Hollywood hasn’t yet maximised the potential of the Indian market, where 2013 saw some record-breaking Bollywood hits despite a slowdown in box-office growth. Liz Shackleton reports.

Although the Mumbai-based, Hindi-language film industry produced some record-breaking hits in 2013, overall box-office growth appeared to slow again last year, following a bumper year in 2012.

Bollywood hits included Yash Raj Films’ action adventure Dhoom: 3 [pictured], which became the biggest Hindi film of all time on its December release, grossing $64m in India and $27m overseas.

Other heavy hitters included Disney UTV’s Chennai Express and Yeh Jawaani Hai Deewani, which grossed $44m and $38m respectively; superhero sequel Krrish 3 ($38m); Sanjay Leela Bhansali’s Ram-Leela ($24m); and Bhaag Milkha Bhaag ($22m), backed by Viacom18 Motion Pictures.

But the success of these films was not enough to sustain the previous year’s growth in the overall market, about half of which goes to Tamil, Telugu and other regional-language productions and just under 10% to foreign films. Although figures were still being compiled at the time of writing, theatrical box office was thought to have increased by 15%-18% in 2013, compared to growth of 24% to $1.35bn (rup85bn) the previous year.

Hollywood also had some successes in India in 2013: Marvel’s Iron Man 3, distributed by Disney UTV, grossed $12.3m, while Universal’s Fast & Furious 6 took $10.3m.

Other big films included Warner Bros’ Gravity and Man Of Steel, which grossed $6.7m and $5.9m respectively; Fox Star Studios’ The Wolverine with $4.8m and Paramount’s G.I. Joe: Retaliation with $4.2m. However, the US studios did not have as strong a year as in 2012 when five films grossed more than $10m.

Multiplex needs

The US studios have made gains in India in recent years, due to multiplex expansion, better marketing and the practice of dubbing films into Hindi, Tamil and Telugu. But they are not seeing anything like the growth they have experienced in China - and that is not just due to the popularity of local films. 

The roll-out of multiplexes has been much slower in India, due to red tape and sluggish development in the commercial real-estate sector, which in turn is slowing the expansion of DCI-compliant digital screens. In the last few years, Indian exhibitors have added only around 200-250 multiplex screens annually, compared to more than 5,000 new screens in China in 2013. 

“Overall the market has still not reached its potential for Hollywood product as there is still a big need for more multiplexes and digitisation, not to mention the local product which continues to account for 90% of the total market,” says Paramount Pictures International (PPI) president Anthony Marcoly.

One area where the US studios have seen growth is through their Indian acquisitions and joint ventures - Disney UTV, Fox Star Studios and Viacom18 Motion Pictures - all of which produce local-language films. While Hollywood tentpoles struggle to break the $10m benchmark in India, three of the top six Bollywood grossers last year were backed by Disney UTV and Viacom18. 

But development of exhibition infrastructure is crucial for both local and foreign studios. With a tiny video market and low broadband penetration, the film industry still relies heavily on theatrical - in 2012, box office accounted for 76% of film revenues, according to KPMG.

Multiplexes also allow for a more diverse range of content and Indian audiences have already proved they have an appetite beyond the traditional diet of star-laden Bollywood films. Last year, Disney UTV distributed three independently produced Hindi titles - The Lunchbox, Shahid and Ship Of Theseus - all of which performed relatively well.

“What made last year special was that audiences were appreciative of specialty genres, first-time film-makers and new talent,” says Amrita Pandey, vice-president and head, theatrical, television & digital distribution - studio, Disney UTV. “Content and storytelling took precedence more than ever before.”

Non-studio foreign films also continue to make inroads. PVR Pictures, the distribution arm of leading exhibitor PVR Cinemas, scored last year with Now You See Me, which grossed $900,000, Riddick ($600,000) and Jobs ($370,000). The company is currently capitalising on awards buzz to roll out several of this year’s Oscar contenders, including The Wolf Of Wall Street, American Hustle, 12 Years A Slave, Dallas Buyers Club and Her.

“The Oscars have a big influence on Indian audiences and media - even the Golden Globes had an impact this year,” says PVR joint managing director Sanjeev K Bijli. “There’s a lot of goodwill that comes when a film opens in the US and the rest of the world. Day-and-date is critical - a lot of independent films are opening here just one or two weeks after the US.”

But niche product will not reach its full potential while the market remains under-screened. Local studio chiefs point out that even the Bollywood films are still reaching only a small portion of the total audience. One problem has been the weakened economy and political uncertainty that has dogged the end of the current government’s five-year term. The local industry is hoping that investor confidence will return following general elections in May.

“One good thing is that all the multiplex companies are now listed entities with access to corporate finance, so they’re in a position to fund their growth more aggressively,” says Viacom18 Motion Pictures COO Ajit Andhare. 

PPI’s Marcoly adds: “After several years of very slow progress, there now appears to be some traction in the development of new multiplexes, which is critical to see this market really grow.”

Indeed, India’s leading exhibitors - PVR Cinemas, Inox Movies and Big Cinemas - are all finally starting to expand their footprint into tier 2 and tier 3 cities. PVR, now the biggest chain with 408 screens following its acquisition of Cinemax, plans to open 70-80 screens this year, across markets of all sizes, including a five-screen complex in the southern city of Chennai. 

Cracking the south is crucial to growth, as this region has high levels of cinema-going, but has proved the most resistant to the multiplex revolution and other forms of change. Two of the south Indian states - Tamil Nadu and Andhra Pradesh - still have government-imposed curbs on raising ticket prices.

Driving ancillary

There are also big structural changes taking place in the cable TV market that could lead to more ancillary revenues for film. The Telecom Regulatory Authority of India (TRAI) is currently digitising the cable industry, a move that is expected to stem piracy and increase subscription revenues for broadcasters. This should eventually lead to the introduction of a pay-per-view window for movies. Cable digitisation is moving more slowly than anticipated, but should be more or less complete by the end of 2014. 

Elsewhere, the industry may also be looking to overturn an unpopular ruling by India’s health ministry that made it mandatory for all films to flash up intrusive anti-smoking messages whenever a character lights up on the big screen. The legislation prompted Woody Allen to pull the Indian release of Blue Jasmine last year, and local director Anurag Kashyap has delayed the release of his latest film, Ugly, while he fights the ruling through the courts.

But whichever way the political wind blows, India’s film market is unlikely to stop growing. It is just that, unlike some of the other BRIC markets, it will grow at its own uneven pace, thanks to its unique and at times eccentric characteristics. At the end of the day, this is still a market of 1.2 billion consumers whose favourite pastimes are cricket and film. 

FICCI Frames convention tackles india’s issues

Celebrating its 15th edition this year, the FICCI Frames convention (March 12-14) will be discussing many of the issues that affect the Indian film industry, including regulation, new business models for digital cinema, box-office tracking, intellectual property and shooting in 3D.

Organised by the Federation of Indian Chambers of Commerce and Industry (FICCI), the conference also covers the wider Indian media and entertainment industry, with different tracks focusing on film, broadcast, digital entertainment, animation, gaming and visual effects. This year, the organisers expect around 2,000 Indian and 600 foreign delegates.

In a year when the world’s largest democracy heads to the polls, the major theme of Frames 2014 will be: Media and Entertainment: Transforming Lives - highlighting the role of media in social change. Discussions will cover policy reform and regulatory changes, as well as how to produce socially meaningful content.

Speakers confirmed so far include producers Andy Paterson (The Railway Man) and Lydia Dean Pilcher (The Darjeeling Limited), author William Dalrymple, Rentrak Corporation CEO Bill Livek, Reliance MediaWorks chief creative officer George Murphy, Celestial Tiger Entertainment CEO Todd Miller, Asian Animation Summit chairman Kim Dalton, and Roger Fisk, the communications guru on both of Barack Obama’s presidential election campaigns.