Wac final report_group07_sece

MNIK Release Strategy

Group 07 Consultants

2 FOX STAR STUDIOS, MUMBAI

Release Strategy and Implementation Plan

For

“My Name is Khan”

Prepared for

Mr. Vijay Singh

CEO, Fox Star Studios

Prepared by


19 March, 2012



3 TABLE OF CONTENTS

Executive summary 4

Introduction 5 Problem 5 Scope 5 Analysis 6 Reducing the home Video Price 6 Convincing the Government 6 Choosing a single release date 6

Implementation Plan 7

Financial Impact 8

Recommendation 8



4 EXECUTIVE SUMMARY

The strategy described for the distribution of “My Name Is Khan” considers the various

problems faced by the company with regard to piracy and the threat of loss of revenues due to

the same. We have suggested what we think is the optimum solution to minimize the losses in

revenue and presented an implementation plan to ensure sustainability of the methods. Our

final recommendation conclusively utilizes all the effective alternatives, and ensures that the

final objective of the firm, that is to make profits, is met. According to our final

recommendation, we should reduce the prices of the DVDs along with reducing the time lag

between movie and DVD release and also release it on a single date globally. We should also

initiate a dialogue with the production house of “Forrest Gump” and try to settle the issue out

of court, to silence the critics that have pointed out similarities in the two movies. We also

present in this report the financial benefits due to our strategy.



5 INTRODUCTION

Piracy is the main problem plaguing the Hollywood studios that have ventured into India to tap the

growing market. Unauthorized recordings in theaters and theatrical print theft are the two major

sources of piracy. India does have laws against such unfair practices, but it is difficult to enforce these

laws and to convict the offenders due to various reasons peculiar to India. While direct pilferage is one

of the troubles faced, the lack of effective copyright laws is another.

We need an effective strategy to prevent piracy from eating into the revenues of our upcoming movie

“My Name Is Khan”. Moreover, some film critics have remarked about a similarity between our movie

and Hollywood blockbuster “Forrest Gump”. We also need to address this issue.

Problem

On thorough evaluation of the situation, we can concisely state the current problem being faced as:

“How to formulate the distribution campaign and release strategy of the upcoming release ‘My Name is

Khan’ which effectively protects the film’s intellectual property rights and also prevents possible legal

implications related to comparisons with ‘Forrest Gump.’”

Scope

When we look at the problems and analyse the possible alternatives, it gives a much clearer view when

we see what the outcome will be if all the efforts bear fruit. Hence the opportunity to be exploited is:

“My Name is Khan will succeed in protecting its IPR, garner more profits and Fox Star studios will reap

the benefits of investing in anti piracy initiatives for its future releases as well.”



6 ANALYSIS

After a thorough analysis, the course of action that should be followed involves the following

alternatives:

Reducing the Home Video Price to Rs50-100 to increase DVD sales in India

Assumption: The current price of an original DVD is Rs500

Our analysis of past data reveals the following results:

Ticket prices in India are a small fraction of the current DVD prices. We can also infer that the spending

capacity for the consumers in India is very low. Hence the current DVD prices are overpriced from the

perspective of the price sensitive Indian consumers. As box office collections drop drastically after 2-3

weeks in India, we recommend reducing the time lag in the DVD release to 4 weeks, to fully tap into the

benefits of this option.

Convincing the government and lobbying to initiate measures to strengthen the enforcement

of copyright law in India.

We suggest seeking assistance from the MPAA to catalyze implementation of stronger anti piracy laws in

some target states like Delhi, UP, Gujarat, Haryana and Andhra Pradesh, where the revenue collection is

higher. The MPAA has already succeeded in doing the same in several states. Looking at the long term

benefits, the costs incurred due to transaction and negotiation will be mitigated in a short while.

Choosing a single release date globally rather than a staggered release.

Our analysis of past data reveals the revenues for the Indian Film Industry (in billion Rupees) as:

*2008 figures

Average ticket price Rs 28.5

Current DVD price Rs 500

Proposed DVD price Rs 50

Ticket price/ current DVD price (%) 5.7

Ticket price/ proposed DVD price (%) 57

2006 2007 2008

Domestic theatrical 62.1 71.5 80.2

Overseas theatrical 5.7 8.7 9.8

Total industry size 78.2 92.7 104.4

Domestic/total (percent) 79.41 77.13 76.82

overseas/total (percent) 7.29 9.39 9.40



7 The overseas market is growing substantially every year and is now close to 10% of the total industry

size. Hence, it would be wise to tap into the overseas market early by going for a global release date

rather than a local release first as this would lead to piracy in the vast overseas market.

With regard to possible legal implications due to comparisons with “Forrest Gump” : Initiating talks

with the production house of “Forrest Gump” and try to resolve any arising issue out-of-court.

There is a strong possibility of a legal implication when the word spreads and our movie becomes a big

success. Hence we suggest, as a precautionary measure, that we should approach the Hollywood

production house and try to buy out the adaptation rights.

IMPLEMENTATION PLAN

We suggest dividing the implementation plan into four phases. Phase 1 would be pre release while

phase 2, phase3 and phase 4 should be after the release of the movie.

Phase 1: Presently being January 2010, we should focus on coordinating with distributors and marketing

heads in various countries to release movie on a single date in February. Simultaneously we should also

initiate talks with the “Forrest Gump” production house. Phase 1 should last for 1 month. Separate

teams should undertake coordination with distributors and talks with Forrest Gump production house.

Phase 2: For five weeks after phase1, our focus should be on curbing major pirate bases. We should hire

private agents to help the police to catch the culprits in regions with high piracy. We should also tie up

with optical disc manufacturers to bring the selling price of DVD’s to Rs50- Rs 100 range for Indian

Market. This phase will require funds to hire private agencies. Also good negotiators will be required in

dealing with optical disc manufacturers.

Phase 3: This should extend to three months; we should hire consultants and help MPAA to urge the

government for strict enforcement of anti-piracy laws especially in high revenue states. For making the

phase implementation effective, the compensation of consultants should be linked to their success in

convincing the government.

Phase 4: Finally, for four weeks we would track and evaluate the success of plans and formulate the

plans for upcoming release accordingly. This top management team should be actively involved in

implementation of this phase.

As a post implementation check of the above phases we should measure the increment in revenues as a

direct result of the raids and trying to stop internet piracy and also measure increased revenues from

the DVD sales. We should also compare the revenues of MNIK with the revenues of some releases of the

same stature in previous years.



8 FINANCIAL IMPACT

We are confident that piracy will be curbed to a large extent by following the recommendations

provided by us. Piracy being a continuous and constant threat in India, we need to focus on long term

measures, to reap future benefits for all our releases in India. Indicative financial benefits over a long

term are summarized in the table below.

RECOMMENDATION

On the basis of our findings we recommend that we should reduce the DVD price to Rs 50 - Rs100 for

the Indian market after reducing the time lag between the movie release and DVD release to 4 weeks.

We also recommend releasing the movie on a single date globally. As a long term measure, we need to

convince the government by lobbying with local and other studios to initiate measures to strengthen the

enforcement of copyright law in India. With regard to comparisons with “Forrest Gump”, the company

should initiate talks with the production house of “Forrest Gump” and try to resolve any arising issue

out-of-court.

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