From Bollywood to the world

India Dispatch: If you live outside India, you might have missed the buildup to Ra.One, the latest blockbuster from Bollywood's golden boy, 'SRK' - Shah Rukh Khan. Inside India the hype has reached fever pitch,

India's film industry has gone global, influenced by the multiple revenue streams and mega-marketing strategies of other countries. B-Town's latest big-budget offering has had months of promotion and can be seen on 3,500 screens worldwide from Wednesday, writes Pia Heikkila

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If you live outside India, you might have missed the buildup to Ra.One, the latest blockbuster from Bollywood's golden boy, "SRK" - Shah Rukh Khan.

But in India, there is no escaping, as the "King Khan" hype over his latest epic reaches a fever pitch with the film set to open in Dubai tomorrow and elsewhere later in the week.

Khan's invincible, cyborg-like superhero is omnipresent. Television, newspapers, magazines and billboards invite everyone to watch the film and to buy anything related toRa.One, from washing machines to Happy Meals.

It's all well-orchestrated. The film is billed to be one of India's best-marketed, with over 25 brand tie-ups, including Sony, Nokia, McDonald's and Coca-Cola.

The magnitude of the film's reach doesn't end there.

Eros International and Red Chillies, the two production houses behind the film, say it is the first global launch of a Bollywood (also known as B-Town) film, with Ra.One set to play on more than 3,500 screens around the world, including in 3D format and in various languages.

There is plenty of money to be made, as the Indian film industry, worth 83.3 billion rupees (Dh6.13bn) last year, is set to grow over the next few years, according to a recent report by the tax and audit advisory firm KPMG, and the Federation of Indian Chambers of Commerce and Industry (FICCI).

And it is projected to grow nearly 10 per cent annually to 133.5bn rupees by 2015.

"The contribution of domestic theatrical revenues to the overall industry pie is expected to reduce slightly, while the share revenues from cable and satellite rights is expected to increase going forward and account for 13 per cent of overall industry size," says the report.

Eros International and Red Chillies want their slice of this growing market. Ra.One reportedly cost US$20 million (Dh73.4m) to make, but Eros and Red Chillies have already recouped most of their money with lucrative satellite, music and product deals.

"Even before the film opens, we have recovered at least 60 to 70 per cent or even more of the cost of the making of the film. We try to do this with all of our releases and as a standard, anything from 40 to 80 per cent of our films are funded before they even hit the box office," said Kamal Jain, the chief financial officer of Eros International.

The film is being launched at an ideal time. Traditionally, the Hindu festival known as Diwali, celebrated between mid-October and mid-November, is one of the busiest times of the year and is one of the most profitable for filmmakers.

But festival season or not, today no B-Town production house can afford to rely on box-office income alone. Bollywood's film release revenues have almost halved in the past decade and most studios employ multiple revenue tactics to finance their films.

"Pre-sales deals, which include satellite rights, music rights and home video rights, sometimes recover almost half of the production cost of the film. So while theatrical as a revenue stream is witnessing growth, its contribution to the overall revenue of a film will decline," says Siddharth Roy Kapur, the chief executive of UTV Motion Pictures.

Studios used to acquire a film from a production company and hope for a hit at the box office. But as competition became tougher, many film companies suffered losses because of immense film budgets and shrinking revenue.

The digital and satellite age changed things. Satellite television is huge in India, contributing up to one third of film revenue, according to industry estimates.

The KPMG-FICCI study said the satellite revenue segment has grown more than 33 per cent from last year to the present and is expected to grow at least 10 per cent next year. The rights are often sold in advance, depending on the cast and production house's reputation. Marketing and product tie-ups aside, co-productions are another way the Hindi film industry can hedge their bets.

Smarter Bollywood bosses get involved early. Instead of acquiring a finished film at a huge cost, studios such as UTV are involved right from the start. For the recent hit Delhi Belly, UTV paid a production fee to the production house and took care of all marketing and distribution activities. The two parties share intellectual rights and profits from the different revenue streams.

Distribution is another growing revenue source for the industry. Production houses used to pay a hefty chunk of a film's revenue to a distributor, but in an era of co-production and multiple revenue streams, most studios now have their own distribution channels and manage films from start to finish.

Even films that are not huge crowd pleasers have potential, thanks to distribution deals.

"Strong distribution offices and networks can take advantage of an oversupply of films by striking advantageous bargains for films that lack huge star power," says Rahul Puri, the executive director of Mukta Arts, a production and distribution house. "Targeting the right audience is becoming key, and skilled distributors can earn their keep by using their understanding of the market to turn quick profits."

Eros and Red Chillies say the scope of Ra.One's distribution deals is unprecedented.

"Never before has a Hindi film been distributed so widely and in 3D. This is not meant just for the diaspora audience, it's a film that [has] wider appeal," says Mr Jain.

Emerging technologies are providing more ways of making money for B-Town, says Mr Kapur.

"Innovations like 3G, 4G and the Web will change the dynamics of the movie watching experience, creating new access points for consumers across the world," he says.

Despite the changes in the industry, Bollywood still relies heavily on the magnetic quality of its stars to pull in the crowds.

"Every film we make with Khan is a sure-proof bet. Each of his films have been profitable," says Mr Jain.

But changes in the Indian film industry continue to occur as the business is increasingly globalised.

"From Raj Kapoor to Dev Anand to Shah Rukh Khan - the Indian films have always sold on star value," says Mr Kumar. "However, in the last five years, a new generation of films uniquely influenced by a mix of Hollywood, Bollywood and world cinema are coming about. This cinema is more dependent on the concept of the film versus the sheer star value."

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