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A Note-Worthy Year

Around this time last year, many of us – much like the nation at large – were following an intensive three-step programme.

Step 1: Stand in a long line outside a bank branch to deposit any `500 or `1,000 notes you may have lying around. Step 2: Scout around to find the rare ATM that is still operational. Step 3: Queue once again outside the ATM and pray that the machine doesn’t run out of cash before you get a chance to withdraw the princely sum of 4,000 bucks.

It all started on the evening of November 8, 2016 when, in a nationally broadcasted address, Prime Minister Narendra Modi surprised the entire country by announcing that in a few hours’ time, all `500 and `1,000 notes would cease to be legal tender.

With almost 90 per cent of the currency sucked out from a predominantly cash-based economy, it certainly wasn’t business as usual in the weeks and months that followed. The jury is still out on how effective the radical measure of demonetisation has proven to be, but with virtually all the old notes being deposited in banks, it would certainly seem that at least some of the stated objectives of the exercise weren’t really realised.

What is also now irrefutable is that the shockwaves caused by the decision had, at least in the short term, a negative impact on many sectors and dragged down the overall economy in subsequent quarters – as reflected in the GDP numbers and corporate earnings results announced since then.

The film trade wasn’t immune to the November bombshell either. With cash-in-hand being so scarce, essential expenses obviously took priority over a discretionary spend like a film ticket, and that was clearly reflected in the disappointing performances of most films that released in the weeks immediately following the note ban.

But, beyond the immediate aftermath, what (if any) was the lasting effect of demonetisation on the film business? That’s the question we are seeking to address this week, on the first anniversary of that momentous announcement.

To do so, we are comparing the overall box office collections during the year following demonetisation i.e. November 9 to November 8 with those clocked during similar periods in preceding years. Take a look at the data below:

Given the very apparent overall slowdown we witnessed in the period following the note ban, as also the general sense of despondency and disappointment that has prevailed over the box office this year, it comes as a big surprise to see that the year since demonetisation has actually been the most remunerative ever, and by some margin at that.

This goes against the grain of all our preconceived notions, and one even suspects a calculation error till realisation dawns that this period coincided with the release of the two all-time highest grossers at the Indian box office. The combined collections of the Hindi version of Baahubali: The Conclusion and Dangal add up to almost `900 crore, or almost one-third of the entire kitty for the year.

So what we are really seeing in the seemingly healthy topline for 2016-2017 is a statistical optical illusion in which a few over-performers are propping up the laggards that comprise the vast majority. That becomes even more apparent when we break down the overall revenues of each year into two blocs – the collections amassed by the Top 10 films in each period, and those of the remaining films, as below: 

This table presents a more accurate picture of the bundle of contradictions that the last 12 months have been – both the highest per film earnings for the top tier of the films, as well as the lowest averages for the rest were recorded during this period.

As for the reason behind this phenomenon, one could speculate that just as a near-death experience often sharpens one’s appreciation of what is truly important and leads to a radical reorganisation of one’s priorities, the sudden and drastic cash crunch brought about by demonetisation has led to a similar reassessment of spending priorities by the consumer. As a result, anything perceived as not worth the price of a ticket is being harshly rejected, while a more-than-expected reward awaits those who earn the audience’s approval.

To summarise and end this note (no pun intended!), nothing describes the year of the note ban at the box office better than these iconic opening lines of A Tale Of Two Cities, the Charles Dickens classic: It was the best of times, it was the worst of times… 

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