will be done. I think it’s about collaboration between what we are facing out there, and

Box Office India is the voice because you will put it out there. It will definitely help all of us.

NA: Exactly.

NG: Be the voice to our vote.

Nandu Ahuja (NA): Thank you, Box Office India, for this initiative to have all of us at the same table, and congratulations on your Sixth Anniversary issue and may there be many more to come. I think we should be discussing the growing importance of distribution in our trade and how distribution is as important as the creative part of filmmaking.  How important is it for the distribution division of a film to be involved with the creative people, whether it is an individual producer or even a corporate house?
Sundaresan Kumar (SK): Take, for instance, the FMCG industry… there are people who make products and there are people who display them, but between the retailer, consumer and producer, it is the distributor who gives the product a platform. If you do not give it an appropriate platform, even a good product will not sell. For example, Bahubali – The Beginning was given a platform and that’s why it could deliver. If it had not got that kind of platform in Hindi, it wouldn’t have seen those numbers.
NA: Speaking of Bahubali, let’s hear Anil’s point of view.
Anil Thadani (AT): Even though distribution is very important, at the end of the day, if the content is strong, the rest falls in place. It is very difficult for distributors to make a success out of a no brainer. So eventually, it’s the content that matters and it starts from the top and filters down to the bottom.
NA: That’s why, Anil, the integration between distribution and content makers is one of the most important things today.
Neeraj Goswamy (NG): In my experience, I believe there is a gap between content makers’ expectations and reality.
NA: (Cuts in) A huge gap.
NG: Every filmmaker wants his film to be assigned maximum screens. But when you come up with a smart distribution plan, it’s not always well-received. For instance, if you tell a filmmaker that his film is good and will gradually grow but it would be prudent to start small and go to the right cinema screens, he thinks – ‘Are you saying my film is a small film?’ So I guess educating filmmakers is still a challenge for people like us. We are trying to give them advice because we understand costs.
NA: I would like to point out that there is a myth about screens. People say ‘we want to release our films in X number of screens’. But people don’t understand that cinema count is more important than screen count.
AT: (Cuts in) But it was the distributors who started this trend, Nandu. You can’t blame filmmakers. The misconception of ‘the greater the number of screens, the bigger the numbers’ was started by us. As a distributor, when you say ‘these are my takings from so many screens’, it doesn’t mean anything.
SK: Anil, sometimes, that is said to make people happy. That’s what a producer or a big star wants to hear.
AT: But it is backfiring on us because convincing them otherwise is becoming difficult.
SK: I agree but it is also due to certain producers and content makers as well as the stars. They ask us what we can do for them, and to please them, we oblige.
Ritesh Arora (RA): It’s part of the PR exercise.
SK: Every film doesn’t need to get 3,000 to 4,000 screens.
Vivek Krishnani (VK): As you said, it’s about educating them. We were talking to somebody and they said, ‘Our film collected so and so numbers in the year 2000 when there were just 400 screens. Now that the number of multiplex screens has increased, collections should double.’ We need to educate them about their film’s potential and who really is their target audience.
AT: I feel it is a turnover game for a corporate house. It depends on how you look at it…
VK: Strategy.
AT: Exactly. So what is your goal, a high turnover or realistic business? This started to happen when the corporate studios entered the business.
NG: Also, the life of films has shrunk. Earlier, films would run for a month but now piracy has hit everybody. You are competing with several people. The life of a film is only the weekend. If you have a big film, you carpet-bomb and go to various centres simultaneously.
AT: It’s unfortunate that experienced producers don’t understand this. If they were to look at the balance sheet or business statement of a distributor, they would have something to reflect on. They have the catalogue, they have past experience to reflect on and, still, they don’t realise.
RA: I think they are aware but don’t accept that this can happen. Basically, since producers go wide and release the film in 4,000 screens, they want the money to come in too. They are aware that adding a screen would cost several thousands more, depending on the screen, but they want to show that their recent film is bigger than their previous release.
AT: I can totally understand if the star cast is big as the film is consumed. But it is disastrous for anything less than the top five-six films.
SK: The 80:20 principle works very well in this industry. In fact, it’s 90:10 – 90 per cent of collections come from those 1,500 screens, not the 4,000-5,000 screens.
Prakhar Joshi (PJ): 600-700 screens.
SK: It’s for the numbers to speak.
NA: With our small films like Badlapur and Tanu Weds Manu Returns, where we concised our release and it just broadened up…
AT: (Cuts in) But Nandu, you are also a producer there, so it becomes relatively easier as your money is on the line. But for a solo distributor, it is difficult because there is a disconnect. There is no investment in terms of production. So, for you, it’s like having larger control but if you have to take up on any film, it is difficult.
NA: There is growing awareness, slowly but surely.
SK: I agree with him that there is growing awareness, because we are giving out facts and figures.
NA: Yes, digital cost reserves, shares…
AT: Control digital costs. You guys are controlling the market but are making no attempt to control digital costs.
NA: Digital costs are now…
AT: It is huge! Nandu, the reason it was introduced was to penetrate everywhere. But look at the numbers; they don’t support the cost of digital. Do something more than just releasing films. Take up these issues as it will save you money too. Money saved is money earned.
SK: That is a very valid point because, internationally, digital costs are coming to a sunset but there is no such law in India.
PJ: There’s Scrabble…
AT: But that is only for studios.
SK: I am talking about the industry at large, not only about Fox.
AT: If giants like you get together, digital costs can be controlled. I mean, a majority of products are with you guys.
NA: No, the majority of products are with you, Anil. (Laughs)
AT: (Laughs) Those products don’t count, numbers-wise. Just one Bajrangi Bhaijaan or PK wipes it out. Unfortunately, the PKs and Bajrangis are not in my destiny.
PJ: No, but you are still at number two. This year, you are number two.
AT: These are only numbers, yaar. At the end of the day, you will get one big film by the year-end and you will be number one again.
SK: We all talking about bringing down marketing and production costs but the industry should be thinking about how to bring down the cost of prints. Also, the quality of projection makes a huge difference to collections. When you make a film like Bahubali, where you spend so much and you have to go and look for a good quality screen at some cinemas…
AT: But, Kumar, we are a Third World country. When you can go to a single-screen cinema, why should they flock to the plexes?
SK: I am not talking about plexes or single-screens, I am talking about the quality of projection. Now cost is not a factor because for the cost of a high-end digital projector, you can get almost the same experience as the other cinemas. Today, the cost difference isn’t much.
VK: Yes, it isn’t.
AT: But, with single-screens, they count every penny because they don’t have the numbers. So it is very difficult for them to make that investment. How many successful films do we have every year?
NA: The cost to upgrade…
AT: No, what I am saying is that with single-screens, the numbers are so pathetic that they can barely sustain their costs. They can buy expensive projectors only if the numbers increase.
SK: This is a chicken-and-egg story. All over the world, the quality of projection has risen but, in India, we are still stuck.
PJ: But, Kumar, Anil has a valid point. How many films do we have for single-screens and B and C centres?
NG: I would like to think we have a lot of films.
SK: That depends. There are times when a small city gets quality cinema and collections suddenly jump.
PJ: That is different. We are talking about the single-screens we have.
AT: That single-screen audience cannot afford to watch every single film that releases.
NG: But from the integration point of view, there are screens available that can be converted to 2K, Scrabble or UFO.
AT: The problem is, the cinema owner doesn’t have the money to invest in this technology.
NG: If he is keen on improving projection and offering the audience a better experience, he will have an advantage even over a multiplex. Today Chandan Cinema (a singleplex) is thriving and PVR Juhu (a multiplex) is also thriving, and they are a stone’s throw away from each other. Clearly, both of them are digital and both of them offer quality services to the audience. So a big film like Bajrangi Bhaijaan collects at both cinemas but it is addressing a different crowd in each cinema. What I am trying to say is that cinema owners should stop crying about not having money; they need to take the initiative. Don’t they have other sources of revenue such as service tax and service charge?
NA: Correct!
NG: They cannot throw up their hands.
AT: But, Neeraj, even after you account for charge, look at the average. Tanu Weds Manu…
SK: Anil, you are not getting the point. The minute quality changes, collections will change.
NA: Maybe the single-screen owner is not getting collections because he is unable to…
NG: …get his toilets clean.
NA: Yes, they are not getting adequate collections because of poor projection systems or because of the ambience.
AT: Why is it that in the same cinema, a
Bahubali collects but a film like Tanu Weds Manu Returns doesn’t?
NA: It’s the genre of the film, yaar.
AT: That is exactly my point.
SK: I don’t agree. I think it’s not the genre. I think if their toilets are clean, if the cinema upgrades, they can get a Tanu Weds Manu kind of audience. We assume the single-screen audience doesn’t want to watch films like this.
AT: But a Bajrangi Bhaijaan or a PK does brisk business at the same cinema. How many such films cater to that section of the audience in a year?
RA: We are not increasing our audience base. The reason is that the screens we have are not good enough, where the family audience can watch a film. The audience that watched PK and Bajrangi is almost the same but the collections of Bajrangi were lower. Why?
AT: Because the ticket rates are different. Distributors want ticket rates to increase even in crappy cinemas but will that audience be able to afford it? Reduce the rates and watch how occupancy rises.
SK: Anil, if I agree with you that there are not enough films that cater to that section of the audience, then exhibitors have to upgrade to be able to cater to all audiences.
AT: I am not disagreeing with you but, then, how many genres of films are we making for single-screens?
SK: Anil, if a single-screen upgrades, it will be able to screen multiple genres.
AT: Okay, so a distributor has to support that.
SK: Yes.
AT: But after every last big film, you ask the exhibitor to raise ticket rates for the next big film. You will have to stop doing that. If I have a 1,000-seater, what is the average occupancy my film enjoys in that single-screen? 30 per cent or 40 per cent. If you lower ticket prices, you might even raise your average occupancy.
NG: Correct.
AT: So why don’t you support exhibitors first?
NG: No one is ignoring that.
AT: No, but with every film, everyone wants to raise ticket prices.
NA: Who wants to increase ticket rates?
AT: Nandu, every big film that releases.
NA: When a regular, mid-sized, mediocre film releases, then prices are constant.
AT: No, I am saying that if you don’t increase the ticket price, your numbers might just be the same. Guage when does the audience come in to see a big film first. They are not going to come in for average films because they cannot afford to do that.
NA: That is true but there are both good and bad single-screens.
AT: Speaking of the good single-screens, Nandu, what is the occupancy after a week?
NA: Anil, the point Kumar and I are making is that aren’t the good and well-maintained single-screens earning more revenue than the badly maintained single-screens?
AT: Of course they are. What I am saying is don’t increase ticket rates in the bad single-screens because there is a tendency to do that.
RA: Supposing you are going to watch a film at Juhu or Phoenix… If you have a choice like Regal near where you live, you would go there and not mind paying a little extra as you are getting a better experience.
AT: But the majority of film-goers cannot afford to do that.
NG: Let’s have a couple of exhibitors with us next time. (Laughs)
SK: Yes, this is a one-sided discussion. (Laughs)
AT:  No, I am an exhibitor too.
NG: We feel your pain.
AT: You know, Neeraj, they have a property worth crores but they are like beggars today.
SK: Point taken, Anil. All I am saying is that quality should improve. The question is, who should do it? There is no doubt that quality screens and better projection systems can only help the industry.
AT: Some distributors threaten them, yaar.
NA: Okay, now let me…
AT: (Laughs) I am not pointing a finger at you.
NA: Let’s talk about the challenges we face as distributors.
NG: I think we are all aware of our daily challenges. I would like to think momentarily about how the world is changing in terms of distribution and how entertainment is consumed now. Yes, the experience of sitting in a dark room and watching a film with 300 people is great, but India is now sitting on the edge of a digital boom, and when I say that, I am talking about the 4G rollout a few months from now.
There was a news article in the US on how Netflix has better and higher revenue growth over a five-year period compared to other networks. They have nine million mobile subscribers, which is a massive base. I am trying to point out how the way entertainment is going to be consumed is poised to change. Is it going to be a challenge for us to make smaller films because the platform won’t have the big, cinema experience? And will people want to see films like that on their phablets while on the move? Nowadays, thanks to 3G and unfortunately piracy beats us to it, our films are being consumed on local trains on a daily basis.
VK: We need a windowing strategy, to ensure that there is a theatrical release window followed by a digital window. The international market follows a platform release strategy, which we cannot adopt in India as a small film cannot support a pan-India release. So, if I want to release only in the Mumbai circuit or purely in CP or CI, I should be allowed to do that. But I am not allowed to because the cinema guys prefer a pan-India release. But if smaller films are allowed a platform release – say, I am releasing in Mumbai today, in Delhi-UP next month and so on – I can go to more markets if the film works or I could shut shop if it doesn’t work in more than two markets. Then I wouldn’t have to incur the cost of a pan-India release.
NA: How can we do this with piracy?
AT: That’s a hand-in-glove situation.
SK: We still have to do submissions and we are able to do that in Hollywood, at least.
AT: That needed to be done.
VK: The Telugu market is doing a great job in the battle against piracy. We were at an anti-piracy meeting the other day, where there was a whole case study on Bahubali and how they are extremely focused on anti-piracy.
AT: But for Bahubali, the producer was very vigilant. How many of us actually take care of piracy as individuals?
PJ: Bahubali was available on Friday.
VK: It was. But again, the quality of the print…
AT: In the South, they have price control, ticket price control, and controlling piracy is top priority.
VK: To answer your question, obviously digital is big and there is money to be made there. As a film, you can exploit the digital window immediately after the film’s theatrical window, and before the satellite window comes in. But if small films are allowed a platform release, you can control you distribution cost. If the cost is low, you also make good money.
PJ: Barfi! released in 600 prints. The problem with national chains is if you’re releasing in Vadodara and if you escape the city then it’s okay. That’s what happens with English films. The thing is that they allow you three to four main markets.
RA: Just like Barfi! released, and I think we released Piku in 800 properties.
PJ: Haider was 800-900.
RA: But if to explore can we come down to 600 screens from 800?
NG: Hypothetically, Manjhi: The Mountain Man is a great film but you had to release it pan-India. If I released it in a platform manner, the film would have done more business and the cost could have been controlled. We also had challenges as it was pirated and, in spite of that, the film was well received and we got tax-free status in five states.
NA: And doing very well.
NG: Yes, but we had to convince filmmakers that although it was a good film, we didn’t want to go overboard and we should release it at only 500 locations. We filtered it.
AT: But even so, of the 500, how many were redundant? I assume 250 or 300 would have been redundant.
NG: It fired up really well in the North. It did well in places where we thought it would not do well, and getting tax-free status in UP, MP and Bihar really helped. So coming back to our first point rather than shouting about the big 4,000-print release, let’s shout about the 500 prints that we are doing. Actually, it is a wake-up call for filmmakers that they don’t have to go full-on with the number of screens.
AT: Masaan released in 230 to 240 screens and I wanted to do that number because I was afraid of piracy. I wanted to open pan-India but, as he was saying, a state-wise release would have been a better idea. If we don’t have to worry about piracy, we could open in Mumbai followed by Delhi…
NG: I think piracy can be controlled, we simply haven’t take it up on a war-footing. We already have the support of the law enforcing agencies. The cops are on our side. For Manjhi, they were, like, come to us and we will help you wherever we can. They are very particular about intellectual property rights. I urge all studios to start making a noise about piracy. We need to crack down and we need to get to know the source.
NA: We shouldn’t take it lying down.
AT: The revenues and averages will go up. The audience that frequents single-screens watches movies at home because they would rather spend `100 on a pirated DVD.
NA: Down South, fan clubs of the big
actors wouldn’t even think about buying a pirated DVD.
VK: In India, there is a study which shows that digital piracy is not harming India; it’s the cam-recordings that are taking place in cinemas.
NG: You would be surprised. Cam-recordings are not taking place in cinemas. Piracy starts with content that is shared among digital integrators. That’s why the quality of pirated DVDs has become so good. We are investigating the matter.
AT: If you unite, you can win this battle.
SK: That’s even more reason for standardisation.
PJ: Things like these are usually discussed at the MPA level.
NG: We do discuss this at the MPA level. Currently, we have got together some forensic people from overseas for this. When we have some concrete evidence, we will go after these people. It happened two weeks ago and we are still working on it.
AT: If you share this information with corporate houses, they can take preventive measures.
SK: To curb piracy, the industry as a whole needs to think about standardisation.
NA: I would like to discuss the platform release issue some more. I want everybody’s thoughts on that. How to justify the cost of marketing against a platform release?
VK: Marketing takes place in a controlled environment.
AT: Yes.
NA: What you are spending depends on the kind of film you have. I want to know how you justify this platform.
AT: Our digital cost is not very high. I am talking about using the Internet for advertising, now that is very cheap. Now when you localise a release, you can target only that market. You will have so many new options that will open up. Let say, you have created awareness in Mumbai, TV is not the only medium.
NA: Today with digital platforms, it will be difficult.
AT: If a dubbed film can earn `100 crore, then this too can be achieved.
SK: Nandu, whether it is difficult or not it depends on the content; the content has to be good but look at Hollywood. They have platform releases.
VK: Yes, they do.
NA: I don’t know.
VK: Take the example of Slumdog Millionaire and Clint Eastwood’s American Sniper, which starred Bradley Cooper.
AT: It was a very expensive film. Even he couldn’t do it.
NA: According to me, it is not possible right now.
AT: It’s the future, Nandu.
SK: Choose a market where media isolation is possible. If you are an FMCG company and you say you want to go to Tamil Nadu as a test market for a soap, you can do it because product isolation is possible. But we don’t have that kind of ecosystem. If I want to target only Mumbai city, what options do I have other than outdoor and print and radio?
VK: There are cable operators but again, that ecosystem has not developed. If we do it, the ecosystem will develop. My marketing cost for just Mumbai territory will come down to…
NA: (Cuts in) Can it be justified against the cost of the film? I’m just curious.
VK: It depends on which film you are making it for.
AT: What if you are making a small film?
NA: You can’t.
AT: No, Nandu, how would you justify the small film release in pan-India?
NA: Would you have preferred a platform release for Manjhi?
NG: Had the film not had the issues it had, then yes.
SK: Yes, if it brings down the cost, then why not?
NG: I think the issue with exhibitors is if you give it to one exhibitor, give it to all of them. If you are skipping the city as a whole, they wouldn’t have a problem.
NA: But there are multiple issues, na.
NG: Yes, but it is a work in progress and someone has to see where it goes.
NA: Digital piracy is a challenge.
AT: Exhibitors toh hai but first you are talking about the advertising, you are increasing your costs by releasing it pan-India.
NA: No, I feel with this, we are moving one step backward.
VK: On the contrary.
AT: It is a step forward, your numbers will increase, a good film will receive a pan-India release later and your numbers will come from everywhere.
NA: In fact, on the contrary.
AT: How did Rajshri get the numbers for Hum Aapke Hain Koun? If they had released the film across India, they wouldn’t have received the numbers they did.
NA: That was a different time.
AT: Nothing is different. Today, why do films that release on Friday get a superb jump on Saturday? Because word-of-mouth publicity is strongest today.
NA: Word-of-mouth and digital.
NG: That’s social media.
AT: Social media will filter pan-India and you will have better releases and better numbers. There’s also YouTube.
PJ: Even though you don’t do TV, it is convincing as well. If they are doing Manjhi content-wise, then the first problem they will face is of actor and actress.
SK: Let’s just say we all agree to disagree and move on to another issue.
BOI: Given what Neeraj was saying, will your most critical discussions henceforth be with a Reliance Jio rather than a PVR Cinemax?
VK: No.
NG: This is your theatrical experience.
VK: Theatrical experience is different, that window is different.
SK: What will happen is, even with Hollywood, there are some movies you will still prefer to watch on the big screen, so the quality of production and exhibition should improve. I was coming to this. All these platforms can coexist, provided the product allows that. There are some products that should go into Reliance 4G directly and not even come to theatrical.
VK: So, that will make a difference only to Jio; that is an altogether different ecosystem.
AT: No, why should every movie go to Jio?
SK: That’s what’s going to happen.
VK: That’s what I am saying; they can make a film for Jio.
SK: That’s what’s going to happen and for the exhibition industry to survive, they will have to improve production quality and make different qualities for different platforms. Even if you show me Bahubali one hundred times on TV, I would still prefer to watch it on the big screen.
VK: Internationally, there are a lot of films that go straight to DVD because the market for DVDs still exists. In India, they will go straight to the Internet.
AT: Overseas, Hindi films go straight to DVD, and that will start happening here too.
NA: They also enjoy a theatrical release. Both platforms will coexist and obviously theatre will remain the largest platform. It is not going to die.
SK: Cinemas aren’t vanishing but the product mix has changed.
VK: And you get more opportunities to make money.
SK: The exhibition quality has changed and so has the product mix.
VK: If you look at the learnings from the international market, 3D as a technology and the immersive experience it provides, most cinemas in the US or across the world are 3D or 4D enabled. In India, we haven’t seen 3D take off at all, especially in Hindi because I think if anything has to drive change here, it has to be local films. Hollywood films can do it up to a point only. Where and how do you think 3D will bring in that growth that we are seeking in distribution?
BOI: I think ABCD 2 was the latest example of 3D conversion.
PJ: I think it did. Revenue-wise, 3D prices are high. Plus first the 2D to 3D contribution was 20 to 25 per cent but in current times, you can ask this question because the revenue split is 45-55 per cent. 2D is also contributing 45 per cent. So now the question is, if we had not converted to 3D, would we have got the same audience and the same revenue? But in this case 3D, because of that extra revenue, made sense.
AT: Not extra…
PJ: … a little higher.
SK: My point is, 3D is an altogether different discussion. That is exactly my point but the problem is, TV internationally also is kind of settling down.
VK: But there is growth, yahaan pe growth hua hi nahin.
SK: No, that’s because, again internationally too, it is settling down because of the quality of 3D. Not everyone can do that. If Avatar had released today, the 3D percentage would jump.
PJ: In B and C towns, 3D is still there. It’s a charm. Even the quality is good and if the quality is good, people are going for 2D.
RA: If the quality is good, people will go and watch the film.
VK: There is an audience for 3D but unfortunately the format is not being made in India. But, yes, it depends on the quality.
SK: And make content-rich films. Make content which has to be viewed on the big screen.
VK:  I think it is more about leadership in thought. So if Raju (Rajkumar Hirani) decides to make a 3D film, see what that does to cinemas embracing 3D.
PJ: Prices will rise. If it’s 3D, prices will increase. (Laughs)
AT: It starts from the top. So if you make a good film, the audience will pay to watch it. Just don’t make one film a year. Make 10 such films a year.
PJ: Anil, it’s not the distributor who wants it, even exhibitors increase their rates.
AT: Content should improve, quality of exhibition should improve. We have to set the ball rolling. If you have great content releasing every year, it will snowball.
PJ: He is right. In India, Avatar set the 3D ball rolling because it was something the audience had not seen before.
AT: So it’s based on the product. Every film can’t be like that.
NG: In today’s times, if an Indian film had to be enjoyed in 3D, it has to be Bahubali, the size of the film, the action, the war, the scale of the film… people are comparing it to swords and sandals. If Bahubali had been in 3D, the revenue would have been much, much better.
PJ: Yes, it has action and the scale.
NG: It’s the Indian answer to Avatar.
SK: Also, the problem with 3D is the quality of exhibition.
AT: Of course! Everything should improve.
NA: That’s what I am saying, improve your cinema.
PJ: The quality of cinemas is very good in metros and it declines in the small cities. When PK released, we went to cinemas in Muradabad… people were drinking and smoking inside the cinemas.
RA: It is also the profile of the audience that patronises these cinemas – largely male and no family audience. So, obviously the toilets are not clean and women will not venture into cinemas like these. So occupancy will never grow for, say, a family film. For an action film or a big star cast film, men will go in large numbers.
AT: When Hum Aapke Hain Koun released, every cinema hall improved its quality and the movie ran for a year. Revenue came in whether you got two weeks or three weeks but because the film ran for so long, every cinema improved its quality.
SK: Anil, you’re talking about improvement of showcasing cinema. (Laughs)
AT: Get a product like this which will run for a year and revenues will be much more.
SK: Improve the toilets, structure, quality of cinema halls. Avatar brought 3D to India, so it’s the quality which we need to improve.
AT: Arrey, since that film ran for a year, exhibitors saw bigger revenues and were able to improve the quality of their cinemas and services. I am saying make a good film which will run for at least a few weeks and revenues will flow in. Understand that exhibitors need money. The number of films that work every year is very low.
SK: Collections will follow if cinema is good.
PJ: He is saying that to generate revenue, we need to make more films that work.
AT: Let me explain why I am saying that it starts from the top. Tanu Weds Manu Returns is a damn good film but it didn’t reach out everywhere. What is your ratio of multiplex to single-screen?
NA: Around 80:20, yaar.
AT: No, it is 85:15.
PJ: For?
AT: For a successful film like Tanu Weds Manu Returns. Today, what is the single-screen contribution to this ratio?
PJ: Not more than that for even Bajrangi Bhaijaan.
AT: And that too if you get more films a year like Bahubali; if you get 10 films a year, things will automatically change.
NA: As a producer, I can’t limit myself to make 10 Bahubalis, na?
AT: What I am saying is if only we could get 10 films like that. Unfortunately, we only get three to four such films. That is not enough to survive.
RA: When you’re talking about single-screens, you may have noticed that ticket prices are high in the big cities, where there are multiplexes. There aren’t many single-screens in big cities and the number increases as you travel to Tier II and Tier III cities. Here, ticket prices are very low. That’s why their contribution is very low.
AT: No, ticket prices are not low anywhere. Today, Kolhapur is a Tier II city.
RA: What’s the average ticket price of single-screens there?
AT: Around `80-` 100.
RA: And, here, we are paying more than `500.
AT: No, no, no even in the big cities, single-screen charge `80-100.
PJ: In Mumbai, single-screens charge `200.
SK: You are right but the contribution and the difference between ticket prices is different.
VK: Are you saying that single-screens that have really good infrastructure are still suffering?
PJ: No, they are not.
VK: For want of content.
AT: Today, the guys who are surviving are the new single-screens. They are well constructed. So people will watch films there. Right now, because films are not working, they are even getting English products, which don’t work everywhere.
VK: Correct.
AT: They need a wider range of products so that there is wider choice. Here, there is none.
PJ: Then good for them.
AT: Very good. It’s fantastic but it’s very limited.
VK: The fact is, single-screens that have good infrastructure are making money and those that have poor infrastructure are not. The answer is to improve infrastructure.
AT: Absolutely! But they have to invest so much, which they can’t afford. What I am saying is affordability is difficult.
VK: Are you suggesting that we help these cinemas to develop their infrastructure?
AT: In a way, yes. Everything is subsidised. As he was saying, the transmission cost is reduced. There are many factors involved. If everything works in their favour, why wouldn’t they agree? Who would not want to make money?
RA: The genesis of this payment to UFO or payment to Scrabble was that we would support the exhibition of movies. The reason we are paying is because the EMI payment to the integrators allows them to provide discounted rates to cinemas.
NA: Anil, I am talking about taxes now. I am moving the whole conversation: do you know service tax is levied on certain cinemas in certain states? Are those single-screen owners even utilising service charge correctly?
AT: They are surviving only on that.
NA: They are surviving because they are counting it as revenue rather than using that money to upgrade their cinemas.
AT: Because they are not being able to cover their costs. Take any single-screen cinema, Nandu, where an English film does not perform. Their average is so low that they are investing their own money to keep the cinema running. There was an exit clause for single-screens. So why doesn’t the owner sell? But they cannot do that.
NA: Why don’t they upgrade their cinemas?
AT: Because he cannot afford the situation he has been in over the years.
SK: You just said there are so many good single-screens. How are they surviving?
AT: Because he thinks that his property is worth so many crores, he is afraid of doing that.
RA: There are other infrastructure issues as well, like entertainment tax. You have an exit clause in certain states.
PJ: Mukta has recently upgraded many of its single-screens to twin screens.
AT: But one needs investment like that.
SK: If I want to exit this business, there is no way to do it in certain states.
PJ: Even in Maharashtra.
SK: Because it’s like that, even a new investor will not invest in this business.
RA: But when you invest in cinemas and you start getting returns… we have even seen some proof of this.
SK: My point is simple… if there is an exit clause, I would say that I will renovate my cinema and make so much more money, but if I don’t renovate, I will make X amount of money. And then I will decide whether I should renovate or shut. When you give that option to exit automatically, what happens is that the money with fresh investors is what I would like to get into this industry. That way, more investment will also come in. Then I can either go to retail or close it tomorrow, if it doesn’t work. As things stand today, I don’t have an option.
AT: No, but as distributors, we can’t do anything about it.
SK: No, we can’t.
PJ: It has to start from the top.
AT: The government needs to make policies.
PJ: That’s why Nandu was saying if GST comes in, it will help the industry.
AT: I feel Welcome Back should run for 100 weeks everywhere and we get that opportunity. So Nandu, we wish you all the very best.
BOI: Let’s move on to other issues.
AT: There are more issues?
RA: Achha, that’s why he ended this topic… to move on to the other! (Laughs)
PJ: I think tax is one of the biggest issues, like in UP or in Bihar. Taxes are so high that cinemas cannot invest and get returns.
BOI: Going forward, do you think a film like Masaan, for instance, or Manjhi will be easier to distribute or is it still fickle?
NG: Honestly, nothing is easy and nothing is difficult. It’s all about marrying strategy with content and you hope you get it right. It takes as much effort to release a film in 3,000 screens as it does in 300 screens. That effort doesn’t change.
BOI: But what about scarcity of screens?
AT: I don’t think there is a scarcity of screens. It’s more in our minds.
NG: The real challenge is me getting my collections the next morning when I need to inform the trade guys. That is a bigger challenge. I would like exhibitors to move on and I would like to know how much money my film made the previous day, the opening weekend and the first week.
RA: Again, we are talking about infrastructure.
NG: It is not being implemented because certain cinemas have certain issues. Why? All these cinemas are listed on the stock exchange, still they don’t want to report their collections. They don’t want to use tools that are available to bring about transparency in numbers. They shy away from this. You have got an international company in India saying, we will help you get your information to you in time.
BOI: Rentrak.
NG: Yes, why is it so difficult? I don’t need to know anybody else’s numbers if they don’t want to tell me. But can I know how many tickets I sold the previous night?
BOI: What do you think of the so-called fudging of numbers? Where does it come from, on whose orders?
NG: Some of it is due to insecurity among all the stakeholders. Let’s do some plain talking. Every actor wants his film to be big because their market value depends on it. Every producer wants his film to be big because there is another studio around the corner saying they make more money. Every studio, listed on the stock exchange or not, wants to make bigger headlines. So it comes from everywhere. All these insecurities come into play and the easiest thing to do is to put a number out there which says that we are the biggest. But when you look at your profit and loss, you know you are bleeding or you know just how successful you are. The day you can look yourself in the mirror and say, yes, this is the truth, and I can face it, this fudging of numbers will stop.
VK: We are the only industry that goes out and says, ‘We made `500 crore or we made `600 crore’. Show me any other industry which says they made `3,000 crore worth of sales.
RA: Who knows the actual gross. They have a formula that they use to convert it on their own before they announce their numbers. They don’t report revenue, they report gross.
NG: Yes, exactly.
NA: But they don’t really fudge. Everyone knows all the numbers. It is no secret, yaar. Everyone in the industry knows what’s what.
AT: (Laughs) Nandu, everybody knows but yet it is happening.
NA: Today, I would know the actual collections of Bahubali and you would know the numbers of Bajrangi Bhaijaan.
AT: Yet, everyone is doing it.
NA: Fudging is also dying out.
BOI: A last word from each of you?
SK: A lot of coordination is required, from filmmakers to distributor to exhibitors, and we need to work as an industry and not as separate verticals to improve infrastructure and the industry. There are so many issues which are affecting the industry.
PJ: I think the government should give more concessions to exhibitors so that more plexes will be built, especially in small towns. For instance, Dehradun was a `15-20 lakh centre seven to eight years ago. But after plexes came in, revenue has risen to more than `2 crore. Even a small town like Sangrur, which was a
`1 lakh centre, is today at `50-60 lakh at the box office. So we need more concessions so that we can go to small towns. Right now, we release films in 150-200 cities while we have more than 400 towns, which have a population of 1 lakh. And 90 per cent of our revenue comes from the top 100-150 cities. So if we get better taxes and better cinema, the quality of cinema halls will improve. And, yes, also stable ticket prices.
RA: We should basically work on how we can improve infrastructure, which is how we can bring audiences to our cinemas, which will increase revenue. This would increase our base from 300 to 400 to 500. If we are really looking forward to being a `1,000 crore industry, we need to improve infrastructure in Tier II and Tier III sectors, through investments and by providing them some relief by working through the government. We really need to look into infrastructure. That will definitely help us.
NG: Things will only get better. So, yes, we
are looking forward to more films, more money, and more box office success. And more
Box Office India issues!
VK: This was a very thought-provoking discussion. What is important is how you follow through and I think we raised several interesting issues here. Over a period of time, once people start talking about it, something can and
will be done. I think it’s about collaboration between what we are facing out there, and
Box Office India is the voice because you will put it out there. It will definitely help all of us.
NA: Exactly.
NG: Be the voice to our vote.
Box Office India
Collection Chart
As on 14th October, 2017
FilmsWeekWeeklyTotal
Chef14.90Cr4.90Cr
Tu Hai Mera Sunday118.37LK18.37LK
2016 The End14.20Lk4.20Lk
Call For Fun13.55LK3.55LK
CRD12.21LK2.21LK
Muavza - Zameen Ka Paisa11.14LK1.14LK
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