The indian film industry

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THE INDIAN FILM INDUSTRY Films are the most popular form of entertainment. India is now the largest producer of films in the world. Since 1931, the film industry has produced more than 67,000 films in more than 30 different languages and dialects. The film industry recorded a loss of Rs. 3 billion and gross revenues of Rs 39 billion have been recorded in 2002. But, it is expected to grow annually by 19 per cent to reach Rs. 93 billion by 2007. The industry produced 1200 films in 2002, and 1,013 films in 2001, up from 855 films in 2000. While Hindi films continued to be the largest segment in 2001 (23 per cent share), south Indian language films (Telegu, Tamil and Malayalam) have seen a considerable growth. Last year’s actual revenue was only Rs. 39 billion. High- profile movies from 2002 such as Devdas and Mr. And Mrs. Iyer did not bring in as much cash as expected. The number of films made annually is expected to fall, leading to an increase in the average revenue per movie. Problems faced: Shortage of cinema halls 1

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Transcript of The indian film industry

Page 1: The indian film industry

THE INDIAN FILM INDUSTRY

Films are the most popular form of entertainment. India is now the largest producer of films in the world.

Since 1931, the film industry has produced more than 67,000 films in more than 30 different languages and

dialects.

The film industry recorded a loss of Rs. 3 billion and gross revenues of Rs 39 billion have been recorded in

2002. But, it is expected to grow annually by 19 per cent to reach Rs. 93 billion by 2007. The industry

produced 1200 films in 2002, and 1,013 films in 2001, up from 855 films in 2000. While Hindi films

continued to be the largest segment in 2001 (23 per cent share), south Indian language films (Telegu, Tamil

and Malayalam) have seen a considerable growth.

Last year’s actual revenue was only Rs. 39 billion. High- profile movies from 2002 such as Devdas and Mr.

And Mrs. Iyer did not bring in as much cash as expected. The number of films made annually is expected to

fall, leading to an increase in the average revenue per movie.

Problems faced:

Shortage of cinema halls 

India has around 12900 cinema screens (a UN Study). This leads to a serious shortage of screening facilities

in India. Even the existing screens aren’t technically upto the standards required. Many of them are being

shutdown or sold off. The economics for a multiplex works better. The success rate for movies has gone down

drastically since the last year. States like Rajasthan, Maharashtra, Haryana, Uttar Pradesh and Madhya

Pradesh have been given tax breaks for multiplexes. Halls with smaller capacities also are better for niche

films.

The government has in recognition of this fact, given tax breaks to multiplexes built in the rural areas and

non-metros.

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Tax structure

India has a very lop sided entertainment tax structure. Though SIMCON has recommended a maximum of

60% in each state, in states like Gujarat, it is as high as 100%.

Improvement of existing movie theatres

The cinema halls need to be renovated so that more viewers are attracted to watch films there. As per the

current market trend most hall owners don’t earn enough to be able to upgrade their theatres. The solution to

this could be flexible ticket pricing. Black marketing of tickets is a common feature in India. A system could

perhaps be introduced whereby the film industry, or the theatre owners derive this advantage. This can

possibly be achieved by introducing the concept of flexible pricing of tickets. Theatres should be allowed to

collect higher revenues for more popular movies by temporarily increasing or decreasing the ticket prices, as

the case maybe. This would generate higher revenues for the industry, which in turn would encourage them to

spend more to upgrade the standards.

Lack of adequate infrastructure for movie production There is a serious dearth of movie production facilities in India. Most of the movies are produced at shoestring

budget. Though there are adequate creative ideas, implementation is poor. The primary cause is lack of

facilities. Examples like Ramoji Rao City Studio in Hyderabad, Whistling Woods from the house of Mukta

Arts are recent examples of where the country is headed.

Financing

In terms of volume, India produces the largest number of movies in the world. But the Film industry structure

has been highly non-corporatised till date. It has generally been family run companies with no access to

institutional finance. Finance is tapped from family friends and other sources with high rate of interest (upto

40%) being charged.

With the Film industry being granted the official ‘industry status’, it has propelled companies like Mukta Arts to go in for institutional sources. Still not many Film

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companies have availed finance from these sources. This is because corporate structure in place is a pre requisite for such a venture. This means that the company has to clearly define the following:Documented scripts in place

Legally enforceable contracts with the artists and technicians

The entire time schedule documented

The producer has to make sure the filming activity is completed in time and there are no time and cost

overruns.

Companies like Hinduja TMT, which has earmarked Rs 20 crores for Film financing this year, and UTV

which made Fiza, are entering this arena while the emerging finance sources encourage corporates to invest:

These sources of finance are available only to companies and not to individuals, thus the need for

corporatisation.

CII & CRISIL are also working at developing a financing model that would enable the banks to weigh the

risks in this industry.

Gloabalisation:

Globalization of the industry can be achieved in the following ways:

Production: India has a large resource pool of talent, esp. for animation. Another area where India stands at

an advantage is providing locations for shooting. The cost advantage and the technical expertise for offer can

act as comparative advantages for India.

Market: Indian films have always found market in Singapore, Malaysia, Indonesia and Europe. Success of

films like Monsoon Wedding and international recognition of Lagaan is just some examples.

Technology: while the technological capabilities and expertise are improving, the costs are decreasing. India

can act as a hub for postproduction development of films.

The requirements to achieve them would be to improve infrastructure for institutional funding and improve

the infrastructural set up in the country. Government’s help would be required in improving the facilities in

the form of better policies and improved access to funding. Right now a bank would approve a loan for a

film in six months’ time during which a movie may be complete.

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Piracy:

Indian film industry loses about Rs.300 crores annually to piracy. While efforts are on to curb the menace, the

technological evolution is making it increasingly difficult to keep pace with the anti piracy measures.

Indian Film CDs (pirated) reach India just on or even before the official release of the movie in India. These

originate outside India, mainly in Dubai where they are sent a week before the release for the Censorship

Board’s approval. This is the point of leak and one master copy is enough for supply all across the country.

The industry is worried that while the avenues of piracy are increasing at an alarming rate and the laws are

either inadequate and where they aren’t, the problem is enforcement. The fines paid when caught are

inadequate and so is the punishment. They also cite the non-cooperation of cable operators as a major

handicap in their efforts to curb piracy.

The cable industry on the other hand finds it difficult to check it on its own. The nature of piracy in the

Entertainment industry is such that since the consumer demands the pirated product, the administration finds

it difficult to check it. The cable operators cite this reason among others as to why it is difficult for them to

control it. If one operator does not showcase a pirated movie, the consumer switches to the other. And since

there isn’t strict enforcement of the laws, there is not disincentive for anyone to stop showing such movies.

The operators claim that even the film industry is not clear as to which rights are to be given to the cable

operators and how to distinguish them from satellite rights of movies.

The need of the hour is thus a single platform where the stakeholders, policy makers and consumers’

representatives can sit across a table and discuss solutions. The enforcement of laws has to be made stricter

and where the laws are inadequate, they need to be put in place. Public campaign condemning piracy needs to

be carried out. And piracy has to be made a prohibitive activity to carry out in terms of punishment.

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The Movie IndustryMovie studios makes movies. The movie studio then relies on a third party for distribution, for most of

the marketing and, in some cases, for finance and investment. The first step from studio to market is

bridged by international sales companies. They buy the rights for a film and license it to domestic

distributors, who then oversee the final step to cinema or TV screen.

The Challenge

The range of choices made available by technology and market diversity present sales companies with

limitless opportunities for licensing. A full return on an investment is only achieved if this licensing

process is as flexible as it is thorough. A sales company cannot afford to return from a film market

only to find that a third of its library of 150 films was underexploited because the administrative task

of issuing multiple licenses was overwhelming.With this administrative hurdle cleared, the respite

from paperwork is all too brief, as royalty statements from the licensed films start to arrive. Each

statement based on a different contract, with a unique combination of territories, distribution channels

and time frames, with income offset against advances paid by the licensees. Collection societies like

those

who streamline the music industry’s royalty process simply don’t exist in the movie world.

Checking each contract, clause by clause, dollar by dollar is often an impossible task. Many movie

companies are forced to rely on random audits to check license compliancy. Domestic distributors

undertake the lion’s share of promotion and marketing – money that has to be offset against receipts –

as well as the manufacture of videos and DVDs. They will also seek out and negotiate sub-licenses to

TV networks. Month by month, receipts stream in and need to be tallied, checked and paid onwards as

royalties. While their counterparts in the record industry enjoy the relative comfort of drawing up

artists contracts on their own familiar and relatively standard terms, a domestic film distributor may be

dealing with tens, even hundreds, of sales companies with very different ideas about how and when

royalties

are payable. Some may involve advance payments triggered by events scattered

throughout the lifetime of a film’s release. In some cases it only takes the emergence of a new

distribution medium — like DVD — to topple an already complicated structure of contracts and

payables. Finally, all the players must contend with a film’s all-too-frequent changing of hands, as

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libraries and companies both domestic and international are split up, rebranded and resold.

23. Operational Risks

a) Reduction in costs of CDs/VCDs.

With fall in prices of CD/VCD players, consumers increasingly prefer to view new films on

CD/VCDs. The illegal screening of new films by cable operators has worsened the matter.

However, recent enactment of Anti-Piracy law by the Tamil Nadu Government, which can

book an offender under Goondas Act,1982 may provide some added protection against piracy

and may bring higher numbers of viewers to the theatre.

b) Competition from other segments of entertainment sector.

In recent years, new types of entertainment like amusement parks, bowling alleys, go-karting,

water sports, resorts etc. have emerged as alternative sources of entertainment and may

threaten viewer ship of films.

c) Piracy

Pirated movies represents more than half of industry off-take since it is a cheaper

alternative to the Company’s original products. This phenomenon is hurting the industry not

only in India but worldwide. Indian Industry is working closely with local law enforcement

agencies and has been successful in organizing many raids and seizures. The Government

Authorities are also increasingly becoming conscious about this menace. Recently, the State

Government of Tamil Nadu has covered such piracy under the Goondas Act, 1982 acting as

effective deterrent to the pirated products. Notwithstanding this, the consumers have become

aware of the hazards using such pirated products.

d) Competition from developer of similar technology for webcasting

Company is dependent on the technology developed and owned by Drushya Entertainment

Broadcast Streams Limited (Drushya) for webcasting of films. Any development adversely

affecting its technology and its rights may also adversely affect future business of the

Company.

Management would keep its options open for a tie up with a superior technology developer in

such an eventuality

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CURRENT SCENARIO OF FILM INDUSTRY. Film entertainment is the most popular form of entertainment and it is this undiminished passion through

the decades that has driven India to become the largest producer of films in the world. Since 1931, when

talkies were introduced in the country, the film industry has produced more than 67,000 films in more than 30

different languages and dialects.

The film industry grossed a turnover of Rs 3,900 crore (Rs 39 billion) in 2002. The current worth of the

industry is pegged at Rs 4,500 crore. A market survey conducted in march by accounting firm Ernst and

Young has predicted that the film industry is expected to grow at the rate of 18 per cent annually to gross Rs

10,000 crore in the next four years. The Indian film industry is the largest in the world in terms of number of

films produced and also in the number of tickets sold.The industry produced 1200 films in 2002, and 1,013

films in 2001, up from 855 films in 2000. Bollywood’s annual ticket sales world wide are 3.8 billion as

compared to Hollywood 2.8 billion. But Hollywood's revenue is much higher because ticket rates in india are

among the lowest in the world. While Hindi films continued to be the largest segment in 2001 (23 per cent

share), south Indian language films (Telegu, Tamil and Malyalam) have seen growth in their shares. Times of India

India’s movie industry is a great sector for foreign investment by corporatised entertainment companies.

Though risks are high on a per-movie basis, the risk spreads out across a number of films. However, the

domestic film-making industry, despite its profligacy, is yet to acquire the character of professionalism on a

large scale.

According to the FICCI report on the Indian Entertainment Industry for 2002, the Indian film industry

employs more than 6 million people, most of whom are contract workers as opposed to regular employees.

This statistics cannot however be used to calculate the movie industry’s share in the GDP or employment

generation. This is because a vast proportion of the turnover takes place outside the legal economy.

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SIZE OF THE INDUSTRY A FICCI report 2002 on the Indian Entertainment Industry prepared by Arthur Andersen India Ltd.

states that it is difficult to accurately determine the size of the Indian film industry because unlike in the

developed economies such as the U.S. and U.K., costs and revenues for films in India are not monitored by

any nodal agency. Therefore, the size of the industry has been estimated using two different approaches –

estimation of total costs and estimation of total revenues.

Cost and Revenue figures for the film industry for 2002

Average

Number of

Movies

Total

Gross

Value

INR

Billion

Less: Theatre

Share –

distribution

Commission

INR billion

Revenues

INR

Total

Costs

INR

Hindi

mainstream75 16.5 6.4 10.1 12.8

Cross-over

Hindi15 0.9 0.4 0.5 0.4

Foreign

movies15 0.8 0.4 0.4 NA

Malayalam 93 3.7 1.8 1.9 2.3

Tamil

mainstream84 5.9 2.8 3.1 3.3

Telegu

mainstream74 5.9 2.8 3.1 3.3

Bengali 50 0.5 0.2 0.3 0.3

Other Films 150 0.9 0.4 0.5 0.5

Others 640 3.2 1.5 1.7 1.6

*US $ 1 = INR (Indian Rupees 48)

(Source: KPMG and FICCI Report – Indian Entertainment Sector in the Spotlight.)

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COST-BASED APPROACH

This comprises artists’ remuneration, production expenses, technicians expenses, marketing expenses, studio

charges, and other fixed costs.

REVENUES BASED APPROACH

The revenue models of Indian film makers have undergone a fundamental shift in the future with a

higher probability of exploiting alternate revenue streams as opposed to relying on domestic theatre

viewership revenue stream. Some of the new revenue possibilitie are overseas theatre viewership, home video

segment, satellite rights, music rights and in-cinema advertising amongst others.

The Indian films can be sold for fewer territories than a typical US film. While the domestic theatrical

rights can be sold for five to ten different sub-territories, for a fixed time period, the overseas, music, and

C&S TV rights are usually sold to a single distributor respectively. Unlike the U.S. where home video

distribution contributes 32 per cent of the total revenue, an Indian

film generates negligible revenue from this source because of the unorganised rental/ state market and piracy.

Overseas Rights

Overseas rights include overseas theatrical rights as well as overseas video and television rights, which

are presently sold by film producers as a package to overseas distributors. The last few years have seen Indian

movies gain immense popularity overseas. The major export destinations continue to be the U.S.A., Canada,

and the U.K., countries such as Japan, South Africa, Mauritius, Australia, New Zealand and the Middle East

are fast becoming important export markets for Indian films.

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Music Rights

The music industry whose fortunes are closely interlinked with the film industry is likely to grow at

approximately Rs 16.4 billion by 2007. As per industry sources, sale of music rights contributed Rs 1.5 billion

to film industry revenues. Music rights include the domestic and international music rights of a film, which

are sold by the film producer exclusively to music companies. As new film music contributes more than 4 per

cent of the music industry revenues, music companies compete to procure the music rights of new films from

reputed production houses.

Cost of Music rights of some films

Music Company ProducerCost

(Rs mn)Films

Sa Re Ga Ma Yash Chopra 15

For 3 films - Saathiyan,

Mere Yaar Ki Shaadi hai,

Mujhse Dosti Karoge

Tips Mukta Arts 85 Yaadein

Sony

Karan Johar

Aamir Khan

Dreamz

Unlimited

120

60

60

Kabhie Khushi Kabhie Gham

Lagaan

Asoka

UniversalSanjay Leela

Bhansali120 Devdas

(Source: FICCI Report 2002 - Indian Entertainment Industry)

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Telecasting and video rights

In the near future, the home entertainment segment, broadcast TV, DVD and VCD is expected to

increase its share, even as multiplexes emerge as a strong distribution platform. The share of satellite rights in

the consolidated revenue pie has grown from 4 per cent to 14 per cent between 1999-2002. Even channels

have started a new trend by acquiring and broadcasting new titles at exorbitant prices, within 3 to 4 months of

their release. As telecasting blockbuster films is an effective way of driving up viewership, there is a demand

for these channels to acquire television rights of hit films.

Corporate Sponsorships and Merchandising:

Corporates have also started marketing their products through films. And in exchange film makers get

additional revenue in the form of Corporate Sponsorships. For example, Mukta Arts had earned Rs 35 million

from Coke, Pass Pass and Hero Cycles for product endorsements in Yaadein. Today revenues are also

generated from the sale of Internet rights and merchandising. FICCI Report 2002- Indian Entertainment Industry

Revenue Break up segment wise(Rs. bn)

Domestic theatrical sales 36.00

Overseas theatrical rights 5.25

Music rights 1.50

Telecasting and video rights 2.00

Corporate Sponsorship/ Merchandising 0.10

TOTAL 44.85

Source: FICCI Report 2002 - Indian Entertainment Industry

Source: FICCI Report 2002 - Indian Entertainment Industry

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TYPE OF FILMS.

REGIONAL FILMS

According to the Economic Times Entertainment Report 2001-2002 after Hindi films, the Telegu film

industry is perhaps the biggest, followed by the Tamil film industry in terms of revenue generation, though in

number of films released, Tamil outranks Telegu. Together, they are called the “Tollywood” film industry.

What sets this segment apart from the rest of the industry is its high degree of discipline. The average time for

making these films is 4-9 months.

The producers and directors, along with the artistes do a lot of homework before making a film. The

entire script of the film is usually ready before shooting begins and the artistes know their roles clearly. Since

the artistes are usually involved in filmmaking, they give continuous dates to the producers. As a result, none

of the South-based artistes take up more than 2 films a year, as opposed to many Hindi artistes who make 4-6

films in a year.

One more peculiarity of the Tamil and Telegu films is the increasing proportion of integration in the

industry. Ramoji Rao owns a studio and a post-production facilities in Hyderabad. Many top production

houses in the South are owned by artistes. Thus, unlike the Hindi film industry, in A category films, the

artistes have more clout and are involved in the entire process of film making. These artistes also have a

substantial control on the script. Artistes like Rajnikant also control the theatres, albeit indirectly. The Tamil

and Telegu industry is more integrated than the Hindi industry in many ways, with fewer players and the top

players controlling the industry both in terms of value and volumes. In this respect the Tamil and Telegu film

industry is similar to international film production houses.

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One major difference between the Hindi and South based films is the extent of star worship. Films are

classified under the various categories mainly based on the star cast. For example, in Telegu films in which

famous actors like a Chiranjeevi or Nagarjuna or Venkatesh or Balakrishna or Alu Arvind star would be rated

as A category, irrespective of the director and the film producer. The other top stars are Mohan Babu, Pavan

Kalyal and Mahesh Babu. Then there are a lot of other actors like Jagapati Babu, Srikanth, Prakash Raj and

Naveen, who are not as big and do one to two good films in a year. These may be rated as B films.

Amongst the banners, Suresh Productions, run by D. Rama Naidu and his son Suresh is one of the

most respected. This production house has done more than 100 films for which it has entered the Guiness

Book of World Records. The other main production houses are Usha Kiran Movies of Ramoji Rao, Anjana

Productions of Chiranjeevi, Geeta Art Films of Alu Arvind, Annapurna Studio Private Ltd of Nagarjuna and

his father – the legend and Nageshwar Rao, Padmalaya Production of Mahesh Babu and his father Krishna

and Laxmi Prasanna Productions of Mohan Babu.

In the South based film industry in general and the Telegu film based industry in particular, the

production houses are mainly owned by the top stars, who do at least one to two films for their own

production houses in a year. This trend is slowly entering the Hindi film industry too. There are star directors

like Raghavendra Rao, S.V. Krishan Reddy and B. Gopal, whose films are A class. Finally, there are a

number of independent films producers like C. Ashwin Dutt and Subhiram Reddy who make big budget A

grade movies.

In Tamil films, Rajnikant has a special category of his own. He falls perhaps in the super A category.

Rajnikant produces his own films. He works on the principle of selling a film at areasonable profit so that

everybody involved in the movie makes a winning. His films usually carry the names of 4-5 producers, who

are mainly needy people. His film “Padiaappa” did a business of Rs 320-350 million. The entire film was

made for Rs 60 million and was sold for close to RS 250 million. Of the film profits, he usually reserves 35-

40 per cent for charity. The rest goes towards his fee for the film. With close to Rs 100 million per film, he is

one of the highest paid actors in the country.

The other major banners in Tamil films are Supergood Films, which makes movies under Oscar

Movies Banner, Mani Ratnam who makes movies under Madras Talkies Banner and Kamala Haasan’s home

production. Shankar, who was a director till recently is the most sought after and number one director in

Tamil films.

Another aspect of the Telegu and Tamil films is the large inter-lingual market. Films in either of the

languages usually get dubbed in the other language.

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OTHER REGIONAL LANGUAGE FILM PRODUCTION

The other regional languages have not made a substantial dent in the market, though they collectively

total close to Rs 2 billion to Rs 3 billion. These films are similar to B and C class films in Hindi, Telegu or

Tamil languages, though their subject might be more social and their appeal more universal. The reason for

such low budget films is the low cost of artistes and technicians. These films do not have special effects and

graphics, they usually use stock music, they have very few songs and hardly any outdoor shoots. Moreover,

these films cannot afford to have very high costs as their target audience is only one or two states and they

rarely have an overseas market. However, some Punjabi films like “Shaheed Udham Singh” and “Guru

Gobind Singh” have done reasonably well internationally, but these are exceptions.

In terms of value, among the regional languages, the order is Kannada, Malyalam, Bengali, Gujarati,

Marathi, Punjabi, Oriya and others. Kannaada and Malyalam films have a market in Middle East countries

and the USA where a substantial population from the respective regions resides. Most of these films have

been made at very low budgets and in most cases all these films have one or two artistes, who act in each of

the films. These artistes have a huge public

following and their films usually get a very good reception and make money.

In Bengali films, Devyank Arts owned by Dilip Karkaria is a renowned production house having

produced 8-10 films in the last 4-5 years. All these films have cross-border appeal and have been dubbed in

Bangladeshi Bengali. The biggest actor in Bangla films is Prasenjit, son of Biswajeet, an icon of Hindi films

in the yesteryears. Similarly, in Gujarati, Mahesh and Naresh Kanodia and Upendra Trivedi are popular

artistes, while Govindbhai Patel is a well known producer. Unlike Hindi, Tamil and Telegu films, the regional

film industry is mainly dominated by one or two artistes and production house, who make the bulk of the

films. The Indo-Italian Chamber of Commerce and Industry

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BRIEF HISTORY OF INDIAN FILM INDUSTRY

The Beginnings

In 1886 the Lumiere Brothers Cinematographe unveiled six soundless short films at Bombay's Watson's

Hotel. Soon after, Hiralal Sen and H.S. Bhatavdekar started making

films in Calcutta and Bombay, respectively. Like Lumiere Brothers

Bhatavdekar made India's first actuality films in 1899. Tough there

were efforts at filming stage plays earlier India's first feature film Raja

Harishchandra was made in 1913 by Dadasaheb Phalke who is known

as the Father of Indian Cinema. This was a silent movie.By 1920 there

was a regular industry bringing out films starting with 27 per year and

reaching 207 films in 1931.

Advent of Sound

By the time of the First World War, and the phenomenal expansion of Hollywood, 85% of feature films

shown in India were American. But the introduction of sound made an immediate difference. In 1931, India's

first talkie, Alam Ara, was released, dubbed into Hindi and

Urdu. As the talkies emerged over the next decade, so too did a

new series of issues. The most prominent of these, of course,

was language, and language markets; alongside, there are

considerations of regional identity, of the different places

that separately and together make up India. Many films of the

time were produced both in the regional language (Bengali,

Marathi), and in Hindi, so that they could be oriented to the larger Hindi-speaking market. The Indian public

quite naturally preferred to see films made in their own language and the more songs they had the better. In

those days, the films made had upto 40 songs.

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The 1950s

By the start of the 1950s, Calcutta became the vanguard of the art

cinema, with the emergence of the film society movement at the end of

the 1940s and Satyajit Ray's Pather Panchali/Song of the Road,

produced with West Bengal state government support in 1955.

International recognition came with Satyajit Ray's Pather Panchali

in 1955. Satyajit Ray is considered as one of the greatest directors

of all times. Post-independence, despite a relatively sympathetic government enquiry in 1951, the industry

became the object of considerable moral scrutiny and criticism, and was subject to severe taxation. A covert

consensus emerged between proponents of art cinema and the state, all focussing on the imperative to create a

"better" cinema. The Film and Television Institute of India was established at Pune in 1959 to develop

technical skills for an industry seen to be lacking in this field. However, active support for parallel cinema, as

it came to be called, only really took off at the end of the 1960s, under the aegis of the government's Film

Finance Corporation, set up in 1961 to support new film-makers.

Ironically, this pressure and vocal criticism occurred at a time when arguably some of the most interesting

work in popular cinema was being produced. Radical cultural organizations, loosely associated with the

Indian Communist Party, had organized themselves as the All India Progressive Writers Association and the

Indian People's Theatre Association (IPTA). The latter had produced Dharti ke Lal/Sons of the Soil (KA

Abbas; 1943), and its impact on the industry can be seen in the work of radical writers such as Abbas, lyricists

such as Sahir Ludhianvi, and directors such as Bimal Roy and Zia Sarhady.

In addition, directors such as Raj Kapoor, Guru Dutt and Mehboob Khan, while not directly involved with

IPTA, created films that reflected a passionate concern for questions of social justice. Largely studio-based,

the films of this era nevertheless incorporated vivid stylistic experimentation, influenced by international

currents in film-making. Such effects are evident in Awara/The Vagabond (Raj Kapoor, 1951, script by KA

Abbas), Awaaz/The Call (Zia Sarhady; 1956) and Pyaasa/Craving (Guru Dutt; 1957).

The First International Film Festival, held in Bombay in 1951, showed Italian works for the first time in India.

The influence of Neorealism can be seen in films such as Do Bigha Zamin/Two Measures of Land (Bimal

Roy, 1953), a portrait of father and son eking out a living in Calcutta that strongly echoes the narrative of

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Vittorio de Sica's Bicycle Thief (1948). Mehboob Khan's Andaz/Style (1949), an upperclass love triangle

founded on a tragic misunderstanding, draws on codes of psychological representation - hallucinations and

dreams that feature strongly in 1940s Hollywood melodrama. Mehboob's tendency to make a visual spectacle

of his material, and his involvement with populist themes and issues make him a good example of popular

cinema of the time.

The   Indian   Popular   Cinema and the   Superstars

During the 1960s, popular cinema had shifted its social concerns towards more romantic genres, showcasing

such new stars as Shammi Kapoor - a kind of Indian Elvis - and later, Rajesh Khanna, a soft, romantic hero.

The period is also notable for a more assertive Indian nationalism. Following the Indo-Pakistan wars of 1962

and 1965, the Indian officer came to be a rallying point for the national imagination in films such as

Sangam/Meeting of Hearts (Raj Kapoor, 1964) and Aradhana/Adoration (Shakti Samanta; 1969).

However, the political and economic upheaval of the following decade saw a return to social questions across

the board, in both the art and popular cinemas. The accepted turning point in the popular film was the angry,

violent Zanjeer/The Chain (Prakash Mehra; 1973), which fed into the anxieties and frustrations generated by

the quickening but lopsided pace of industrialization and urbanization. Establishing Amitabh Bachchan as the

biggest star of the next

decade, its policeman hero is ousted from service through a conspiracy, and takes the

law into his own hands to render justice and to avenge his deceased parents.

The considerable political turmoil of the next few years, including the railway strike

of 1974 and the Nav Nirman movement led by JP Narayan in Bihar and Gujarat,

ultimately led to the declaration of Indira Gandhi's Emergency in 1975. It was as if the state and the people

had split apart. As the cities grew, so did the audiences. The popular cinema generated an ambiguous figure to

express this alienation. At the level of images, there was a greater investment in the stresses of everyday life

and, unlike the 1950s, in location shooting. In Zanjeer, the casual killing of a witness on Bombay's commuter

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trains conjures up the perils of life in the metropolis. This is echoed in images of the dockyard, taxi-rank,

railtrack and construction site in Deewar/The Wall (Yash Chopra; 1975), also starring Amitabh Bachchan.

The recurrent narrative of these films, of protagonists uprooted from small town and rural families to the

perils of the city, is shared by the street children researched by professional sociologists in Mira Nair's Salaam

Bombay (1988). The Bombay films' very excesses, their grand gestures, and the priority given to emotion and

excitement may more truly reflect the dominant rhythms of urban life in India. At the level of plot and

character, however, the Bombay films simultaneously simplify and collapse our sense of India, reducing the

enormous variety of identity - social, regional, ethnic and religious - that makes up Indian society. Where

these identities appear, they do so as caricatures and objects of fun.

The Art Cinema of the 80s

To counter this, the art cinema of the 1980s diversified from its Bengali moorings of the earlier period under

the aegis of the Film Finance Corporation. Works by Shyam Benegal, Gautam Ghose, Saeed Mirza, BV

Karanth, Girish Kasaravaili, Mrinal Sen, MS Sathyu, Ray, and Kundan Shah, among

others, actively addressed questions of social injustice: problems of landlord

exploitation, bonded labour, untouchability, urban power, corruption and criminal

extortion, the oppression of women, and political manipulation. Ghatak in particular

had addressed many of these issues earlier, but never had there been such an

outpouring of the social conscience, nor such a flowing of new images - of regional

landscapes, cultures, and social structures. Many of the films may seem didactic and

uncomplex, undercutting the attention to form that had marked the earlier period - but

not all. Benegal's first two films indicate an unusual concern with the psychology of domination and

subordination. Ankur/The Seedling (1974), starring Shabana Azmi, is particularly striking not only for this but

also for the open, fluid way it captures the countryside. Among Kannada directors, working in south India,

Kasaravalli in Ghattashradha (1981) effected an intimate vision of the oppression of widows through the

view of a child. And special mention must be made of Kundan Shah's Jaane Bhi Do Yaaron/Let Sleeping

Dogs Lie (1984), a wonderful exercise in farce and slapstick that is also a brilliant portrait of Bombay.

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The South

The most notable of the directors who speak specifically about their own cultures, and about the possibilities

of change, are Adoor Gopalakrishnan and Aravindan from Kerala. A key to their productivity was the overall

development of film culture in Kerala, India's most literate state. In his films Gopalakrishnan transformed the

lush countryside, busy towns and animated culture of Kerala into a strange, dissociated place, fraught with

communicative gaps, menacing, inexplicable characters, and an overall sense of the impenetrable. Subjects

range from the mounting tragedies that beset a young couple in the city (Swayamvaram/One's Own Choice;

1972), and the effete authoritarianism of a declining feudal landlord (Elippathayam/The Rat-Trap; 1984), to

the mysterious spiritual decline of a popular communist activist (Mukha Mukham/Face to Face; 1987).

The late Aravindan, sometime cartoonist and employee of the Kerala Rubber Board, had something of the

mystic in him, but went through a range of styles, including a cinemaverite approach, as in Thampu/The

Circus Tent (1978), in which circus performers speak direct to the camera. His episode from the Ramayana,

Kanchana Sita/Golden Sita, places the action against the grain of the high Hindu tradition by situating it

among tribes in the verdant landscape of the Kerala forests. At his best, his narrative style refuses a didactic

approach, generating a whimsical sense of how destinies are shaped.

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Full circle

The 90's saw the

Indian Cinema come to a full circle with Hum Aapke Hain Kaun turning out to be the biggest grosser ever.

Indian cinema has come a long way from the shaky flickering images and grating noises and sounds to a very

sophisticated state-of-the-art technology for creation and projection of image and sound track. The film

industry has grown multi-dimensionally with unique blend of commerce, art, craft, star glamour, social

communication, literary adjuncts, artistic expression, performing arts, folk forms and above all a wide-ranging

and abiding appeal to the heart, the mind and the conscience. www.meadev.nic.in/earthquake/culture/films/intro.htm

Entertainment

The last decade has seen the Indian entertainment industry grow exponentially. The key drivers for

this have been technology and the government’s recognition of the importance of the sector. The

stage is now set for further evolution with a trend towards convergence, adding a new dimension to

entertainment. The industry is expected to grow at a CAGR of 27 per cent.

• Revenues are projected to increase to US$ 10 billion in 2005 from 3 billion in 2002.

India is one of the most media-exposed countries when compared to its Asian counterparts due to its

size and consequently a large consumer base.

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• The Indian film industry is largest in the world in terms of number of movies produced. India

produces 800-900 movies every year in 52 languages and provides direct and indirect

employment to 5 million people.

• #9; The film Sector is one of the oldest industry in India. The first commercially successful

film was made in 1913. The exports of Indian films in the last few years have seen a dramatic

upward swing with the export earning for the year 2001-02 being in the region of Rs. 9 billion.

• The Government of India has accorded industry status to the film industry and FIs are

formulating funding mechanisms for financing films. Recently some major film projects have

received funding from FIs and banks.

• Many large production houses are embracing a corporate structure and there is a trend

towards adopting a professional approach in producing and marketing films in India and

overseas.

Television

• Television is a leading entertainment medium accounting for the largest slice of the urban

India’s media consumption pie (72% of total media consumption).

• Television software is also expected to grow in India as technology is affordable and

manpower cost is low.

• The Government of India has liberalised the uplinking policy to allow India to develop as a

centre for broadcasting.

• There has been a reduction in the rate of basic custom duties on the import of certain

specified equipment for setting up an earth station for broadcasting.

Opportunities

Opportunities for this sector exist across multiple categories of the entertainment industry.

• Film distribution is turning out to be a lucrative business.

• Television software content development is expected to experience healthy growth in the

coming years.

• The radio industry is witnessing several private FM channels being launched in many Indian

cities.

Indian capital market have rewarded Foreign Institutional Investors (FIIs) with attractive valuations and

increasing returns. Stock Exchange – the Mumbai Stock Exchange continues to be the premier exchange in

the country with an increase in market capitalization from US$ 40 billion in 1990-91 to US$ 203 billion in

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1999-2000. The stock exchange has about 6,000 listed companies and an average daily volume of about a

billion dollars

Entertainment - The last decade has seen the Indian entertainment industry grow exponentially. The industry

is expected to grow at 27% annually. Revenues are projected to increase to US$ 10 billion in 2005 from 3

billion in 2002. India is one of the most media-exposed countries when compared to its Asian counterparts

due to its size and consequently a large consumer base.

Entertainment Industry

The words that come to our mind when we think of entertainment are Pleasure, Fun and Relaxation.

Entertainment exists from the time man exists. He always found some way or the other to entertain himself.

Though the methods and sources of entertainment differed the essence remained the same that was to get

pleasure. We would say a lot has changed over the years in other words everything is getting more and more

modernized. But, yet the truth is that the basic mode of entertainment yet remains the same. Earlier the scope

of entertainment was narrower unlike today. Now services are available to entertain us in other words it is

commercialized.

All, young & old, rich & poor, man & woman, require entertainment. Every individual needs some

sort of entertainment in his life. Entertainment provides some sort of a change from the normal course of life.

Modern age, man has been found facing a number of problems. They are supposed to follow the busy

schedule to earn more and at the same time also required to be a high performer. Management of a family is

also important. This necessitates entertainment. The changes in the taste and temperament in the masses,

increasing disposable income, the changing lifestyle due to corporate changes has paved the way for the

development of healthy entertainment facilities. Opening of new air-conditioned cinema halls, open-air

theatres, drama centers, music centers, pub, club, art and handicraft and painting centers have been found

gaining popularity. Many entrepreneurs have been seen promoting entertainment services. By doing this, they

not only entertain the masses but also inculcate awareness, promote education, and develop knowledge. The

focus today is on development of entertainment services in a right fashion. In the Indian perspective, where

majority of the population is illiterate, it is the responsibility of the entertainment services to inculcate

awareness even in the rural areas of the country.

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The entertainment industry in India has outperformed the economy and is one of the fastest growing

sectors in India. However, it registered a moderate growth of over 15 per cent in 2003. The FICCI-Ernst and

Young Study titled "The Indian Entertainment Industry: Emerging Trends and Opportunities", scheduled to be

unveiled during FICCI-FRAMES 2004 - the Global Convention on the Business of Entertainment on 15th of

this month at Mumbai, has projected that the industry will grow from Rs.19,200 crores in 2003 to Rs. 42,300

crores in 2008, at a compounded annual growth rate of 17 per cent.

(Source: Ernst and Young Study)

Zee Telefilms has secured top position in Indian entertainment industry with a market cap of Rs 4,739

crore and no one comes anywhere near. Media Matrix Worldwide, at No 2, is way behind with Rs 406 crore.

Top 5 Companies By Market Cap

Sector

RankCompany Market Cap

(Rs Crore)1 Zee Telefilms 4,739

2 MediaMatrix Worldwide 406

3 Sahara India Mass Communications 387

4 Balaji Telefilms 357

5 Pentamedia Graphics

(Source: Economictimes.com)

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Top 5 Media Companies By Net Profit

Sector

RankCompany Net Profit (Rs Crore)

1 Zee Telefilms 87

2 Balaji Telefilms 57

3 Padmalaya Telefilms 17

4 Adlabs Films 17

5 ETC Networks 14

(Source: Economictimes.com)

The role of the cinema in image building

The big screen, says Tareque Masud, holds immense possibilities for a nation. He presents his thoughts

on the issue.

Film is the youngest art form, but it is also the most evolved and complex. All art forms are essentially

reflections of life, but cinema reproduces life or reality more directly. It almost creates an illusion of life itself.

Cinema is also distinct at another level from other art forms.  The concept of uniqueness and originality is the

core of value in most art forms. But film, by its very nature, is reproduced.  It is replicated in great numbers

for a mass audience, so that many people in many different places can view it.  This is the most decisive

departure of this new art form.  As a matter of fact, film, and the audio-visual media in general, has

revolutionised the whole concept of art. It pervades every aspect of our lives. It is not only limited to cinema

halls, it also comes via satellite into our own living rooms. It is ubiquitous, and the most powerful art form of

today.

   With its capacity to mirror life so literally, film reflects the social, political and cultural aspects of life

very powerfully.  It also exerts its influence on society more directly. This influence not only has the power to

reveal truth, but also to hide it.  It can expose people to harsh realities and truths, but it can also provide an

escape from the harshness of reality into a fantasy world.  This is how cinema has come to be exploited as a

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major vehicle of entertainment, as well as a full fledged commercial industry for a mass market. Since society

is reflected in cinema, the nature of cinema keeps changing.  But cinema also has an impact on society. Proper

use of the medium of film can fight the insidiousness and mindless propaganda of the mass media.  On the

other hand, violence in film can have a demonstrative effect and cause violence in society. Thus it can play a

destructive as well as a constructive social role.  The language of cinema can be used for artistic and aesthetic

ends as well as for information and propaganda.

   Film can play and has always played a critical role in shaping a national sense of purpose and identity. But

how much of this potential has been harnessed?  How much has it been used as a vehicle for nation building

in the most positive sense?  Cinema also can be a great vehicle to preserve national memory. This memory

can in turn be projected into the future for generations yet to come. It can build a bridge between past and

future, old and new.  It can bridge the divide between the lower strata of society and the upper strata, between

communities and religions.  It can serve as a channel for dialogue and greater understanding.  It can bring out

the inner beauty and truth of the country.  But there is at the same time a danger of idealising and over-using

this medium to the extent that it loses its impact and credibility.  For example, you can make a beautiful

viewcard to promote national tourism, but this viewcard will be totally lacking in credibility if it is not

authentic and close to reality.  It is important not to fall into the trap of making crude attempts at

beautification, because it can be counterproductive.  Film should rather provide a critical insight and

appreciation of our own society through which credible beauty can be born.

   Satyajit Ray’s Pather Panchali is a good example of the positive role that authentic cinema can play in a

nation’s history.  When Ray’s film got an award at Cannes in the mid-1950’s, some of the big Bollywood

stars dismissed this masterpiece as earning prestige at the expense of a negative portrayal of India as a poor

country.  But how short-sighted they were!  And fortunately how unrealistic their concerns also were!  Pather

Panchali not only earned India prestige and honour in 1955, but it is continuing, over half a century later, to

earn appreciation of the country and contributing to its positive image.  It is also continuing to bring revenue

from all over the world, as it is being screened and seen almost every month in some part of the world.   After

Pather Panchali got an award at Cannes, it did not run well theatrically, even in its home town Kolkata.  In

terms of immediate returns, it could be considered commercially unsuccessful. The most commercially

successful film of that same year possibly ran for months in many halls, but in the long term this film was not

more commercially successful than Pather Panchali.  Rather, it was Pather Panchali that continued to be

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shown over the years, and eventually brought more money, as well as honour, to the nation. Sometimes

apparently non-commercial “art” films can be more commercial than so-called commercial cinema.  Since

Pather Panchali was completed with funds received from the West Bengal government in exchange for the

ownership rights, it was eventually the government that was able to appropriate not only the prestige but the

profit of this great film.

   In the 21st century, when globalization is threatening to eclipse all local identities and penetrating into even

the remotest regions of the planet, it is more important than ever that we project our own image of the nation.

This should be an image dictated on our own terms, rooted in our own soil, giving a more complex and in-

depth impression unlike the oversimplified and black and white portrayals seen in the global mass media. The

difficult part is that we cannot counter these over-simplified portrayals by projecting an equally simplified

version of our own in reaction.  You must fight lies and deception with truth and honesty.  But we too often

are more concerned, even in our own personal life, with what other people think of us. What we think of our

own selves is more important.  Cinema should be used to reassert and reinforce our sense of self-respect.

Therefore, while we think that we are suffering from a negative image projected from outside, possibly we are

ignoring the fact that we suffer most from our own negative self-image.  We have to overcome this problem,

and remind ourselves of the inner beauty and strength of our people. The major problem lies with the urban

middle class intelligentsia, who need to be reminded of the wisdom and beauty that lies at the heart of our

indigenous rural culture. But it is also this same class that carries the burden of having to transmit the image

of ourselves to the outside world.

   An example of the way in which cinema can be used effectively to reverse a negative stereotype of national

image is that of Iran. In Iran, the government is actively supporting the production and distribution of high

quality Iranian films, which are shown and appreciated at film festivals and in cinema halls across the globe.

Many of these films are critical of contemporary socio-political conditions in Iran, but they are still promoted

because they give a more complex and credible picture of the country. By promoting these films, the Iranian

government has won appreciation for its liberalism. At the same time, Iranian cinema has proven to be the

most powerful and effective means of countering the negative image of Iran prevailing in the West. The

filmmakers themselves, with the full cooperation of the State, have risen to this challenge and have projected

to the world a different image of the beauty of Iranian people and their culture.

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   In our own modest way, from Muktir Gaan to Matir Moina, we have also tried to contribute to the

projection of a more positive image of Bangladesh.  We have tried to hold up a mirror before the society to

remind the people of Bangladesh of their strengths, the richness of their traditions and the resilience of their

culture.  At the same time, when these films are shown outside the country, they create a completely new and

fresh perception of our country that breaks the typical stereotypes. Now more than ever, we need to use the

powerful but neglected medium of cinema to create a new image of our country into the 21st

century.   Tareque Masud is a film-maker.

Director

The director has the final responsibility for the creative aspects of the film. The producer hires the

Director of the film. Sometimes the director also functions as producer.

Synopsis, Draft

A synopsis is a summary of the contents of the film. It is a kind of sketch: a paper that reveals the

contents and form of the film or program. The reader can also get an idea of the film's approach and

style. Usually the synopsis is followed by a treatment.

First of all, the purpose of the synopsis is to sum up the series of events, the story. The synopsis of a

drama is a summary of the function of the film. Further, the synopsis can tell about the characters and

the crucial conflict.

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The synopsis does not present visual or otherwise detailed solutions. They would only restrict the

following writing process. A synopsis is important to the financier, the producer, the actual work

group and the scriptwriter himself.

A synopsis is a good phase in screenwriting, since the entity is not yet covered up with details. The

crucial idea, the fundamental conflict and the structure can be clearly identified.

Treatment

Intermediate between synopsis (or draft) and screenplay, a rather large summary. Treatment includes

the structure and plot of the film, even though it is not yet broken down into scenes.

The treatment should show the beginning, the middle and the end of the film, as well as the main turning points

Structure

A film has to have a beginning, middle and the end. This basic structure can be identified by many

conceptual tools. It is very common to divide a film into three acts. This division comes from the

theater and in its foundation one can see the structure of three-act or five-act play.

Plot

The plot tells the story of the film. The same story can be told through many different plots. The plot is

action, a series of events, taking us from the beginning of the film through the middle to the end.

The scriptwriter must keep the plot in his mind all along. Each sentence should forward the plot. It is

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recommended to grasp the plot as soon as possible, already at the start-up sequence. You can scatter

descriptions of the setting and go deeper into the characters along the way.

The plot should not be too easily guessed. The viewer is pleased when the film presents a surprise.

One limiting factor is worth remembering: the inner logic of the story, created by genre, setting and

characters. The events cannot turn into something not fitting to the inner logic of the film.

Scene

From the viewpoints of scriptwriting, directing and producing, a scene is a unit of film narration, as

are shot, take and sequence. A scene is an active entity happening in one setting, dealing with one

event of the script, and having a beginning, middle and the end. Cf. Act.

In a fiction film division into scenes is based on production grounds. According to writer a scene

changes when there is a jump in time or when the location changes. Yet there can be small jumps in

time

within the scene. Practically, a scene is a continuous part of a film, with:

• the same location, same setting

• the same actors

• the same time of day (lighting)

• the same continuity in the situation

Thus a scene changes into another, when

• the location changes

• the setting changes

• the time of day changes (lighting changes)

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• the continuity changes

For the documentary film and the experimental film "scene" is a more wavering concept, and there are

various opinions as to its exact contents. A scene is, however, always a part of a larger sequence, i. e. a

sequence consists of several scenes that fit together functionally. A scene can also mean a series of

shots or even an individual position of a camera. Thus a scene is a series of shots (or a single shot).

Storyboard

Storyboard is a visual or written account of what kind of visual images will be used in the film. The

written form usually includes the ratio, characters in the shot, duration of the shot and a brief account

of what is happening in the shot. In the visual form, or in storyboard, the shots of the film are

presented in a cartoon-like manner so that even the movement happening in the shot is somehow

visualized.

A storyboard artist is an artist, whose job is to make the storyboard according to the directions from

the script and the director/producer.

Storyboard is based on the screenplay and its basic idea is that already before the shooting the main

lines of the film are planned, the details that will be brought up are decided, and the duration of each

sequence is estimated

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CONTENT OF FILMS

Indian producers and directors are increasingly spending more time on the development phase of the

film and have started toying with experimental ideas. The film makers have also started paying attention to

the packaging of the film, which goes a long way in improving the final product.

Some of the changes that the Indian film industry has witnessed recently include shooting in long

schedules for a sense of uniformity and timely and efficient completion ( Lagaan, Dil Chahta Hai), use of

technology through better cameras and synchronous sound ( Lagaan, Dil Chahta Hai), focus on packaging and

marketing ( Kabhi Khushi Kabi Gham, Mujhe Kuch Kehna Hai, Gadar, Ek Prem Katha, Kasoor, Style,

Ajnabee, Pyaar Tune Kya Kiya), production

of small budget niche films ( Bollywood Calling, Monsoon Wedding, Tum Bin) and

experimentation of characters and novel story lines ( Zubeidaa, Dil Chahta Hai, Asoka, Lagaan, Aks, Chandni

Bar and Astitva).

Indian cinema has also arrived on the global stage with “Lagaan” securing an Oscar nomination,

“Monsoon Wedding” winning the Golden Lion at Venice and Ismail Merchant honoured by the Bafta

Academy.

EXTERNAL ENVIRONMENT OF FILM INDUSTRY

(I) POLITICAL ENVIRONMENT SUPPORT AND PROMOTION BY DIFFERENT GOVERNMENT BODIES

Films Division

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The Ministry of Information and Broadcasting over the last 47 years through an exclusive Films

Division, set up in 1948, has been securing the active participation of the public in nation building activities,

through the medium of film. The largest agency dedicated to the production, and distribution of

documentaries and news agencies, the Films Division produces news magazines from its headquarters at

Mumbai, films on agriculture, defence and family welfare from Delhi and featurettes from its regional centres

at Calcutta and Bangalore. The Division caters to more than 12,911 cinema theatres allover India and to non -

theatrical circuits like units of the Directorate of Field Publicity, mobile units of the State Governments,

Doordarshan, field units of the Department of Family Welfare, educational institutions and voluntary

organisations. The Division's films are also screened abroad through the Indian embassies, television

networks, Government departments, educational, cultural, and social organisations as well. The Division aims

to foster the growth of the documentary film movement - which is essential to the realms of information,

communication and integration.

The Division has been given the responsibility of organising the Mumbai International Film Festival

for Documentary, Short and Animation films, which is a biennial event.

National Film Development Corporation Limited

The National Film Development Corporation Limited set up on 11 April, 1980 aims at bringing an

overall improvement in the quality of Indian cinema and also increasing its access. As films constitute a vital

segment of audio - visual culture, NFDC covers a large gamut of activities - production of films, export of

Indian films, import of foreign films, import and distribution of raw stock, construction of cinema theatres and

development of technology. The Corporation promotes the concept of low - budget yet high quality films,

which is a possible solution to the financial problems faced by the film - makers of the country. The

Corporation imports about 20 to 30 films annually for theatrical release. India exports films to over 100

countries. It participates in various international film markets to promote Indian cinema and also plays host to

a number of buyers from various countries. NFDC's main objective is to expose the Indian audience to a

plethora of fine films from various countries, however due to limited resources the emphasis is on good

quality family entertainers.

To fight video piracy, NFDC, in collaboration with the Indian film industry has set up an anti - piracy

body, Indian Federation Against Copyright Theft (INFACT), which is registered as a company under the

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Companies Act. The Theatre Financing Scheme was launched by NFDC to ensure the creation of additional

seating capacity in India and to provide outlets for fine cinema.

Directorate of Film Festivals

The Directorate of Film Festivals was set up in 1973, under the Ministry of Information and

Broadcasting, to help promote Indian films of aesthetic and technical excellence, both within India and

abroad. Since then, the Directorate has supplied a platform for the best in Indian cinema by holding the

National Film Festival every year. The Directorate has been successfully promoting Indian cinema abroad and

also given a chance for Indians to appreciate some of the finest works of international cinema. Within the

country, it has made the newest trends in international cinema accessible to the general public.

The Directorate was brought under the NFDC in July 1981, and in July 1988, it was again transferred

to the Ministry of Information and Broadcasting.

National Film Awards

The National Awards for films, known as state awards till 1966, were set up in 1953, for promoting

the country's film art by acknowledging the outstanding achievements in various fields of film - making.

The Dadasaheb Phalke Award is decided by the Government of India, and the entries for the National

Awards are judged by two national juries, one for the feature films and the other for short films.

National Film Archive of India

The National Film Archive of India ( NFAI ) was established in February 1964, as a media unit of the

Ministry of Information and Broadcasting. Its objective is to acquire, preserve and restore the rich heritage of

national cinema, and the cream of international cinema. The archive has made significant progress in the

preservation of films, audio and video material, documentation, research and dissemination of film culture in

India.

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The archive functions as the main repository for Indian and foreign research workers for viewing film

classics, relating to their research projects.

National Centre of Films for Children and Young People

The National Centre of Films for Children and Young People ( N'CYP ), earlier known as Children's

Film Society, was established in 1955, as an autonomous unit with an aim to provide children value - based

entertainment through the medium of films, and is engaged in production, acquisition, distribution and

exhibition of children's films. N'CYP conducts ' International Film Festivals for Children and Young People'

every two years. The Centre produces feature films, television serials, short featurettes and short animation

films for children and young people. It also purchases the rights of foreign films and presents them in the

country after dubbing in Indian languages. The films produced by N'CYP are entered in several National and

International Film Festivals and have won many awards.

Film and Television Institute of India

The Film and Television Institute of India ( FTII ) located at Pune, imparts technical training in the art

of film - making and also gives in - service training to the personnel of Doordarshan. The FTII conducts 3 -

year specialisation courses in motion picture photography, cinematography, film direction, sound recording

and sound engineering with one - year integrated training.

The TV wing of the Institute primarily caters to the training requirements of various production and

technical staff of Doordarshan. Television training is given in TV programme production, studio technical

operations, TV films and TV graphics and design. The Institute regularly sends its students' films in national

and international film festivals, in order to give exposure to students' work, not only on the national, but the

international level.

Federation of Film Societies of India

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The Federation of Film Societies, an apex body of the film societies in India, is provided grants - in -

aid by the Ministry of Information and Broadcasting to spread film awareness and development of audience

taste in the realm of cinema. These Film Societies aim at nurturing and developing film culture in the country. www.meadev.nic.in/media/films.htm

FDI POLICY

100% foreign direct investment (“FDI”) is permitted in the film sector.

(II) ECONOMIC ENVIRONMENT

Purchasing Power Parity (PPP) in India has increased from $300 in 1992 to $ 1600 in 1997

and from $ 1600 to $ 2660 in 2002-03. So today people have more money to spend on entertainment which

leads to increase in turnover of the industy. http://www.theodora.com/wfb/

Interest rate: As there is a fall in interest rate in last several years, film producers get funds at

low rate. This encourages people to venture into the business of film production.

(III) SOCIO-CULTURE ENVIRONMENT

Bollywood is perceived to be ‘The Place where Dreams come true’. Every Indian would wish to be

like, look like, see like or talk like a particular actor/ actress from this magic world. Imagine the level of

etching this industry has on the hearts and minds of people.

The Indian film industry has moulded itself very perfectly with the ongoing traditions, values, beliefs

and lifestyle. A flashback into the history of the country and its people would reveal the impact it had on the

industry.

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Just after India broke from the shackles of dependency, patriotism was deep down there in the hearts

of the people. To serve the country better, there were thinkers and actors like Manoj Kumar who had come

with films like Kranti, Roti Kapda Makan, Purab Paschim, etc.

Next came in the phase of action and drama where our very own Mr. Amitabh Bachan was aptly called

the Angry Young Man. He worked in the movies like Zanjeer, Sholay, Deewar , etc.

The present era inspired by westernisation with more broader mindsets and a complete shift in

paradigm has resulted in movies like Dil Chahta Hai, Murder, Julie, etc.

From hairstyles to costumes, from beliefs to lifestyle, from house concepts to the toy in the hands of a

kid, every thing which is seen in the daily cores is reflected on the Silver Screen.

(IV) LEGAL ENVIRONMENT

THE FILM INDUSTRY AND COPYRIGHT LAWS

The Threat

The film industry in India today is facing its biggest threat, that of piracy. This includes, cable piracy,

VCR piracy and its new avatars, VCD piracy. The development of these new forms (VCDs and now DVDs)

are a double edged sword. Whereas, on the one hand they provide for additional sources for commercial

exploitation of the film, on the other hand, the ease with which they can be copied, reproduced and

disseminated to the public, is giving the film industry nightmares. Films appear on cable without any authority

whatsoever, almost as soon as they are released in the theatres, sometimes even prior to their theatrical

release. Overseas rights of Indian films are sold almost simultaneously along with the release in India.

Copyright Laws in India

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With the advancement of technology, Copyright laws in India have also been changing to keep pace

with the times. The Copyright Act, 1957 was enacted and came into force on the 21st of January 1958. In its

Objects and Reasons the legislature recognized that "new and advanced means of communications like

broadcasting, litho-photography, etc." call for certain amendments in the existing laws (Copyright Act, 1911).

The legislature also commented that "adequate provisions have to be made for fulfillment of international

obligations in the field of copyright which India must accept". It is in this year (1957) that cinematograph

films derived separate copyrights apart from its various components, namely, story, music etc.

The laws have thereafter been subjected to certain changes. It was Amending Act 65 of 1984 which

specifically addressed the issue of piracy. The Statement of Objects and Reasons to the amendment

acknowledged piracy as a "global problem due to the rapid advances in technology". Besides addressing the

loss in the form of royalties to the legitimate copyright owners, the legislature also realized the losses to the

exchequer by way of tax evasion. Certain relevant portions from the Object and Reasons for the amendment

are reproduced below :

"….recorded music and video cassettes of films and TV programmes are reproduced, distributed and sold on a

massive scale in many parts of the world without any remuneration to the authors, artistes, publishers and

producers concerned. The emergence of new techniques of recordings, fixation and reproduction of audio

programmes, combined with the advent of video technology have greatly helped the pirates. It is estimated

that the losses to the film producers and other owners of copyright amount to several crores of rupees. The

loss to Government in terms of tax evasion also amounts to crores of rupees. In addition, because of the recent

video boom in the country, there are reports that uncertified video films are being exhibited on a large scale. A

large number of video parlours have also sprung up all over the country and they exhibit such films recorded

on video tapes by charging admission fees from their clients. In view of these circumstances, it is proposed to

amend the Copyright Act, 1957, suitably to combat effectively the piracy that is prevalent in the country"

In its effort to address the above issues, by way of the amendments, the following changes were incorporated

in the Act, namely: -

i. The punishment provided for the infringement of the copyright was enhanced to a maximum of three years,

with a minimum punishment of imprisonment of six months, and a fine upto to Rs. 2 lakhs, with a minimum

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of Rs. 50,000/-.; An enhanced punishment in the case of second and subsequent convictions was also provided

for;

ii. The provisions of the Act were now specifically made applicable to video films and compute programes;

iii. The producers of records and video films were now under a statutory obligation to display certain

information in the records, video films and containers thereof, which included the name of the copyright

owner, year of first publication etc.

 

  India's new copyright law, passed in June 1994, became effective on May 10, 1995 and

establishes an entirely new potential for reducing piracy in India. According to the Statement of Object and

Reasons, the legislature recognized that "effective copyright protection promotes and rewards human

creativity and is, in modern society, an indispensable support for intellectual, cultural and economic activity.

The legislature further recognized that copyright law promotes the creation of literary, artistic, dramatic and

musical works, cinematograph films and sound recordings by providing certain exclusive rights to their

authors and creators. It was felt that the present Act needs revamping on the following grounds:

 

to extend more effective protection to owners of copyright and related rights in the context of technological

developments affecting the reproduction of words by, inter alia, bringing within the scope of copyright the

subsequent hire or sale of copies of cinematograph films, computer programmes and sound recordings.

to further clarify the law in respect of cable, satellite and other means of simultaneous communication of

works to more than one household or private place of residence, including the residential rooms of a hotel or a

hostel.

to make provisions for licenses whereby the reproduction of works by reprographic equipment or by means of

devices such as tape recorders and video cassette recorders, where such reproduction would not under the

existing law be infringement of copyright, shall be subject to payment or remuneration to copyright owners by

means of a levy on such equipment.

The law protects cinematograph films as a distinct work, giving the producer of the film the exclusive rights

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i. to make a copy of the film, including a photograph of any image forming part thereof;

ii. to sell or give on hire, or offer for sale or hire, any copy of the film regardless of whether such copy has been

sold or given on hire on earlier occasions;

iii. to communicate the film to the public

India, being a member of two of the major copyright conventions of the world (The Berne Convention

and The Universal Copyright Convention), Indian works and works of Indian authors are accorded copyright

protection in all major countries of the world. Likewise, foreign works and works of foreign authors are

accorded the same protection as Indian works.

In addition to the law bringing India newly into compliance with its substantive TRIPS obligations in

the copyright area, the law provides for new minimum criminal penalties including a mandatory minimum jail

term which, if implemented, will go far to controlling piracy.

The government has initiated some measures for better enforcement of copyright laws. A summary of some of

these measures is given below :

The Department of Education, Ministry of Human resource Development, Government of India has

constituted a Copyright Enforcement Advisory Council (CEAC). The CEAC is reconstituted from time to

time to review periodically the progress of enforcement of the Copyright Act and to advise the government on

measures for improving the enforcement.

Creation of separate cells in state police headquarters. Special cells for copyright enforcement have so far

been set up in the following 23 States and Union Territories: These are the States / Union Territories of

Andhra Pradesh, Assam, A &N Islands, Chandigarh, Dadra & Nagar Haveli, Daman & Due, Delhi, Goa,

Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir, Karnataka, Kerala, Madhya Pradesh, Meghalaya,

Orissa, Pondicherry, Punjab, Sikkim, Tamil Nadu, Tripura and West Bengal. States have also been advised to

designate a nodal officer for copyright enforcement to facilitate easy interaction by copyright industry

organizations and copyright owners.

Encouraging setting up of collective administration societies and organization of seminars and workshops to

create greater awareness about copyright law among the enforcement personnel and the general public. For

collective administration of copyright, copyright societies are set up for different classes of works. At present

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there are three registered copyright societies. These are the Society for Copyright Regulations of Indian

Producers of Films & Television (SCRIPT) for cinematographic films, Indian Performing Rights Society

Limited (IPRS) for musical works and Phonographic Performance Limited (PPL) for sound recordings.

There is now an urgent need for all the constituent parts, i.e. the rights owners, the government, the

enforcement agencies and the judiciary, to work jointly in eradicating the menace of piracy. www.filmpiracy.com/artic.html#a

FILM CERTIFICATION

All films meant for public exhibition, irrespective of their length, whether in celluloid or video or CD

or DVD version are subjected to censorship. Programmes produced exclusively for broadcasting through the

Television are excluded.

"Film censorship becomes necessary because a film motivates thought and action and assures a high degree

of attention and retention as compared to the printed word. The combination of act and speech, sight and

sound in semi darkness of the theatre with elimination of all distracting ideas will have a strong impact on the

minds of the viewers and can affect emotions. Therefore, it has as much potential for evil as it has for good

and has an equal potential to instill or cultivate violent or good behaviour. It cannot be equated with other

modes of communication. Censorship by prior restraint is, therefore, not only desirable but also necessary"

SUPREME COURT OF INDIA

Film Censorship In India

The Cinematograph Act 1952, apart from including provisions relating to constitution and functioning

of the Central Board of Film Certification (then called the Central Board of Film Censors), also lays down the

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guidelines to be followed for certifying films. Initially, there were only two categories of certificates "U"

(Universal exhibition) and "A" (restricted to adult audiences), but two other categories were added in June

1983 "UA" for unrestricted public exhibition subject to parental guidance for children below the age of twelve

and "S" films for public exhibition restricted to specialized audiences such as doctors. The 1952 Act has been

amended to bring it up-to-date, and the last amendments were in 1981 and 1984. The present censorship of

films is governed by the 1952 Act, the Cinematograph (Certification) Rules promulgates in 1983 and the

guidelines issued from time to time, The guidelines are issued under section 5(B) of the Act.

Legislation

The censorship of films is governed by the The Cinematograph Act,1952, the Cinematograph

(Certification) Rules promulgated in 1983 and the guidelines issued on December 6, 1991. The guidelines are

issued under Section 5B of the Act. This section says that ' a film shall not be certified for public exhibition,

if, in the opinion of the authority competent to grant the certificate, the film or any part of it is against the

interests of the sovereignty and integrity of India, the security of the States, friendly relations with foreign

States, public order, decency or morality or involves defamation or contempt of court or is likely to incite the

commission of any offence.

Enforcement

a. Introduction

1. The Central Board of Film Certification is responsible mainly for certifying films. The

enforcement of the penal provisions of the Cinematograph Act, 1952 is with the State Governments /Union

Territory Administrations, since exhibition of films is a State subject...

2. The CBFC does not have any enforcement agency or manpower directly under its control.  It has

to depend on the local police force for enforcement of laws.

3. There are various forms of violations which often go unchecked because there are no checks and

no complaints from either the law enforcement agencies or members of the public.

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b. Violations of Cinematograph act

The following are the major violations that agitate the minds of the public:

(a) exhibition of an 'A' certified film to a non-adult

(b) exhibition of an 'S' certified film to persons other than those for whom it is meant;

(c) exhibition of a film in a form other than the one in which it was certified. Such violations are known as

interpolations. Interpolations can be described as follows:

(i) re-insertion in prints of a film for exhibition those portions which were deleted by the Board before

certification of the film

(ii) insertion in prints of a film, portions which were never shown to the Board for certification;

(iii) exhibition of 'bits' unconnected with the certified film.

(d) exhibition of a film which was refused a certificate (or 'banned' in common parlance)

(e) exhibition of uncensored films with forged certificates of other films.

(f) exhibition of films without censor certificates.

C. Penalties

1. Offences with regard to violations of censorship provisions are Cognizable. Furthermore, they

are non-bailable.

2. Section 7 of the Cinematograph Act provides penalties for violation of censorship provisions.

Penalty can also be imposed for failure to comply with section 6A which requires that any person delivering a

film to an exhibitor or a distributor will also give to him details of all cuts, certification, title, length and

conditions of certification.

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3. A person guilty of violation while exhibiting celluloid films is punishable with imprisonment

for a term which may extend to Three years, or with fine which may extend to Rs.1/-lakh, or with both, and

with a further fine up to Rs.20,000 for each day for a continuing offence. Similarly, Showing of video films

which violate the rules in the manner prescribed in this section will attract imprisonment of not less than three

months but which may extend to three years and a fine of not less than Rs.20,000 but which may extend to

Rs.1/-lakh and a further fine up to Rs.20,000 for each day for a continuing offence.

4. Furthermore, the trial court can direct that the offending film be forfeited to the Government.

Under Section 7A, any police officer can enter a hall where an offending film is being screened, search the

premises and seize the print. Films can also be seized when they are likely to be exhibited in violation of

Cinematograph Act.

Film Censorship.

In keeping with this responsibility, the Central Board of Film Certification known till June 1, 1983 as

the Central Board of Film Censors) was set up in Mumbai, with regional offices in some other cities (at

present there are nine such offices in Mumbai, Calcutta, Chennai, Bangalore, Hyderabad,

Thiruvananthapuram, New Delhi, Cuttack, and Guwahati). A Film Certification Appellate Tribunal (FCAT)

has also been constituted under section 5D of the 1952 Act for hearing appeals against any order of the CBFC.

While the work of certification of films is a central subject, the states have to enforce these censorship

provisions and bring any violations to the notice of the CBFC. The organizational structure of the CBFC is

based on the provisions of the 1952 Act and the Cinematograph (Certification) Rules 1983. The Chairman and

members are appointed for a term of three years or till such time as the Government may direct. They

comprise eminent persons from different walks of life such as social sciences, law, education, art, film and so

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on, thus representing a cross-section of society.The CBFC is assisted by the Advisory Panel in various

regional offices which are headed by Regional Officers. The members of these panels are also representative

of cross-section of society and interests. These members hold office till such time as the Government may

direct but not exceeding two years. However, the members can be re-appointed. The CBFC has divided itself

into Examining and Revising Committees to provide a two-tier system for certification of films in the event of

the applicant or the Chairman himself not being satisfied with the decision of the Examining Committee. The

certification rules also apply to foreign films imported into India, dubbed films, and video films. In the case of

dubbed films, the Board does not have any fresh censorship for the visuals in general cases. The Certification

does not apply to films made specifically for Doordarshan, since Doordarshan has its own system of

examining such films.

The Process of Certification

- Examination

1. The Cinematograph (Certification) Rules, 1983 have laid down the procedure that a producer

must go through to get his celluloid, video, CD or DVD film certified.

2. The film, document specified in rule21, censor fee and cess fee have to be submitted to the

regional officer of the concerned regional centre. The regional officer will form an Examining Committee to

view the film. This Examining Committee, in the case of a short film, will consist of an officer of the CBFC

and one member of advisory panel either of whom shall be a woman, and in the case of a long film/feature

film, one officer of the CBFC and four members of the advisory panel of whom two persons shall be women.

After the film has been previewed, a report indicating the recommendations of EC along with the category of

certificate recommended and deletions / modifications as deemed necessary is prepared and given to the

Chairman of CBFC who may approve the decision of the examination committee and ask the regional officer

to initiate further actions necessary to issue the certificate.

-Appeal

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3. However, if the Chairman, on his own motion or on the request of the applicant, so feels, he may refer the

film to a Revising Committee. The Revising Committee will consist of the Chairman, in his absence, a Board

member, and not more than nine members, drawn either from the Board or the advisory panel, provided none

of them was on the Examining Committee. The Revising Committee will view the same film print shown to

the Examining Committee without any changes, and each member will be required to record his verdict before

leaving the theatre. If the Chairman is not in agreement with the majority view, he may direct another

Revising Committee to see the film.

4. After the applicant is apprised of the decision of the Board, he will delete or modify any portions (if so

directed) and submit them to the regional officer along with one copy of the film (in video cassette format) as

certified.

5. Before any order prejudicially affecting the applicant of a film is passed by the Board, he is given an

opportunity to represent his views in the matter.

-Appeal in Tribunal

6. An applicant aggrieved by the order of the Board can go on appeal to Film Certification Appellate Tribunal.

7. If the matter goes in appeal to the Film Certification Appellate Tribunal which is headed by a retired judge as

Chairperson and not more than four other members, the FCAT may view the film and hear both the applicant

and the CBFC before coming to its judgement.

8. Certificate is finally issued by the concerned Regional Officer on behalf of the Board.

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AN OVERVIEW OF FILMS CERTIFIED

(From 1.1.2003 to 31.12.2003)U UA A S TOTAL

INDIAN FEATURE FILMS 479 198 200 - 877FOREIGN FEATURE FILMS 34 67 181 - 282INDIAN SHORT FILMS 1056 64 57 - 1177FOREIGN SHORT FILMS 47 109 72 - 228INDIAN LONG FILMS OTHER THAN FEATURE

- - - - -

FOREIGN LONG FILMS OTHER THAN FEATURE

- - - - -

TOTAL 1616 438 510 - 2564(Source: Central Board of Film Certification)

ENTERTAINMENT TAX

Films are a huge source of government receipts on account of the high rate of

entertainment tax which stands at an average of 25 per cent for the country as a whole. In fact, in Maharashtra,

it is as high as 60 per cent. Gujarat has an incidence of 100 per cent, while Madhya Pradesh has a tax rate of

75 percent. Andhra Pradesh has low tax rate of only12 percent.

Texemption for export earnings raised abroad according to Section 80HHF is 20%.

Tax benefits to multiplex construction companies :

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50% of the profits and gains derived from the business of building, owning and operating multiplex theatres

are allowed as a tax deduction. In order to avail of this deduction, the theatre must have been constructed

during the period between April 1, 2002 and March 31, 2005 and must not be situated in Mumbai, Kolkatta,

Chennai and Delhi. The deduction is available for five (5) consecutive assessment years beginning from the

first assessment year.

(Section 80IB(7A) of the Income-tax Act, 1961). www.incometaxindia.gov.in

(V) TECHNOLOGY ENVIRONMENT

The Indian film industry is increasingly adopting digital technology in its processes. The cameras that

are being used in India are the same as those used in Hollywood today. Digital breakthroughs and digital

creation of scenes is increasingly becoming part of Indian cinema. There is marked improvement on the

technical side such as dolby sound, computerized editing, special effects etc. It is expected that digital

technology will bring a sea change in the film production.

Areas which need to be addressed are in the Digital Space are:

- Animation: Currently the global outsourcing in the animation space is being done in the Philippines, Taiwan

and Korea. There are more than 50,000 animation specialists working in this space. In India, there are just

four major studios and about 2,000 to 3,000 professionals are available. The scope for providing training in

Animation and creating opportunities for outsourcing from India is untapped and huge. Individuals with basic

drawing and visualization skills can be easily trained in animation.

- Special Effects: It requires very high capital investments. Large IT players have the opportunity to enter this

space and can also provide high-end consultancy.

- Digital Cinema: Infrastructure

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FICCI has tied with NASSCOM which can be called as “ e-Entertainment Alliance”.

This Alliance will establish:

1. A forum to create ‘Human Capital’ from India in the creative and performing arts and related technologies,

provide young and budding entrepreneurs opportunities to compete globally in the technology space in

animation, special effects, digitization etc. and produce winners in the International arena. Training Programs

and workshops are to be organized for both IT as well as entertainment techies.

2. Every possible form of media will be covered in the e-entertainment space be it print, radio, TV,

electronic/internet based, films, sports, … … the opportunity lies in developing the abilities to digitize the

contents.

3. There is a need to Create an ‘Advanced Institute for Digital Arts ‘ (AIDA) in Mumbai.

4. The source of funding in the Hollywood film industry generally comes from Germany through the

“Completion guarantors” and not through the Venture Capital Funds at this point of time. Hence eE@ needs

to research and develop alternate sources of funding.

5. Better interaction with International Bodies like Motion Pictures Association, USA etc.

6. Leveraging the TiE network in bridging the gap between Hollywood & Bollywood and getting marketing

support from the Indian Community abroad.

7. Working closely with the Investor community in India and abroad.

8. Lobbying with the Govt. in technology related issues benefiting the entertainment industry.

PRODUCT

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Have you ever had a hand in developing a product that was engineered for efficiency. Tested for performance.

Packaged for shipping. And had it sit on the shelf?

Today’s marketing ‘tude is about design as much as it is about product life cycle. A marketing attitude of

connecting people with people through a product and/or service is at the heart of every decision and process in

business. An attitude of identifying the audience/customers. An attitude of giving them more bang for their

buck. An attitude of getting their attention in a world of media clutter. An attitude of building value for your

company through smart business negotiations. All those choices and skills are elements of marketing.

A movie product consists of intellectual property than can be ported to a variety of deliverables: theatrical

exhibit, non-theatrical exhibit, video tapes, DVDs, CDs of the soundtrack, collectible editions, television and

cable broadcast, Internet-served, and then there is the split dimensions of domestic, foreign, and niche

markets. Not to mention ancillary products such as clothing, toys, games, posters and even restaurants for

successful franchises. Oh…and then there’s the franchise rights, endorsements, product placements…and a

host of offshoots that are bought and sold, leased and rented.

The digital cinema product is also a service. It’s a product that can be a valued collectible or a gift. It’s also

entertainment opportunities in a theater or in someone’s home. The movie biz is one of the most complex in

the communications industry because of its creativity, its diversity and its continual explosions of

technological delivery options.

Production value is a nice global term in product marketing of movies. Included in this catch-all basket are:

Strength of the story

Star power – promotional quality of actor, director and maybe, director of photography

Visual quality

Sound and Music quality

Deliverability: quality, on-budget, on-time and marketing materials

Marketing and Distribution Services

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Based on the Test Marketing analysis, a plan is made looking at the sets of audiences whom the film appeals

the most, & accordingly marketing budgets are allocated & publicity campaign is planned and launched, e.g.

according to test data, the film is intended to appeal to Hindi-speaking, college-going groups, then marketing

& publicity campaigns are focused on such segments. The objective is to target the right audience & to derive

maximum mileage from promoting & exploiting the product.

Methodology

The plan also aims at advising how many prints have to be put in the market at the time of release of the film.

Estimates are given for allocating these prints, circuit-wise.

Further, plans can be drafted for exploitation of any language film simultaneously with the release of the film

in following languages:

English

Tamil

Kannada

Malayalam

Telugu

Sinhalese for Srilanka

Bengali for Western India & Bangladesh

Out of the total number of prints, one can have at least 50% prints dubbed in the above languages, which

ensures very high reach and acceptability.

The plan also covers cost estimates to various media with publicity budgets. Budgets are separately made for

TV & cable publicity, Newspaper publicity, direct promotions, Outdoors publicity, etc.

Based on the above, hype is created in the market & a well-established distributor line up is ensured for

acquiring rights. In this bargain the rights holder gets better value for the product & sells on his terms.

Pricing & Distribution review is based for each major circuits & appox minimum + maximum pricing

estimate. Further estimates shall be provided on sale of different rights (audio + theatrical + home video +

cable) in the neighboring countries like Pakistan, Srilanka, Bangladesh & estimates for such rights in Indian

territories.

Advantages:

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Ensure that during the first 3-4 weeks, film is highly successful.

Create a cascading effect & get a better turnout at theatres.

Film is launched with right marketing appeal.

Getting better value of product.

Planning and implementing an expertly-drafted Promotion & Advertising plan can result in unexpected

profits, as in the case of Ek Chhotisi Love Story.

Intrinsic returns will increase with more yield on other rights such as satellite, television, etc.

Marketing a film· What films have you seen recently? What made you want to go and see

them?

Make a list of all the factors that influenced you and put them in order of

priority.

· Make a list of all the different ways in which you might hear about a film. Put

these in order as to which give you the most information. Now re-order them

to show which are the ones that make you really want to see a film. What

does this say about the way you personally make choices about your film

viewing? How does this compare with your friends?

· What cinemas are there in your local area? Are there any differences

between them? How do you find out details of what films are showing and

when? Visit the websites for several cinemas. How do the websites reflect the

different nature of the organisations?

FILM MARKETING STRATEGY

Via the implementation of a professional dedicated production team, the film story line will focus on a highly

targeted demography audience.

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Successful independent films made by first and/or second-time producers are predominantly made for

“targeted audiences”. A Hispanic American “targeted film” will assured success in this

market, (please see Hispanic American market research at the end of the presentation). An independent film is

typically a small, character driven movie that plays at selected theaters in urban markets. After their run in

theaters these movies become widely available for rental or sale at video stores and are seen on national cable

networks such as Showtime or HBO. Examples of this kind of movies are:

My Family, Mi Familia, El Norte, Sugar Hill, Amore Perros, tu, Mama Tambien La, La Puta Vida, Water for

chocolate

Distributors

Companies that buy films and present them in movie theaters are called distributors. Most large distributors

have a sister company or division that deals specifically with independent films.

Fox Searchlight Twentieth Century Fox Corporation

We have already made contact with these distributors and are currently developing relationships with them for

the distribution and purchase of the “Vampira project. Our full intention is to create, produce, and ultimately

sell “Vampira” for a maximized profit. We feel, that while we love our project, ultimately, it is the exposure

and sale of the film that will generate the publicity and profit that we require to continuing making films.

Film Festivals

Known to the public as film festivals, these international movie-industry gatherings are actually open markets

and trade shows where hundreds of distributors look for new films.

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Our intention is to enter our film in all the competitive festivals, simultaneously we will attend the major

markets in order to personally promote our film. These Film Festivals include:

The Sundance Film Festival

The American Film Market

The New York International Latino Film Festival

The Los Angeles Latino Film Festival and Market

The Miami Latino Film Festival

The New York Film Festival Uruguay International

Film Festival

The New Directors/New Film Series presented by the Film Society of Lincoln Center

The Film Festival of Punta del Este, (Uruguay)

As well as several South and central American Film Festivals.

We will put together an aggressive marketing plan of our product to be displayed at these venues. Vampirism

being a successful product in the film industry will guarantee a profit in the Hispanic market and the

international horror film market. We will attract attention to our film by directly approaching foreign and

domestic distributors and by winning awards. We expect our efforts to increase our chances of winning

awards and gain recognition.

ADVERTISING AND PROMOTION

The primary target market is the Hispanic American community. 

The marketing communications activity will be focused on the Latino community to transact on the

“Vampira” film Hispanic will be reached through a broad based marketing channels:

Film Festivals

Trade Magazines and Print Publications

Media campaign: Radio and TV Promotion

On Line (Internet) Marketing

The primary target market is the Hispanic American community. The marketing communications activity will

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be focused on the Latino community to transact on the “Vampira” film. Hispanics will be reached through a

broad based marketing channels:

 

Film Festivals

Trade Magazines and Print Publications

Media campaign: Radio and TV Promotion

On Line (Internet) Marketing

 

The nature of the storyline of “Vampira” will transcend to the Anglo market as well as Hispanic and the

vampirism/horror markets.

Budgeting Budgeting is the operation where each of the scenes of the script is broken down and analysed followed by a

financial assessment of the total cost of each scene. The total financial requirements for the film become the

sum of the budgets of each scene. This budget is used to attract finance and is scrutinised by investors. During

production, it is the yardstick whereby the producer, the crew and the investors can gauge the progress of the

productions and determine whether the shoot is on or behind budget.

AN INTRODUCTION TO FILM MARKETINGIn a crowded marketplace it is not easy to sell and promote a given film. In "An Introduction to Film

Marketing", Christian Kmiotek discusses some essential points of film marketing, shedding light on why it is

so very important, why film has to be considered as both art and product and why the film industry is a

product driven market. While acknowledging the uniqueness of each film, this introduction explains why and

how marketing can help to bring your film from script to screen and enhance its chances to be successful at

the box office.

Marketing & Promotion

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In this glittering world of glamour, it is very important that a product is packaged well. Therefore, marketing

and promotion of a film has become a critical decision point for producers/distributors. In Hollywood, the

amount spent on the marketing and promotion of a film matches the skyrocketing film budgets. This same

practice is now more or less also being witnessed in Bollywood. Although on a relatively smaller scale

compared to Hollywood promotions, Bollywood's ad spends are also on the rise, along with the development

of a merchandising market (like caps, umbrellas and T-shirts) for "brand recall".

However, now with Bollywood aiming to globalize, marketing of the film/product will play a lead role. The

Indian film industry will have to lay emphasis on the need for proper marketing and its increasing

professionalization the world over. Distribution and marketing strategies are important and very different in

Hollywood. Bollywood will be required to play by the rules of the game in an overseas market to promote its

films. Be it either in Hollywood or Bollywood, the marketing and promotion of the film plays a very

important role in the creative awareness of a film.

Bollywood Marketing and promotion of a film in Bollywood takes place in the following

forms:

(a) Pre-Launch Publicity

The marketing process of a film starts approximately a month before the release of the music of the film. Pre-

launch publicity of the film plays a crucial role in the success of film at the box office. Distributors are usually

responsible for the marketing and advertising of the film, which includes outdoor advertising (hoardings),

trailer inserts, and advertisements through magazines, television and of late, the Internet.

(b) Music Release

The music of the film is generally released two months before the film itself is actually released. This way the

track of the film gets a chance to reach its peak without any bias whatsoever. Once the music gets released,

the music company spends money on the promotion of the film. The music companies generally buy spots on

channels in the beginning of the year itself. The idea at this stage is to create awareness about the film in the

public.

(c) Time of Release

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The producers try to ensure that the film is released at a time when the audience is in a festive mood. For

instance, New Year, Diwali, and Christmas are considered to be good times in the year to release films.

Similarly, most Hollywood films are released during summer and Christmas.

(d) Coffee Table Books

Recently, Bollywood has developed a new trend of releasing coffee table books of films such as The Making

of Sholay, The Making of Asoka and most recently, The Making of K3G. This trend has, judging from the

sales, been quite a hit, as it has caught the fancy of many film-crazed fans. The Making of Sholay won the

National Award for Best Book on Indian Cinema, 2000 and sold nearly 3,000 copies.45 These books have also

found a ready market globally amongst non-resident Indians, as well as cross-over audiences.

Even with the average production cost of a studio film falling, the marketing and promotion costs of films in

Hollywood continue to be on the rise, with audiences paying even higher prices to see films. The average cost

of marketing films to the public in 2001 rose nearly 14% from the previous year to US $31 million. 46

According to the Motion Picture Association of America, about 25% of the advertising costs of typical

Hollywood studio films go to network TV and 17% to the local TV. Cable TV, radio and billboards take up

further 20% of a film's advertising costs.47, Despite much talk about harnessing the power of the Internet to

market films, only 1.3% of a film's advertising budget currently is spent online. Similarly, marketing

expenditure of films made by smaller subsidiaries of the big studios (Walt Disney Co's Miramax Films and

AOL Time Warner Inc.'s New Line Cinema), has skyrocketed nearly 54% to US $10 million per film.48

According to CMR/TNS Media Intelligence (formerly Competitive Media Reporting), the major studios spent

US $944.5 million, more than one-third of their media outlays, on network advertising in 2001.49 In the last

five years, Motion Pictures has been the top advertising category for new products contributing from 25-30%

of total advertisement spending for all new products.

A big Hollywood film would normally require to gross more than US $100 million to be considered a hit. But

as budgets and marketing costs continue to skyrocket, crossing that threshold does not guarantee profitability.

Road to Perdition, Minority Report and Red Dragon grossed a collective US $330 million, but due to steep

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profit, production budgets and profits divided among stars, producers and directors, the three films together

are not expected to make much, if anything, for the studios

Despite the large amount of revenue that a successful film is likely to bring in, the making of a film is in and

of itself an expensive art, requiring coordination and cooperation amongst numerous people through the

several stages of production. In this chapter, we have briefly explained the process of film production and

have outlined certain basic differences in the processes followed in Bollywood and Hollywood.

                              

          Procuring Finance

Finances for a Bollywood film, as it stands presently, comes from the following sources:

(a) Private financiers

These people mostly comprise of diamond merchants, brokers and builders who have a lot of liquid cash they

can spare. An established, well-known producer with a good track record can raise money at about 2% interest

per month. For the less fortunate, interest rates could be as high as 4% per month.

(b) Pre-sales

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Pre-sales are the advance sales of distribution rights in various media and territories. A pre-sale may take a

variety of forms like theatrical, music or satellite rights, which are in turn given to distributors, record

companies and satellite channels, respectively.

For the purposes of the distribution of the theatrical rights of an Indian film, the market is divided into

different geographical territories (including the overseas market). The rights for each territory are normally

sold separately. The producer usually gives the distribution rights of a particular territory for a particular

period to the distributor upon receipt of an advance credit from the distributors. Generally, for well-known

producers, distributors book films in advance. Under this system, the distributor pays the producer a portion of

the cost up front (approximately 40%) and the balance (60%) upon receiving the final print.

(c) Self-Finance

Unlike Hollywood, where the producer seldom finances his own film, in Bollywood, it is not uncommon to

find a producer financing his own film. This practice, however, is typical of large production houses. This

method of finance enables such production houses to leverage and sell the rights in the film at a premium, just

short of the film's release. However, in recent times, the practice of the producer investing his own money in a

film is comparatively decreasing. Also, with bank finance being an option to raise funds, the producer usually

prefers not to take the risk of investing a substantial amount of money in the film.

(d) Black Money

Leaving aside private financiers, who are an extremely costly option, funds are not easily available for

producers and therefore, producers tend to fall prey to black money. A number of the payments made in the

course of production of a film, including the payments to and from the financiers, transactions with the

distributors, music companies, the star cast, etc., have an element of unaccounted money in them. Five years

ago the Financial Times noted 'Bombay's thriving film industry has long had connection with organized

crime, largely through the laundering of 'black' money used to finance many of the films.38 However, due to

the recent attacks on prominent Bollywood producers, and with the government's move to provide a boost to

the Indian film industry, this mode of finance is becoming increasingly unpopular. Further, with the move

towards the corporatization of Bollywood, other formal sources of financing are also opening up.

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(e) Bank Finance/Corporate Finance

Pursuant to the film sector being accorded "industry" status, bank financing is now permitted in the film

industry. The IDBI is the first bank that initiated the process of financing films. Similarly, the Bank of India

also expressed its intention to follow suit. This source of finance is discussed in detail in Chapter III.

Recently, the new trend that has emerged is the production and financing of films by corporate houses. Most

of the well-known corporates like the Tatas, Birlas, and Reliance have set up separate divisions/companies

and are investing in this space. Even though they may not know too much about films, they do know about

professional management and processes, which is what Bollywood needs most today. Bankers, too, are

getting into the film business. A classic example is that of Idream Production Private Limited, an offshoot of

SSKI Finance. Idream has distributed cross-over films like Monsoon Wedding, Bend it Like Beckham and

Bollywood Hollywood, creating an altogether new demand for this niche market of specialized films.

(a) Primary Sources of Finance

Finances for films in Hollywood comes from the following four main sources:

(i) Studio houses;

(ii) Joint Ventures;

(iii) Equity/Investor Financing; and

(iv) Loan Financing.

A completion guarantee and appropriate insurance are two of the most important requirements for the

financier (whether private investor, distributor or bank) of a film (as described in Chapter III).

For a film financed by a studio, a typical agreement is the production-financing-distribution agreement ("PFD

Agreement"). It addresses issues that relate to elements of both creativity and finance. The production

company, in order to obtain the financing necessary to produce its film, either secures a direct monetary

investment and assumes responsibility for all other production aspects, as well as negotiation of distribution

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arrangements. Or, it may negotiate an agreement with a studio or another production or distribution company

to provide the financing, production facilities, and distribution arrangements.

If the production company has gathered the essential production elements, it may try to finance the picture

through pre-sales. The production company may also go to various distributors for pre-production

commitments to distribute the film after it is made. In order to work effectively, such commitments must

include monetary advances, which may cover all or some of the production costs. The strength of the

production company's reputation and the package of the director, performers and story determine whether the

distributor's reluctance to take such risks will be overcome.

(b) Secondary Sources of Finance

Hollywood films are also funded to an extent through a secondary source of finance , also known as “support

finance.” The various means of support finance are:

(i) Gap Financing;

(ii) Merchandising;

(iii) Corporate Endorsements / Product Placement; and

(iv)Facility Arrangements.

The aforementioned are discussed in greater detail in Chapter III.

In Hollywood too, although there are no statistics to back it up, there is a significant amount of unaccounted

money that is pumped into the filmmaking process. This forms an unofficial source of finance and deserves a

passing mention.

Apart from the above, there are many other ways Hollywood film makers fund their film, such as grants from

foundations (especially for documentaries and educational films/videos), individual and/or corporate

investors, and, very often, financing out of their own meager pockets.

(c) Security Lien

A film has various underlying intellectual property rights such as the film itself, musical works, sound

recordings, artwork and still photography, all of which can be used as security to raise finance. As part of the

process of acquiring a completed film, a Hollywood financier takes various precautions and employs certain

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procedures to ascertain the status of the production company's rights and its ability to confer distribution

rights. The two most common forms of lien are the following:

(i) Lab Lien

All production companies make arrangements with a film-processing laboratory for film processing needs. A

financier usually lends money to a producer upon obtaining a laboratory lien. This is dealt with under "Post

Production" in Chapter II .

(ii) Bank Lien

It is normal for finances to be routed through a production bank account designated specifically for

production. The production company is not permitted to withdraw funds from the production account except

for the purpose of applying them towards the production of the film in accordance with the agreement. The

financier will normally require a form of acknowledgment from the bank at which the production account is to

be maintained. This ensures that the bank will not exercise any right of set-off it may have in respect of debts

incurred by the production company in its own right against funds maintained in the production account.

Music

Music is considered an integral part of the seamless web of word, image and sound the stuff that cinematic

magic is made of Music,42 in Indian films, forms one of the most important ingredients that contribute to the

success of a film, thereby ensuring a steady inflow of revenue for the producer. India is the second largest

producer of music, a crucial selling point for Bollywood films. Currently, film music constitutes a major

chunk of the Indian music industry. However, since the past year the Indian music industry is facing

substantial losses due to falling sales, fewer hits, and higher taxes. The Indian Music Industry (IMI), which is

the apex body of music companies, estimates that owing to piracy and high taxes, the legitimate industry has

shrunk by 27% in volume and 38% in value over the last two years.43

There are various types of contracts that the producer can have with the music company. The music rights are

nothing but just another option that the producer can sell to get money. One way it is done is through an

outright sale of the music rights of the film to the music company.

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In the case of a big banner, or when the producer is confident of the success of the music, the music rights are

not sold on an outright basis. Instead, a minimum guarantee is taken by the producer, over and above which a

royalty is also paid to the producer.

Besides paying for the musical rights of the film and the royalty, music companies also spend time and money

promoting the music on various media fronts. The amount to be spent on promotion is decided jointly by the

music company and the producer.

Recently, with the slump in the music industry, music companies are offering more of royalty-based deals, as

opposed to minimum-guarantee deals. Royalty deals vary depending on the requirements of the film

producers and music companies. If the upfront payment towards the promotion of the film is borne by the

music company, the royalty rates vary from 8% to 12% on sales. However, if the deal is such that the

producer gets the money only upon the music company recouping its costs, the royalty may go up to 15% or

20%. 44

    Distribution

There are primarily two stages at which the distributors come in the picture for the distribution of the film.

Pre-completion

While the film is in progress, the producer is often in need of finances to complete the film. At this stage, the

producer begins to negotiate terms and conditions with various distributors.

Post-completion

Once the film has been completed and the producer wants to launch a film, he needs a person who can market

the same.

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Typically, in Bollywood, a distributor buys the distribution rights of a film for a particular territory and

recovers his costs from the exhibition of the film. For the purpose of domestic film distribution, the country is

divided into eight circuits.51

The distributor usually bears the downside and shares with the producer the upside of the film's eventual

popularity. The distributors buy the rights based on their perceptions of the film's box office chances. The

distributorship pattern does not follow a rigid format. The price at which the rights are sold for each territory

are expressed as a percentage of the rates at which they are sold for the Mumbai circuit.

(a) Distribution Deals

Distributors enter into mainly three types of deals with the producers:

(i) Outright Sale: The distributor purchases from the producer certain or all distribution rights in the film on

an outright basis for a fixed sum and a specified period.

(ii) Minimum Guarantee (plus royalty): Minimum Guarantee ("MG") is the minimum downpayment made by

a distributor to the producer for distribution rights in the film. This amount is usually based on the track

record of the producer, the star cast and budget of the film. The MG is paid to the producer, either as a lump

sum or in parts, from the pre-production stage until the release of the film. The producer may also, based on

the agreement with the distributor, get royalty overflow, meaning he would also, if the film makes profits

(after deducting distributor's costs and commission), share the upside with the distributor. Similarly, the

distributor may also enter into an advance contract with the producer, which is similar to MG, except that the

distributor has the right to, in the case the film does not do well, take back his advance from the producer.

(iii) Commission: Here, the distributor only charges a commission on the collections of the film. Thus, in this

method, the distributor pays no initial amount to the producer. He only acts as an agent.

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(b) Overseas Distribution

In the case of overseas distribution, the rights are usually sold on an outright basis. The producer might

contract with a single distributor for complete overseas distribution, or might divide them into further

territories. The overseas distributors have their offices in India and approach the producers in a similar way as

the local distributors. Besides geographical territory rights, there are other rights which are given out by the

producer, i.e. music rights (domestic and overseas), cable satellite rights, Internet rights, VCD/DVD rights,

etc.

(c) Agreements

Usually, all the agreements for the licensing and assignment of theatrical (cinema) rights are essentially fixed-

length contracts. The rights for a film are customarily sold to distributors for an initial period of five to seven

years. At the end of that term, the distributor has the right of first refusal on a renewal that can extend the

contract for another five years. At the end of this stipulated period, the producer gets back the licensed copy of

the film from the distributor. He can then give the same territory rights to other distributors.

In Hollywood, the type of rights that are granted to distributors are either primary or

secondary rights. Primary rights are usually the audiovisual exhibition and transmission rights in a film or

television production whereas secondary rights, which are also known as ancillary rights, give the right to sell

merchandise and publish novelizations of the screenplay.

In Hollywood, “negative pickupfunding” is a popular method followed for distribution deals. Negative pickup

means a sale or grant of distribution rights made prior to completion of the film with the distributor as a

means of obtaining financing for the film. The negative pickup method is used to secure a loan from a third

party, including a bank. Thus, the producer would normally have to satisfy the requirements of both, the

distribution and financial source.

From the distributor's viewpoint, the advantage of this arrangement is that the distributor obtains a complete

film containing certain agreed upon elements such as specific cast members, directors, length and rating for a

fixed sum of money payable only upon completion and delivery of the film. The distributor runs no risk of the

film going over budget, this being the producer's responsibility (which may in turn be passed along to the

completion guarantor). Any advance upon signing and/or during pre-production and production is usually so

nominal in comparison to the payment required upon delivery, that the distributor runs very little financial risk

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if the film is not delivered as and when promised. Most negative funders are established film finance

companies and have weekly checks to ensure all is according to the schedule.

Exhibition

Theater owners are the last link in the distribution chain. For a theatrical film, the principal method of

distribution is the exhibition of the film in cinema halls across the country.

In India, exhibition centers are available in various forms and sizes, ranging from open-air

facilities to thatched-roof rooms to air-conditioned and modern multiplexes. Most theatres in the country

possess only the basic facilities. Only a few theaters in major cities like Mumbai and Delhi possess

sophisticated equipment and sound systems. Amenities like canteens, parking lots and decent restrooms are

found only at a few select, well-run theaters.

The distributors enter into contracts with the theater owners/exhibitors for screening the film. The different

contracts entered into between them are as follows:

a) Theater Hire

The distributor pays the theater owner a fixed charge for screening the film on a weekly basis and earns his

revenue through ticket sales. In this type of arrangement, the distributor bears all the risk.

b) Fixed Hire

Under this method, the theater owner pays the distributor a fixed sum of money per week. Unlike theater hire,

here the risk is borne entirely by the theater owner. Irrespective of the film's performance, the theater owner

pays a fixed amount to the distributor.

c) MG + Royalty

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Here, the theater owner guarantees a certain amount to the distributor for screening the film. In the event the

film makes a profit (after the theater owner deducts his cost and payment of MG), the same is shared between

the distributor and theater owner in a pre-decided ratio.

d) Profit Share

The theater owner and the distributor share an equal risk, as the amount earned by the theater by way of ticket

sales is shared with the distributor in a fixed ratio.

Studios are the major distributors and have their distribution channels worldwide. They can

commit substantial sums of money towards prints and the advertising of a film compared to a smaller,

independent distributor who may be operating on a limited financial basis.

While many of the major film production companies have their own distribution arms to distribute their

product, both domestically and internationally, there are a number of independent film distribution companies

that engage in film distribution in various media and/or territories. Since most independents do not have their

own distribution arms, some distribute through companies, which have distribution facilities in certain states

or territories. Others book directly with exhibitors without using sub-distributors. The advantage of having the

security of committed distribution arrangements prior to commencement of production must be weighed

against the potentially larger sums of money, which may be obtained later if the completed picture appears to

have the potential of becoming a hit.

The following are the various ways in which a film in Hollywood can be released.52

Saturation Release

This is solely done by the major studios, which have the massive printing and advertising ("P&A") money to

book a screen in at least 1 out of 2 multiplexes in each city. This results in release of anywhere from 1,500-

2,500 prints..53 In 2002, 32 films opened in ultrawide release (more than 3,000 theaters) and 139 films opened

in wide release (more than 1,000 theaters).54 Spider-Man was released on 7,200 screens in 3,615 theaters and

Harry Potter was released on 8,200 screens..55 Considering the total 35,506 screens in 2002 in the US, these

films played in one out of every four-five screens. Such saturation releases can shut-out many smaller films

that rely on word-of-mouth.

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Limited Release

This is when a film opens in just a select few theaters in the major markets like New York, Los Angeles and

Chicago Then, if it is well received at the box office, it makes its way into a smaller scale of a platform

release.57

Market-by-Market Release

Usually the ideal candidate is a good-to-excellent small film that a mid-size distributor has picked up the

rights to but does not have the capital for a Saturation Release of 1,500-2,500 prints. This distributor will

make 20-40 prints and play it in one region after another over 12 months until the territory of North America

(USA/ Canada) is eventually saturated.58

Art House Release

Foreign films and small film noirs (like a film made by Merchant-Ivory) are in the classification distributed

via art houses. In every large city there are 1 -2 art houses (small old cinemas) seating 100-200 people.59

Four Walling

This occurs when a producer circumvents a distributor and literally goes from town-to-town renting, the 4

walls of the theater directly from the theater owner, bringing his own print, placing his own ads, and sitting in

the box office collecting every penny (if any) for himself, thereby cutting out the middlemen.

Non-Theatrical

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This category comprises films that go directly to video, foreign sale, cable, hotel/motel, pay-per-view,

broadcasting (TV), foreign television, multi media, web, and net markets for revenues.

                                                Profit Definitions & Deals

(a) Profit Definitions

In Hollywood, terms such as "gross profits" or "net profits" are commonly used and carefully defined. Studios

and major distributors have definitions of "net profits" which go on for pages. The definitions will vary from

studio to studio. The terms only have meaning in connection with the specific definition. These are essentially

contract definitions, not any standard accounting term, and do not by any means indicate that the "profit

participant" will indeed see a profit, even if it appears to the public that the film is very successful, and even if

the studio appears to have made significant sums of money on the film.

The arrangements between distributor and exhibitors tends to be a percentage arrangement, with floors and

ceilings. These arrangements cushion the blow of a film that does not do well and allows for advantages for

the exhibitors if it does well.

Typically, the split between distributor and exhibitor may be up to 90% to the distributor after the exhibitor

has taken care of its overhead figure ("nut"). The percentage may initially be much lower. The popcorn and

snack concession is the profit center for the theater.60

(b) Deals

Predominantly, there are two kinds of arrangements in practice for the sharing of revenues in Hollywood:

(i) Gross deals

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Usually the first sums earned by a film are from box office receipts. The distributor and exhibitor of the film

enter into an agreement which makes reference to the 'Exhibitor's Gross,' i.e. 100% of all the sums received at

the box office. From the Exhibitor's Gross, a deduction, which is the 'Exhibitor's Percentage' (usually an

amount subject to negotiation between the exhibitor and the distributor) is made. The sum, which is then paid

by the exhibitor to the distributor, is the 'Distributor's Gross'. The eventual division of the Distributor's Gross

between the distributor and producer depends on the deal between them.

In a gross deal, the distributor deducts a commission based on the Distributor's Gross, out of which the

distributor also deducts all his expenses. A gross deal guarantees a flow of income from the first receipts but

the percentage due back to the producer is relatively low.

(ii) Net Deals

In a net deal, the distributor deducts his expenses from the Distributor's Gross and usually splits the remaining

in a 50:50 ratio with the producer. Sometimes, the distributor deducts the distribution commission based on

the Distributor's Gross and deducts its expenses from the producer's share of the Distributor's Gross before

sending the balance to the producer.

(c) Illustration

Today, as a practice, when one buys a film ticket at a box office, around for example, US $8, the theater (the

Exhibitor) immediately takes about 60% of this amount ("Box Office Gross") and turns over the remaining

US $3.20 to the studio/distributor who released the film. The theater is fully or partially, directly or indirectly,

owned by the studio/distributor. The studio/distributor charges its "distribution fee" of about 33% against this

US $3.20 leaving US $2.14 from the US$8 ticket sale.

The studio/distributor then reimburses itself out of this US $2.14 for anything it spent on P&A, and all other

expenses relating to distribution of the film. If the said expenses amount to 20%, which is charged against this

US $2.14, a mere US $1.71 would be all that's left. This means that from the US $8 ticket sale, US $1.71 is

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now available to turn over to the producer, provided the studio/distributor does not also have participation

rights in this sum as well, reducing such cash flow to zero.

This US $0.00 to US $1.71 is what is known as "points" or, in certain circumstances, known as "producer's

net." The producer now has to split the US $1.71 with its film production investors, usually 50-50 leaving US

$.86 for all the producers/ writers/ directors talent/ development investors and a mere US $.86 for all the

production investors, from that original US $8.00 ticket!61

New Trends

Be it Hollywood or Bollywood, 2002 was the year of the niche-buster. Films such as Bowling for Columbine,

One Hour Photo, Monsoon Wedding, My Big Fat Greek Wedding, (which was the highest-grossing

independent film ever with US $228 million in box office receipts, taking only US $5 million to produce),

Empire, Y Tu Mamá También" (This Mexican film unfortunately lost out against El Crimen Del Padre Amaro

for a chance of Oscar nomination in the foreign film category due to the controversial practice of the

Academy to include only one nominated film per country) made 2002 one of the most successful years ever

for specialized fare and has given studios the financial incentive to make and distribute more small-budget

films.

Of course, the year's blockbusters, like Spiderman, The Lord of the Rings: The Two Towers and Star Wars:

Episode II -- Attack of the Clones, were the dominant players at the box office, and no one expects

Hollywood to retreat from its heavy reliance on sequels and big-budget films.

In 2002, specialized films62 accounted for nearly 7% of the market a 3% increase from 2001. While Greek

Wedding accounted for most of that jump, each of the top 10 specialized films grossed more than US $10

million. Despite their modest size or "indie" style, most of the year's successful, specialized films each had a

big studio behind them. The diverse array of potential audiences is what prompted the studios to form their

specialty divisions in the first place.63

The film industry is also taking advantage of the proliferation of cable-TV outlets to reach niche audiences.

Audiences are now going to see more of the higher-concept-marketable-lower-budget-niche films being made.

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MGM's Barbershop, which cost only US $12 million to make and an additional US $10 million to market,

made more than US $75 million. Universal, along with its Latino specialty arm, Arenas Entertainment, made

a bundle on the urban drama Empire, which cost US $650,000 to acquire and has gone on to make more than

US $15 million.64

As Jeff Blake65 said, "If they are made at the right cost, then that is a very good business and a satisfying

business to be in.”

Similarly, Bollywood also has been witnessing the rise of non-mainstream cinema with Mira Nair's Monsoon

Wedding grossing about US $14 million in North America. Gurinder Chaddha's Bend it like Beckham

emerged as the event picture of the year and continues to run in theaters to date, with audiences and critics

being bowled over with this winning film's charm. Worldwide, Bend it like Beckham grossed US $25million.

Similarly, Deepa Mehta's English film Bollywood Hollywood caught the attention of mainstream audiences

and the mainstream media in Canada and the film grossed an impressive US $1.2 million on about 40 screens

in four weeks and grossed US $250,000 in the United States.66

WELCOME TO MARKETING YOUR MOVIE

MARKETING: The process of identifying and reaching specific segments of a population for the purposes of

selling them a product or service

The hardest part of being a film maker is getting the world (or your neighborhood) to see your film. We

understand your pain and are here to help you. On these pages, you will find useful ideas, brainstorms and

ramblings to help you market your movie and draw attention to it. All of the tips come from professional

movie marketers who have been there, so you know what you read is coming from the trenches and have

worked. People ask Film Baby all the time why their film is not selling. That is the million dollar question and

the reason we went out and put together this page.

FILM IN THE CAN: Distribution and a Side of Fries

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If you are looking for home video distribution, there are a couple of companies out there that can help you.

Below is a list and links of ones that we know about. We have never worked with any of these companies

personally, these are not our recommendations, just a list:

--> Ingram Entertainment

--> Baker and Taylor

--> Anchor Bay Entertainment

--> Moving Images Distribution (Canada)

--> Canadian Filmmakers Distribution Centre (Canada)

--> Canyon Cinema

--> First Look Media

FILM IN THE CAN: Replication and the DIY Way

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The best thing about making a movie is having people see it. Well what is the best way to do that? You have

two options when it comes to putting your finished product onto DVD, each with their own pros and cons. So

enough of the small talk, lets get started.

DVD REPLICATION

--> Lets get this out of the way. Who to use? This is who WE recommend you use!

PROS:

--> Amazing quality and a finished product that is retail ready and that is important. The best part, your

looking at a cost of less then $2.00 per disc. Once replicated, if you put your film next to any film in

Blockbuster, Best Buy or Wal-Mart , no one is going to tell the difference between your DVD product and

Sony's project. And at the end of the day, that could be the deciding factor for someone to buy your film, the

packaging.

--> No Hassles with burning one off DVD's. If some store wants 100 copies to sell, your not up all night

burning and printing and cutting. Need more hassles: dealing with labels, printer ink, red fingers, the DVD-R

look, driving to the store to buy supplies,

-->Better creative options. Make inserts, put holograms on your DVD, custom packaging, and more.

--> Sell your first run, just pick up the phone and have more made! Some one in China loved the film,

orders 10,000, just pick up the phone and have more made. The replication house will always have your work

on file and can be replicated in a jiffy.

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--> Don't need to know anything about making chapters, transfer or anything, they handle it for you!

CONS:

--> A lot of money up front. Your talking $2K before you even see a DVD.

--> You lose a bit of indie. Replicated DVD's make your film official and retail ready and in a way, a little

more corporate. I must admit, I love the DVD-R some times and I will tell you why below!

-->Might be stuck with 1000 DVD's in your garage. Truth is, if you don't do anything to get the word out

there about your film, you will have 10 boxes of DVD's sitting in the corner of your basement, garage or

kitchen. Harsh, I know, but it is a con!

DOIN IT DIY @ HOME (DVD-R)

PROS:

-->Technology is getting GOOOOOOOOOD. Need evidence? Enter Lightscribe!

-->Keep ALL the creative control over your product. Because everyone is hand made, each one will have

its own flavor to it. Some people call them errors, others call them collectibles

-->You believe in the film, but have no money! You know this film is going to be big, but you need to start

small. Sit at home and get it going. Just please, please, please, DO NOT USE A SHARPIE on your DVD-

R!!!! PLEASE! A QUICK NOTE: DVD-R's are not as cheap as CD-R's and the machines are at least $200

for a decent one. You could spend a lot of money getting your DVD-R system set up. Figure out your costs

ahead of time

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-->Down Right Independent! What better to say your film is truly independent then by hand making them

yourself. Call them what you want: rare, limited edition, signed, custom created, you name it! Make the

people who are buying them feel special that they are getting a DVD-R.

-->As IBM says It's an on-demand world.

CONS:

--> Burning DVD's SUCKS! I used to do trade shows every week all over the country. In every region we

had different musical acts we were showcasing. So for each conference I had to sit at my computer and burn

100 CD's each week. IT SUCKED. There is nothing you can do while it is going on. Your computer seems to

take EVERY bit of memory to do one simple task. Then I had to put the label on them, put them in jewel

cases. NO NO NO NO NO. Sorry, I will take some meds now.

--> If it smells like poo, looks like poo, then it is poo Your film could be Independence Day, but if it is on a

DVD-R, you might have put it on laser disc to some people. DVD-R makes people squeem. Like the feeling

when a band handed you their tape on a maxell. Plus, if it does not play in their player, well you lost a chance

to have people talk about your film.

-->You are going to work twice as hard to get recognition When sending a DVD-R out to press,

distribution companies, video stores, you need to have an amazing product or you are not going to be taken

seriously. It is just a matter of fact. They are looking for a nice finished product. So make yours nice!

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Dubbing Artists Costume Suppliers Singers

Actors Auditorium Cameramen

Cine Equipment Editing Rooms/Editors Colour Film Processing

Costume Designers Satellite Televisions Dance Directors

Directors Distributors Preview Theatres

Story Writers Gun & Bomb Suppliers Hair Dressers

Home & Mini Theatres Light & Light Fittings Lyricists

Graphics & Special Effects Stunt Artists Make-up Artists/Materials

Video Cassette ConversionMusic

Composers/DirectorsStunt Directors

Orchestras Outdoor units Public Relation Officer

Raw Film Suppliers Film Training Institutions Rain & Fog Machines

Shooting Houses &

Locations

Recording Studio

Equipment

Sound & Light Equipment

- Rentals

Film Trade Bodies &

Associations

Projection & Sound

EquipmentProduction Managers etc.

(Source: www.filmplusindia.com/categ.html)

5 MAJOR COMPONENTS

1. Direction

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The Director is responsible for executing the shooting process on the floor. His responsibility does not

begin or end with shooting. He is responsible for converting the ideas which are in the

form of words into visuals. The storywriter and the screenplay writer may be different

persons but the Director must be good in this department as well. The director is

chiefly responsible for shot-taking which he executes through his cameraman, thus

making it imperative for the director to have basic knowledge of camera, lighting and the visuals in general.

The actors are made to perform in front of the camera and with the help of body language and

dialogues, reveal the story to the audience. The director learns the art of  handling the actors. The whole story

shot in bits and pieces are assembled together in accordance with the syntax of the film grammar with the help

of the editor.

In the selection of sound and music, the director has to make some conscious decisions and hence his

knowledge of these are essential too. The director brings out everyone’s talent and puts them together to make

a worthwhile programme.

The field of Direction is vast. It ranges from Directing Documentary films, News & Current Affair

programmes, educational and instructional films, advertisement and corporate films, entertainment, fictions,

soap operas and of course, feature films too.

2. Camera & Lighting Technique

The painter paints his canvas and his tools are pigments and

brushes. The cinematographer paints his canvas with lights and

records on film or video. Though the tools are different yet the end

results have striking similarities. Photography has it roots in

science, technology, art and aesthetics. Physics,  chemistry,

engineering technology are the means to achieve the end, that is,

the  aesthetics. Such a subject needs serious studies to achieve

high-end results.

The Film and Television technology is growing rapidly and every other day a new  equipment is

released in the field. Therefore, people with camera should be prepared for latest developments in the field.

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The purpose of artistic lighting expands beyond merely illuminating the subject for exposure level. A good

lighting can make the subject appear better than what it meets the eye and good subject may look ordinary if

the lighting lacks aesthetics.

3. Video Editing & Sound Recording

The word Editor must not necessarily to taken as

reference to the technician working in a cutting room. It

simply refers to the person who is responsible for the

particular editing decision being discussed. The process of

editing is usually a far wide responsibility involving the

syntax of the film and television grammar. Editing is not

merely cutting and joining. In fact, the shoot material which

are shot in pieces needs to be put in order and joined together

abiding by the rules of the film and television grammar to convey the visual and aural message to the viewer

authentically.

4. Acting & Presentation

In almost all Film and Television programmes there is hardly any

programme where no actor is involved. It is through the actors the director conveys

his message or idea to the audience. The role of an actor cannot be

underestimated at any cost. Observation, imagination, body language, emoting

capabilities, verbal and non-verbal communications are the tools of an actor, which is more important than the

superficial beauty and glamour.

Acting for Film and Television is highly technical. The actor doesn’t perform in isolation and is

directly bonded to the camera, lights and microphone. Besides, his time and pace criteria are totally related to

the editing parameters. This makes it compulsory for a Film & Television performer to have the basic

knowledge of cinematography, editing and the Film grammar. It is this technology that makes Film and

Television acting so different from theatre. http://www.filminstituteindia.com/

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CORPORATIZATION AND FINANCING The film industry is one sector in India, operations of which have always remained under cloud,

mystery and suspicion. While producers dependence on underworld and hawala money (money transferred

unofficially) for financing has always been a known fact, it’s a different story that all Hindi films ultimately

end with the victory of “Good” and enemies of the nation, “Evil”, destroyed! The Film Industry on the whole

has always worked like small scale industries in the unorganized sector. For over five decades of its existence,

the industry did not produce any “Corporate Entity” worth its name.

While the bosses at the film industry have kept demanding more support from the government, policy

& regulatory framework and clean money from institutions for financing, they did little work in cleaning up

their balance sheets, income tax returns, disclosures and above all, incorporating their businesses. But the last

few years have seen some change.

The famed actor, Amitabh Bachchan called the Big B who promoted Amitabh Bachchan Corporation

Limited (ABCL) took the lead towards Corporatization of film industry in India. Though still an unlisted

company with shareholders and whatever its fate may be, ABCL set the example for others in film industry,

that things can be done in a little more organized way. Globalization, Software technology, TV programming

and the Music boom in India have since prompted several traditional players and industry majors to make

their operations more transparent and hence CORPORATIZE.

Scores of film producers, financers, distributors and associates, have now converted their businesses

into “Companies” under law. Some have already raised capital from the public and are now listed at major

stock exchanges, while several others propose to do the same.

Besides Zee Telefilms, some others who have successfully corporatized includes music leader Tips

Industries, Jitendra promoted Balaji Telefilms, Dheeraj Kumar’s Creative Eye, Sri Adhikari Brothers, RPG’s

Saregama, Pritish Nandi Communications and of course Subhash Ghai’s Mukta Arts.

Films Produced By Corporate Production HousesProduction House Film

Aamir Khan Productions Private Limited Lagaan

Zee Telefilms Limited The Hero

Balaji Telefilms Limited Krishna Cottage

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Mukta Arts Limited Yaadein

Yashraj Films Private Limited Dhoom

Padmalaya Telefilms Limited Suryavansh

Tips Industries Limited Fida

Venus Tapes & Cassettes Private Limited Josh

Devgan Entertainment Private Limited Raju Chacha

(Source: FICCI Report 2002 - Indian Entertainment Industry)

Still not many Film companies have availed finance from these sources. This is because corporate

structure in place is a pre requisite for such a venture. This means that the company has to clearly define the

following:

Documented scripts in place

Legally enforceable contracts with the artists and technicians

The entire time schedule documented

The producer has to make sure the filming activity is completed in time and there are no time and cost

overruns.

Apart from these corporatised players and a few reputed film producers who have a track record of

delivering successful films, other film-makers have to rely heavily on arranging financing for their films from

the unorganised market comprising “friends”, “relatives” and “private financiers” which is also difficult and

involves high cost of interest.

LONG TERM PROSPECTS

The long term prospects for the industry look bright. Though nascent at this stage, companies

promoted by serious promoters will also command a good valuation at the market. While domestic and

international investors have got an opportunity to invest in the sector, strong and positive signals have been

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sent to banks and financial institutions that the industry is changing. CII & CRISIL are also working at

developing a financing model that would enable the banks to weigh the risks in this industry.

It is now hoped that the ensuing restructuring and corporatization will usher in a new era in corporate

India and industry will flourish by producing quality products for its audience. The Indo-Italian Chamber of Commerce and Industry

INFRASTRUCTURE The infrastructure for films comprises of production, post-production and exhibition infrastructure.

Production & Post-Production Infrastructure here includes studio floors, film cities, laboratories and post-

production facilities. In 2002, India has 25 studios and three film cities. Studios are enclosed structures where

sets can be built for shooting. A studio floor should have the necessary dimensions to allow building of these

sets and provide the necessary acoustics for shooting. Mumbai being the hub of film production in the country

has the maximum number of studios.

However, most of the studios are not maintained due to lack of funds. Many like Famous Studios at

Andheri and Ranjeet Studio at Dadar in Mumbai have closed down. Besides, the studio floors are very small

and do not allow building of huge sets. For example, an average studio floor size in India is 100 feet by 150

feet versus the international standard of 220 feet by 350 feet. An Indian studio is spread over 5 acres and has

one or two studio floors whereas an

international studio is spread over a minimum of 500 acres and has more than 6-10 studio floors and hundreds

of locations. In fact, an international studio is akin to a film city in India.

Indian films cities do not come even close to international ones. For example, the Mumbai and Noida

film cities are spread over barely 40-50 acres of land and have only 20 locations each.

Perhaps the only international grade studio in the country is the Ramoji Rao Studio in Hyderabad, with

six studio floors. The film city is spread over 2,800 acres, of which 1,500 acres is developed and has over 100

shooting locations.

Post-production infrastructure like editing and dubbing suites are given as part of the overall package

to the production houses. Till recently, most of the equipment used in India was largely outdated. Now,

several specialised post-production studios like Empire Studio, Crest Communications, CMM and Pentamedia

Graphics have been set up which offer modern technology to producers. Players like Ramoji Rao and Rama

Naidu have already set up or are in the process of setting or investing in post-production facilities. They are

positioning themselves as end-to-end providers, wherein a producer can just come with a script and can take

away a readymade film from the studio, which is how it is done internationally.

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Post-production facilities have to keep pace with fast changing technology. Avid Editing Suites are

rapidly replacing the old Steinbeck editing systems. In fact, even Avid Suites are becoming obsolete and are

being replaced by computer-based editing suites like Adobe Premier.

Exhibition Infrastructure:

The number of theatres has not increased with a speed it should be increased in the last three years.

This is due to the high degree of piracy, low ticket rates, high incidence of taxes and levies, low collections of

theatre owners which prevent them from spending on renovation. Alternative profitable options for real estate

like retailing has led many theatres in Mumbai to be converted into shopping complexes and departmental

stores.

Another reason for the poor infrastructure is the high incidence of entertainment tax, which stands at

an average of 25 per cent for the country as a whole. In fact, in Maharashtra, it is as high as 60 per cent.

Gujarat has an incidence of 100 per cent, while Madhya Pradesh has a tax rate of 75 percent. If one were to

reduce the entertainment tax, one would easily see the improvement in exhibition infrastructure. Andhra

Pradesh is such an example. With 12 percent average entertainment tax rate, the state has the highest number

of theatres and a very flourishing film industry notes Uday Singh, Managing Director, Colombia Tristar Films

of India. Even a country like China, which has a highly regulated market and produces far less films than

India, has 65,000 theatres.

Entertainment Tax Rates In Asian Countries

Country Percentage

Honk Kong 0.00

Indonesia 25 – 30

Japan 3.00

Korea 16.60

Malasia 30.90

Phillipines 33.00

Singapore 3.00

Taiwan 7.62

Thailand 7.00

Source: FICCI Report 2002 - Indian Entertainment Industry

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SCREENS

As compared to approximately 36,000 screens in the U.S., there are around 13,000 cinema screens in

India. Most of the cinema halls in India operate in an unorganised environment and are owned by individual

businessmen. More than 95 per cent theatres are single screen and stand-alone. However, the industry has

recently seen the entry of organised corporate players.

Priya Village Roadshow Ltd., a joint venture between the New Delhi based Bijli Group and Australian

media and entertainment conglomerate, Village Roadshow Ltd., was the first organised corporate player in

this space. E-City Entertainment India Limted, Inox Leisure Ltd. and Adlabs Ltd. are other corporates who

have ventured into this space in 2001.

Till 1997, the concept of housing more than two screens in one theatre was non existent in India. Priya

Village Roadshow Ltd. pioneered the concept of world class multiple screen cinema halls in India by opening

their flagship property, Anupam-PVR, in New Delhi in 1997.

In the last two years, the state governments of Gujarat, Rajasthan, West Bengal and Maharashtra have

announced entertainment tax exemptions on new multiplexes which has resulted in an increase in the

development of multiplexes in these states.

With a population totalling more than 1 billion, 13,000 screens translates into a measly 13 screens per

million of the population. This is far below global averages.

India has witnessed a sharp decline in cinema attendance in the last 10-15 years due to three reasons,

namely poor cinema content, poor film exhibition infrastructure and rampant piracy.

However, the film exhibition industry in India is expected to grow rapidly over the coming years due

to continuous positive developments in the area of film content (which is improving), film exhibition space

(which is witnessing development of multiplexes with as many as 200 multiplex screens planned in the near

future) and a sustained clampdown on piracy (which is likely to result in a decline in the frequency of

watching films in homes through alternative media platforms). These three factors are likely to lead to higher

cinema

attendance in India.

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OVERSEAS MARKET

Mr. Supran Sen, Secretary, Film Federation of India speaking about the export market for Indian films

says that the U.S. and Canada are major markets for Indian films accounting for 30 per cent of exports,

followed by the U.K. accounting for 25 per cent, Mauritius for 10 per cent, Dubai for 10 per cent and other

countries accounting for the remaining 25 per cent. The U.S. market is specially good for sentimental films, as

well as China and the East European countries like Hungary and Czechoslovakia. Russia is another major

market for Indian films.

Co-production is also an important new feature of the industry with a few U.S. companies showing

interest in co-production as well as the U.K., Canada and Singapore.

Speaking about the export market, an important aspect of the internationalisation of the Indian film

industry, Mr. Nandkumar Bele, Secretary of the Indian Film Exporters Association, says that exports started

way back in the early sixties and the Association was set up in 1963 to facilitate exports. The major exporters

he named, are Eros Multimedia which is the biggest exporter of Hindi films followed by CA Corporation, Fair

Deal International Pvt Ltd. and other exporters like Venus Records and Tapes PL, Tips Exporters and Yash

Raj Films. The bulk market is in the U.S. the U.K. and Canada and films are also regularly exported to

Mauritius, Fiji, New Zealand, Australia, Malaysia, Indonesia, Singapore, Hongkong, Dubai, Tanzania and

Kenya. Some exporters such as Eros, Yash Raj Films and Fair Deal have offices abroad.

Rajnikant is a super hero in Japan and his film, Muthu was a super hit in Japan and was subtitled in

Japanese. The Chinese market is also an interested market and the Chinese who have a strict censorship board

are mainly interested in family films and romantic films.

The South African film makers are interested in co-producing with Indian film producers and the

South African Government is offering various facilities for shooting of Indian films in that country.

There are two problems faced by exporters which come in the way of Internationalization. A major

problem is piracy with the emergence of the latest technology tools like Digital Versatile Discs (DVD). For

instance 30,000 copies of DVDs appeared in the American market barely a week after the theatrical release of

the film Devdas there. Similarly, pirated cassettes of Indian films appear in the Pakistani market barely 2 or 3

days after they are released internationally. Malaysia is another big centre for piracy of Indian films. This

phenomenon is a major dent in export revenues for film exporters.

Another problem is that of income tax. Earlier, the film makers used to get exemption for export

earnings raised abroad under Section 80 HHC of the Income Tax Act of 1960. An interpretation put forward

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by an Income Tax Officer that this exemption does not apply to exports of films because the rights of the

films are given on lease and thus they are not outright sales (this section applies to sales) and since the rights

in the film assigned are intangible and not on a par with other foods or merchandise, was made the basis of the

removal of this exemption since 1995. Assessed and completed cases were thus opened up and many

exporters had to pay income tax for 5 to 7 years along with penalties. This was a major setback for several

exporters whose liability was high as well as for small exporters who were badly hit by this interpretation.

After representation by the industry to the Government, while this provision was no longer made

applicable, the new provision under Section 80HHF introduced and allowed tax exemption of 100 per cent in

1999-2000, 80 per cent in 2000-2001, 60 per cent in 2001-2002, 40 per cent in 2002-2003 and 20 per cent in

2003-2004.

While the Government on the one hand wants to encourage exports of Indian films, on the other hand

it wants to tax it heavily. The concessions for instance given to the IT industry are not given to the film

industry, even though the Government has recently given it industry status.

Mr. Mohan Chhabria, Director, Fair Deal Exports Pvt. Ltd., a leading exporter of Hindi films says in

the last three to four years there have been two developments that have helped with the internationalisation

and exports of films. One is that the Indian industry has technically reached the standards of America and

secondly content wise, the films are now getting into subjects which are universally liked.

Mr. Chhabria states that if you have a good product, the middlemen and importers in the business,

mostly people of Indian origin settled abroad approach the exporters themselves. Recently, Australian TV

approached Fair Deal for buying the films Dil Chatha Hai and Hum Dil Chuke Sanam.

Sometimes the suppliers meet the buyers at festivals. New markets are also often opened up by

participating in festivals. However, the cast of the films is important and certain stars like Shah Rukh Khan,

Salman Khan, Amir Khan, Hrithik Roshan, Amitabh Bachchan and Sanjay Dutt are more in demand abroad. The Indo-Italian Chamber of Commerce and Industry

According to Pravinder Bhatia, assistant vice - president, corporate finance, Ernst & Young, the

overseas market is more lucrative than the Indian one. For instant, Kal Ho Na Ho grossed nearly Rs 20,000

crores and Lakshya about Rs 8 crores in ticket sales alone in the UK & US. And then there is the additional

revenue generated by the sale of audio & video CDs. Times of India

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