Movie industry could be a metaphor for the emerging economy
Outdated infrastructure, piracy among issues holding it back
A revenge fantasy and a female wrestling drama are smashing box office records in India and abroad, giving the country’s film industry a shot in the arm after a lackluster couple of years.
But in what could be a metaphor for the emerging economy, the industry is a powerhouse struggling to be unleashed. Despite producing more films than any other country, it’s hobbled by myriad of issues from outdated infrastructure to rampant piracy, generating a fraction of Hollywood’s income.
“Baahubali 2: The Conclusion,” has raked in more than 15 billion rupees ($230 million) at the box office since being released on April 27 and is already the most successful film in India, according to Ramesh Bala, an analyst who tracks box office collections in India. About a prince’s quest to reclaim the throne from his evil uncle, the movie is being compared to ‘300’ given its epic visual effects, a muscle-ripped star and $40 million price-tag.
At the opposite end of the film canon, Dangal, the true story of a former Olympic coach who led his daughters to win medals in wrestling at the Commonwealth Games, is topping the box office in China, according to entertainment consultancy EntGroup.
The movies come after a slow couple of years for Indian cinema. Box office revenues in India slipped 1.6 percent last year, while the industry as a whole -- including the sale of overseas rights to Indian films -- rose only 3 percent to 142.3 billion rupees ($2.2 billion), according to a March report from KPMG and the Federation of Indian Chambers of Commerce. That compares with an average of 7 percent in the previous three years.
While prolific, the industry is also less productive. India produces 1,500 to 2,000 films a year and generated about $2.2 billion last year. That compares with income from about 700 films produced in the U.S. and Canada of about $11 billion in 2015, according to a report from Deloitte in September.
Meanwhile the number of Bollywood movies that generated a positive return on investment fell to 18 last year from 27 in 2014, according to KPMG-FICCI. Bollywood covers movies in Hindi largely produced in Mumbai.
Chalk it up to the issues the bedevil much of the Indian economy: poor infrastructure, low skills, a complicated tax regime and the black market.
To start, there simply isn’t enough screens. The country has about 6 screens per million viewers, versus 23 per million in China and 126 per million in the U.S. according to Deloitte. And while more than 200,000 people are employed in the industry, most are trained on the job and are unprepared to handle new technologies such as virtual reality. Meanwhile, the industry losses about 190 billion rupees a year to piracy, according to Deloitte.
There is good news. Regional cinema has seen a surge of activity. Baahubali hails from southern India's Tollywood, a portmanteau of the Telugu language and Hollywood. The introduction of India’s goods and services tax on July 1 will make the tax system simpler and allow filmmakers to claim a credit on the services, lowering production costs, according to Deloitte.
And apart from Baahubali, which is more good fun than high-brow cinema, film quality is improving, KPMG-FICCI said.
“Differentiated, strong, message-based quality content became the indispensable factor for the success of movies in 2016, further highlighting the fact that audiences have become more discerning in content consumption,” the report said.