CHAPTER -1

INDUSTRY OVERVIEW

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The film industry or motion picture industry, comprises the technological and commercial
institutions of filmmaking, i.e., film production companies, film studios, cinematography,
animation, film production, screenwriting, pre-production, post production, film festivals,
distribution and actors, film directors and other film crew personnel. Though the expense
involved in making films almost immediately led film production to concentrate under the
auspices of standing production companies, advances in affordable film making equipment,
and expansion of opportunities to acquire investment capital from outside the film industry
itself, have allowed independent film production to evolve.

As of 2018, the global box office is worth $41.7 billion. When including box office and home
entertainment revenue, the global film industry is worth $136 billion as of 2018. Hollywood is
the world's oldest national film industry, and remains the largest in terms of box office gross
revenue. Indian cinema is the largest national film industry in terms of the number of films
produced and the number of tickets sold, with 3.5 billion tickets sold worldwide annually
(compared to Hollywood's 2.6 billion tickets sold annually) and 1,813 feature films produced
annually.

The worldwide theatrical market had a box office of US$38.6 billion in 2016. The top three
continents/regions by box office gross were: Asia-Pacific with US$14.9 billion, the U.S. and
Canada with US$11.4 billion, and Europe, the Middle East and North Africa with US$9.5
billion. As of 2016, the largest markets by box office were, in decreasing order, the United
States, China, Japan, India, and the United Kingdom. As of 2011, the countries with the largest
number of film productions were India, Nigeria, and the United States. In Europe, significant
centres of movie production are France, Germany, Italy, Spain, and the United Kingdom.

Distinct from the centres are the locations where films are filmed. Because of labor and
infrastructure costs, many films are produced in countries other than the one in which the
company which pays for the film is located. For example, many U.S. films are filmed in
Canada, many Nigerian films are filmed in Ghana, while many Indian films are filmed in the
Americas, Europe, Singapore etc.

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(1.1)History

The first feature film to be made was the 1906 Australian silent The Story of the Kelly Gang,
an account of the notorious gang led by Ned Kelly that was directed and produced by the
Melburnians Dan Barry and Charles Tait. It ran, continuously, for eighty minutes,

In the early 1910s, the film industry had fully emerged with D.W. Griffith's The Birth of a
Nation. Also in the early 1900s motion picture production companies from New York and New
Jersey started moving to California because of the good weather and longer days. Although
electric lights existed at that time, none were powerful enough to adequately expose film; the
best source of illumination for movie production was natural sunlight. Besides the moderate,
dry climate, they were also drawn to the state because of its open spaces and wide variety of
natural scenery.

A still from The Story of the Kelly Gang (Australia, 1906; 80 min.)

(1.1.1) Hollywood

The earliest documented account of an exhibition of projected motion pictures in the United
States was in June 1894 in Richmond, Indiana by Jenkins. The first movie studio in the
Hollywood area, Nestor Studios, was founded in 1911 by Al Christie for David Horsley in an
old building on the northwest corner of Sunset Boulevard and Gower Street. In the same year,

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another fifteen Independents settled in Hollywood. Hollywood came to be so strongly
associated with the film industry that the word "Hollywood" came to be used colloquially to
refer to the entire industry.

In 1913 Cecil B. DeMille, in association with Jesse Lasky, leased a barn with studio facilities
on the southeast corner of Selma and Vine Streets from the Burns and Revier Studio and
Laboratory, which had been established there. DeMille then began production of The Squaw
Man (1914). It became known as the Lasky-DeMille Barn and is currently the location of the
Hollywood Heritage Museum.

The Charlie Chaplin Studios, on the northeast corner of La Brea and De Longpre Avenues just
south of Sunset Boulevard, was built in 1917. It has had many owners after 1953, including
Kling Studios, which housed production for the Superman TV series with George Reeves; Red
Skelton, who used the sound stages for his CBS TV variety show; and CBS, who filmed the
TV series Perry Mason with Raymond Burr there. It has also been owned by Herb Alpert's
A&M Records and Tijuana Brass Enterprises. It is currently The Jim Henson Company, home
of the Muppets. In 1969 The Los Angeles Cultural Heritage Board named the studio a historical
cultural monument.

The famous Hollywood Sign originally read "Hollywood land." It was erected in 1923 to
advertise a new housing development in the hills above Hollywood. For several years the sign
was left to deteriorate. In 1949 the Hollywood Chamber of Commerce stepped in and offered
to remove the last four letters and repair the rest.

The sign, located at the top of Mount Lee, is now a registered trademark and cannot be used
without the permission of the Hollywood Chamber of Commerce, which also manages the
venerable Walk of Fame.

The first Academy Awards presentation ceremony took place on 16 May 1929, during a
banquet held in the Blossom Room of the Hollywood Roosevelt Hotel on Hollywood
Boulevard. Tickets were USD $10.00[citation needed] and there were 250 people in attendance.

From about 1930 five major Hollywood movie studios from all over the Los Angeles area,
Paramount, RKO, 20th Century Fox, Metro-Goldwyn-Mayer and Warner Bros., owned large,
grand theatres throughout the country for the exhibition of their movies. The period between

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the years 1927 (the effective end of the silent era) to 1948 is considered the age of the
"Hollywood studio system", or, in a more common term, the Golden Age of Hollywood. In a
landmark 1948 court decision, the Supreme Court ruled that movie studios could not own
theatres and play only the movies of their studio and movie stars, thus an era of Hollywood
history had unofficially ended. By the mid-1950s, when television proved a profitable
enterprise that was here to stay, movie studios started also being used for the production of
programming in that medium, which is still the norm today.

(1.1.2)Bollywood

A shot from Raja Harishchandra (1913), the first film of Bollywood.

Bollywood is the Hindi-language film industry based in Mumbai (formerly known as Bombay),
Maharashtra, India. The term is often incorrectly used to refer to the whole of Indian cinema;
however, it is only a part of the total Indian film industry, which includes other production
centres producing films in multiple languages. Bollywood is the largest film producer in India
and one of the largest centres of film production in the world.

Bollywood is formally referred to as Hindi cinema. Linguistically, Bollywood films tend to use
a colloquial dialect of Hindi-Urdu, or Hindustani, mutually intelligible to both Hindi and Urdu
speakers while modern Bollywood films also increasingly incorporate elements of Hinglish.

The Wrestlers (1899) and The Man and His Monkeys (1899), directed and produced by
Harischandra Sakharam Bhatawdekar (H. S. Bhatavdekar), were the first two films made by
Indian filmmakers, which were both short films. He was also the first Indian filmmaker to

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direct and produce the first documentary and news related film, titled The Landing of Sir M.M.
Bhownuggree.

Pundalik (Shree Pundalik) (1912), by Dadasaheb Torne alias Rama Chandra Gopal, and Raja
Harishchandra (1913), by Dadasaheb Phalke, were the first and second silent feature films
respectively made in India. By the 1930s the industry was producing more than 200 films per
annum. The first Indian sound film, Ardeshir Irani's Alam Ara (1931), was a major commercial
success. There was clearly a huge market for talkies and musicals; Bollywood and all the
regional film industries quickly switched to sound filming. Joymoti (1935 film) by Jyoti Prasad
Agarwalla was the first Indian dubbed film, released in Calcutta on 10 March 1935. Till then,
all dialogues of all talkies were had to be recorded at locations during the shooting of the film.
Through Joymoti (1935 film), dubbing technology was successfully introduced to Indian
cinema by Assamese filmmaker Jyoti Prasad Agarwalla.

The 1930s and 1940s were tumultuous times: India was buffeted by the Great Depression,
World War II, the Indian independence movement, and the violence of the Partition. Most
Bollywood films were unabashedly escapist, but there were also a number of filmmakers who
tackled tough social issues, or used the struggle for Indian independence as a backdrop for their
plots.

In 1937 Ardeshir Irani, of Alam Ara fame, made the first colour film in Hindi, Kisan Kanya.
The next year, he made another colour film, a version of Mother India. However, colour did
not become a popular feature until the late 1950s. At this time, lavish romantic musicals and
melodramas were the staple fare at the cinema.

Following India's independence, the period from the late 1940s to the early 1960s is regarded
by film historians as the "Golden Age" of Hindi cinema. Defining key figures during this time
included Raj Kapoor, Guru Dutt, Mehboob Khan, and Dilip Kumar.

The 1970s was when the name "Bollywood" was coined, and when the quintessential
conventions of commercial Bollywood films were established Key to this was the emergence
of the masala film genre, which combines elements of multiple genres (action, comedy,
romance, drama, melodrama, musical). The masala film was pioneered in the early 1970s by
filmmaker Nasir Hussain, along with screenwriter duo Salim-Javed, pioneering the Bollywood
blockbuster format.

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(1.2)Development of the industry

In this stage, the project producer selects a story, which may come from a book, play, another
film, true story, video game, comic book, graphic novel, or an original idea, etc. After
identifying a theme or underlying message, the producer works with writers to prepare a
synopsis. Next they produce a step outline, which breaks the story down into one-paragraph
scenes that concentrate on dramatic structure. Then, they prepare a treatment, a 25-to-30-page
description of the story, its mood, and characters. This usually has little dialogue and stage
direction, but often contains drawings that help visualize key points. Another way is to produce
a scriptment once a synopsis is produced.

Next, a screenwriter writes a screenplay over a period of several months. The screenwriter may
rewrite it several times to improve dramatization, clarity, structure, characters, dialogue, and
overall style. However, producers often skip the previous steps and develop submitted
screenplays which investors, studios, and other interested parties assess through a process
called script coverage. A distributor may be contacted at an early stage to assess the likely
market and potential financial success of the film. Hollywood distributors adopt a hard-headed
no approach and consider factors such as the film genre, the target audience and assumed
audience, the historical success of similar films, the actors who might appear in the film, and
potential directors. All these factors imply a certain appeal of the film to a possible audience.
Not all films make a profit from the theatrical release alone, so film companies take DVD sales
and worldwide distribution rights into account.

The producer and screenwriter prepare a film pitch, or treatment, and present it to potential
financiers. They will also pitch the film to actors and directors (especially so-called bankable
stars) in order to "attach" them to the project (that is, obtain a binding promise to work on the
film if financing is ever secured). Many projects fail to move beyond this stage and enter so-
called development hell. If a pitch succeeds, a film receives a "green light", meaning someone
offers financial backing: typically a major film studio, film council, or independent investor.
The parties involved negotiate a deal and sign contracts.

Once all parties have met and the deal has been set, the film may proceed into the pre-
production period. By this stage, the film should have a clearly defined marketing strategy and
target audience.

Development of animated films differs slightly in that it is the director who develops and
pitches a story to an executive producer on the basis of rough storyboards, and it is rare for a

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full-length screenplay to already exist at that point in time. If the film is green-lighted for
further development and pre-production, then a screenwriter is later brought in to prepare the
screenplay.

Analogous to most any business venture, financing of a film project deals with the study of
filmmaking as the management and procurement of investments. It includes the dynamics
of assets that are required to fund the filmmaking and liabilities incurred during the filmmaking
over the time period from early development through the management of profits and losses
after distribution under conditions of different degrees of uncertainty and risk. The practical
aspects of filmmaking finance can also be defined as the science of the money management of
all phases involved in filmmaking. Film finance aims to price assets based on their risk level
and their expected rate of return based upon anticipated profits and protection against losses.

(1.2.1)Pre-production

In pre-production, every step of actually creating the film is carefully designed and planned.
The production company is created and a production office established. The film is pre-
visualized by the director, and may be storyboarded with the help of illustrators and concept
artists. A production budget is drawn up to plan expenditures for the film. For major
productions, insurance is procured to protect against accidents.

The nature of the film, and the budget, determine the size and type of crew used during
filmmaking. Many Hollywood blockbusters employ a cast and crew of hundreds, while a low-
budget, independent film may be made by a skeleton crew of eight or nine (or fewer). These
are typical crew positions:

 Storyboard artist: creates visual images to help the director and production designer
communicate their ideas to the production team.
 Director: is primarily responsible for the storytelling, creative decisions and acting of
the film.
o Assistant director (AD): manages the shooting schedule and logistics of the
production, among other tasks. There are several types of AD, each with
different responsibilities.
 Film producer: hires the film's crew.

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 o Unit production manager: manages the production budget and production
schedule. They also report, on behalf of the production office, to the studio
executives or financiers of the film.
 Location manager: finds and manages film locations. Nearly all
pictures feature segments that are shot in the controllable environment
of a studio sound stage, while outdoor sequences call for filming on
location.
 Production designer: the one who creates the visual conception of the film, working
with the art director, who manages the art department, which makes production sets.
o Costume designer: creates the clothing for the characters in the film working
closely with the actors, as well as other departments.
o Makeup and hair designer: works closely with the costume designer in order to
create a certain look for a character.
 Casting director: finds actors to fill the parts in the script. This normally requires that
actors audition.
o Choreographer: creates and coordinates the movement and dance – typically
for musicals. Some films also credit a fight choreographer.
 Director of photography (DP): the head of the photography of the entire film,
supervises all cinematographers and Camera Operators.
 Production sound mixer: the head of the sound department during the production
stage of filmmaking. They record and mix the audio on set – dialogue, presence and
sound effects in mono and ambience in stereo. They work with the boom operator,
Director, DA, DP, and First AD.
o Sound designer: creates the aural conception of the film, working with the
supervising sound editor. On Bollywood-style Indian productions the sound
designer plays the role of a director of audiographer.
o Composer: creates new music for the film. (usually not until post-production)

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(1.2.2)Production

Steven Spielberg (standing) with Chandran Rutnam in Sri Lanka, during the production of
"Indiana Jones and the Temple of Doom" (released 1984)

In production, the film is created and shot. More crew will be recruited at this stage, such as
the property master, script supervisor, assistant directors, stills photographer, picture editor,
and sound editors. These are just the most common roles in filmmaking; the production office
will be free to create any unique blend of roles to suit the various responsibilities possible
during the production of a film.

A typical day shooting, begins with the crew arriving on the set/location by their call time.
Actors usually have their own separate call times. Since set construction, dressing and lighting
can take many hours or even days, they are often set up in advance.

The grip, electric and production design crews are typically a step ahead of the camera and
sound departments: for efficiency's sake, while a scene is being filmed, they are already
preparing the next one.

While the crew prepare their equipment, the actors do their costumes and attend the hair and
make-up departments. The actors rehearse the script and blocking with the director, and the
camera and sound crews rehearse with them and make final tweaks. Finally, the action is shot
in as many takes as the director wishes. Most American productions follow a specific
procedure:

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The assistant director (AD) calls "picture is up!" to inform everyone that a take is about to be
recorded, and then "quiet, everyone!" Once everyone is ready to shoot, the AD calls "roll
sound" (if the take involves sound), and the production sound mixer will start their equipment,
record a verbal slate of the take's information, and announce "sound speed", or just "speed",
when they are ready. The AD follows with "roll camera", answered by "speed!" by the camera
operator once the camera is recording. The clapper, who is already in front of the camera with
the clapperboard, calls "marker!" and slaps it shut. If the take involves extras or background
action, the AD will cue them ("action background!"), and last is the director, telling the actors
"action!". The AD may echo "action" louder on large sets.

A take is over when the director calls "cut!" and the camera and sound stop recording. The
script supervisor will note any continuity issues, and the sound and camera teams log technical
notes for the take on their respective report sheets. If the director decides additional takes are
required, the whole process repeats. Once satisfied, the crew moves on to the next camera angle
or "setup," until the whole scene is "covered." When shooting is finished for the scene, the
assistant director declares a "wrap" or "moving on," and the crew will "strike," or dismantle,
the set for that scene.

At the end of the day, the director approves the next day's shooting schedule and a daily
progress report is sent to the production office. This includes the report sheets from continuity,
sound, and camera teams. Call sheets are distributed to the cast and crew to tell them when and
where to turn up the next shooting day. Later on, the director, producer, other department heads,
and, sometimes, the cast, may gather to watch that day or yesterday's footage, called dailies,
and review their work.

With workdays often lasting 14 or 18 hours in remote locations, film production tends to create
a team spirit. When the entire film is in the can, or in the completion of the production phase,
it is customary for the production office to arrange a wrap party, to thank all the cast and crew
for their efforts.

For the production phase on live-action films, synchronizing work schedules of key cast and
crew members is very important, since for many scenes, several cast members and most of the
crew, must be physically present at the same place at the same time (and bankable stars may
need to rush from one project to another). Animated films have different workflow at the
production phase, in that voice talent can record their takes in the recording studio at different

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times and may not see one another until the film's premiere, while most physical live-action
tasks are either unnecessary or are simulated by various types of animators.

(1.2.3) Post-production

Here the video/film is assembled by the film editor. The shot film material is edited. The
production sound (dialogue) is also edited; music tracks and songs are composed and recorded,
if a film is sought to have a score; sound effects are designed and recorded. Any computer-
graphic visual effects are digitally added by an artist. Finally, all sound elements are mixed
into "stems", which are then married to picture, and the film is fully completed ("locked").

(1.2.4) Distribution

This is the final stage, where the film is released to cinemas or, occasionally, directly to
consumer media (VHS, VCD, DVD, Blu-ray) or direct download from a digital media provider.
The film is duplicated as required (either onto film or hard disk drives) and distributed to
cinemas for exhibition (screening). Press kits, posters, and other advertising materials are
published, and the film is advertised and promoted. A B-roll clip may be released to the press
based on raw footage shot for a "making of" documentary, which may include making-of clips
as well as on-set interviews.

Film distributors usually release a film with a launch party, a red-carpet premiere, press
releases, interviews with the press, press preview screenings, and film festival screenings. Most
films are also promoted with their own special website separate from those of the production
company or distributor. For major films, key personnel are often contractually required to
participate in promotional tours in which they appear at premieres and festivals, and sit for
interviews with many TV, print, and online journalists. The largest productions may require
more than one promotional tour, in order to rejuvenate audience demand at each release
window. Since the advent of home video in the early 1980s, most major films have followed a
pattern of having several distinct release windows. A film may first be released to a few select
cinemas, or if it tests well enough, may go directly into wide release. Next, it is released,
normally at different times several weeks (or months) apart, into different market segments like
rental, retail, pay-per-view, in-flight entertainment, cable, satellite, or free-to-air broadcast
television. The distribution rights for the film are also usually sold for worldwide distribution.
The distributor and the production company share profits and manage losses.

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(1.3)Film Production Industry Overview

It is estimated that the U.S. film industry posted $31 billion in revenues in 2013, with the movie
going public spending nearly $11 billion annually at the box office, according to Select USA.
Additionally, people rent and purchase their favourite films on DVD, Blu-ray, and on-
demand/streaming services, and subscribe to cable channels devoted to showing recent and
classic movie productions, around the clock. Americans read magazines and books about
filmmaking and visit Web pages devoted to favourite stars and movies.

Thousands of people each year decide to pursue their dreams of becoming an actor,
screenwriter, producer, or director and flock to the entertainment capital of the United States,
Hollywood. But employment opportunities in the film industry go far beyond those of actor or
director, ranging from administrative assistants and support workers to musicians, camera
operators, animators, talent scouts and agents, and others. And although most work in the
motion picture industry revolves around Hollywood and New York City, opportunities to get
a start in films, typically smaller productions, are available in any number of cities around the
country.

To attract the public's recreational dollar, theatres must now compete with the Internet and
personal computers as well as with changes in televisions such as high-definition televisions
that offer consumers almost theater-quality presentation of movies in their own homes. To
attract more people to the movies, theatres are now providing enhanced stereo systems,
comfortable seating, restaurants, food delivered to viewers' seats, and other frills. Changes in
technology are also enabling computer owners to photograph, edit, and graphically enhance
their own films, and present them on the Internet through sites like YouTube, creating
additional competition for traditionally produced films.

To meet consumer demand and growing competition from other sources, movie production is
increasingly linked with the television and video industries. Many large motion picture studios
are now part of media conglomerates that may include television stations, newspapers and
magazines, and online divisions. Film companies now make films to be released in theatres,
but also plan for future video rentals and sales and TV showings. Feature films are more
frequently produced specifically for release on TV, both network and cable, and then are
produced on video.

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BC

British Columbia represents a very active part of Canadian film production. According to
the Canadian Media Production Association(link is external) (CMPA), when focusing on
foreign location and service (FLS) film and video productions, BC represents 62% of projects
(CMPA, 2013 Profile(link is external)). Television series in the FLS sector accounted for more
than half of BC productions, indicating a significant shift towards television production and
away from film. Indeed, production of FLS television series increase 37.8% to a ten-year high
of $969 million in total volume. British Columbia has a robust system of tax incentives in place,
enjoys the same time zone as Hollywood and is home for a strong film infrastructure, keeping
the province attractive to Hollywood production companies, with Vancouver earning the name
of “Hollywood North” (Vancouver Economic Commission(link is external))

Canada

In Canada, most of the businesses associated with the film and video production industry are
micro or small businesses (1-100 employees), comprising of 98.9% of all production
businesses according to Canadian Industry Statistics (2012)(link is external). According to
the CMPA 2013 Report(link is external), Canadian film and television generated $3.5 billion
GDP for the Canadian economy and created 58,700 direct and indirect jobs. This was down
slightly from the 2011-12 year, although that year showed an all-time high for film and video
production. Most of the Canadian-produced film projects are done in the provinces of Ontario
(46%) and Quebec (42%), followed by British Columbia.

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(1.4)The 10 Best Film Production Companies {major players}

1. Warner Bros.

2. Sony Pictures Motion Picture Group

3. Walt Disney Studios

4. Universal Pictures

5. 20th Century Fox

6. Paramount Pictures

7. Lionsgate Films

8. The Weinstein Company

9. Metro-Goldwyn-Mayer Studios

10. DreamWorks Pictures

1.4.1- Warner Bros. Entertainment

Warner Bros. Entertainment was founded in 1923 and has created some of the best movies
which have innovated the industry, such as The Jazz Singer introducing synchronized sound.
The studio is owned by Time Warner.

Warner Bros. also owns other divisions and subsidiaries such as:

 New Line Cinema

 Castle Rock Entertainment

 Turner Entertainment

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  Warner Bros. Animation

 DC Films

Warner Bros. is an unstoppable production company that has not only created some great
movies but also some great film franchises. Among these are Harry Potter, The
Matrix and Batman.

There was no doubt in my mind that Warner Bros. was going to be number one on this list. It
has proven that it can deliver on great movies while also obtaining some great subsidiaries and
divisions to add to the already successful Warner Bros. Pictures.

1.4.2- Sony Pictures Motion Picture Group

Sony Pictures Motion Picture Group is a division of Sony Entertainment, a part of the larger
Sony conglomerate. The studio's largest subsidiary is Columbia Pictures, which was acquired
in 1989 from Coca-Cola for $3.4 billion. Their other divisions include:

 TriStar Pictures

 Screen Gems

 Sony Pictures Classics

 Sony Pictures Animation

 Destination Films

 Affirm Films

Sony is considered to have the biggest studio today, which begs the question of why they
weren't chosen for the number one spot. In my opinion, they are not the best production

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company, at least not out of this list. However, they have produced some great movies over the
years as well as some franchises like Spider-Man, Men in Black and Resident Evil.

Their biggest asset may very well be Columbia Pictures, which has been producing movies
since 1924. Sony certainly have the power to change any industry they enter into and the film
industry is no exception.

1.4.3- Walt Disney Studios

Walt Disney Studios is the entertainment unit of The Walt Disney Company. The studio has
produced some great movies over the years that have impacted many peoples lives, especially
younger audiences.

Walt Disney Animation Studios is a division that creates animated feature films and shorts. A
few of the great movies they have produced are Snow White and the Seven Dwarfs, Peter
Pan and Frozen.

Most of its live-action productions are done under its major studio subsidiary Walt Disney
Pictures. Their films include Pirates of the Caribbean, Beauty and the Beast and The Jungle
Book.

In the 1980s, the collection of film units in the studio made them become one of Hollywood's
Big Six movie studios. This was largely due to the library produced by Touchstone Pictures as
well as the clever marketing used by Walt Disney Studios.

Walt Disney Studios also owns these other subsidiaries and divisions:

 Lucas Film

 Marvel Studios

 Pixar

 Disney nature

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Walt Disney Studios are only improving in their abilities to provide the latest and greatest
movies. Their great franchises include Pirates of the Caribbean, The Chronicles of
Narnia and The Lion King.

1.4.4- Universal Pictures

Universal Pictures is owned by Comcast through its subsidiary NBCUniversal. Founded in

1912, it is the oldest American film studio.

Universal Studios has produced some timeless classics over the years. Their major box office
hits include Jurassic Park, E.T. the Extra-Terrestrial and Jaws, which were all directed by
Steven Spielberg.

A division of the studio is Universal Animation Studios which creates animated feature films
and TV series. Their feature films include The Land Before Time, An American
Tail and Balto.

Another division is Illumination which was founded in 2007 by Chris Meledandri. The
animation studio became a success with Despicable Me, which earned a worldwide gross of
$546.1 million. This created a franchise which has generated over $3 billion at the box office.

Other division and subsidiaries include:

 Universal Studios Home Entertainment

 DreamWorks Animation

 Focus Features

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  Working Title Films

Universal Studios have not gained their enormous success solely through the help of Steven
Spielberg, who has worked extensively with the studio. They have a vast movie library with
some successful franchise like The Fast and the Furious, The Bourne Identity and Hannibal.

There is no doubt that Universal Studios is one of the most influential movie production studios
in the world. They also have a memorable and iconic logo.

1.4.5- 20th Century Fox

20th Century Fox is one of the Big Six studios. It was owned by New Corporation from 1984
to 2013. That company split into News Corp and 21st Century Fox, the latter of which currently
owns the studio.

The studio was founded in 1935 and became successful and well-known for their musicals and
association with Shirley Temple. Their biggest contemporary hit is Avatar, which currently
hold the record for highest grossing film of all time with over $2.7 billion.

20th Century Fox have produced some amazing and successful franchises. Among them are Ice
Age and X-Men. They also produced the Star Wars films prior to their acquisition by Disney.
Their original animation division, 20th Century Fox Animation, was started in 1994 to compete
with Walt Disney Animation Studios, who at the time was making hugely successful movies
like Lion King, Aladdin and Beauty and the Beast. Their main production unit was Fox
Animation Studios.

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They had some success in 1997 with Anastasia. It was critically acclaimed, but was often
mistaken for a Disney movie. However, it did make nearly $140 million on a $53 million
budget. The studio followed up with Titan A.E. The film made roughly $37 million on a $75
million budget. In total, the film lost the studio $100 million. This led to Fox Animation Studios
shutting down in 2000.On the flip side, 20th Century Fox has seen much more success from
Blue Sky Studios, which they obtained in 1997.

The studio focuses on computer animation features such as Ice Age, Robots and Rio.20th
Century Fox also own these other divisions and subsidiaries;

 Fox Searchlight Pictures

 20th Century Fox Home Entertainment

 Fox Star Studios

 Zero Day Fox

In late 2017, The Walt Disney Company announced their plans to purchase 21st Century Fox
for $52.4 billion. Pending approval, the deal is expected to be finalized by 2019.

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1.5) Structure of industry

A film production budget determines how much money will be spent on the entire film project.
It involves the identification and estimation of cost items for each phase of filmmaking
(development, pre-production, production, post-production and distribution). The budget
structure is normally split into "above-the-line" (creative) and "below-the-line" (technical)
costs.

Above the line (filmmaking)

In feature-length narrative filmmaking, an imaginary line delineates those who have influence
in the creative direction of a film's narrative from others who perform duties related to the film's
physical production. Above-the-line is a term that refers to the list of individuals who guide,
influence and hopefully add to the creative direction, process and voice of a given narrative in
a film and their related expenditures. These roles include but are not limited to the
screenwriter(s), producer, director, casting director and actors. Often, the term is used for
matters related to the film's production budget. Above-the-line expenditures reflect the
expected line item compensation for an official above-the-line member's role in a given film
project. These expenditures are usually set, negotiated, spent and/or promised before principal
photography begins. They include rights to secure the material on which the screenplay is
based, production rights to the screenplay, compensation for the screenwriter, producer,

21
director, principal actors and other cost-related line items such as assistants for the producer(s),
director or actor(s). The distinction originates from the early studio days when the budget top-
sheet would literally have a line separating the above-the-line and below costs. Below

Below the line (filmmaking)

In feature-length narrative filmmaking, an imaginary line delineates those who have influence
in the creative direction of a film's narrative from others who perform duties related to the film's
physical production. Below-the-line is a term that refers to the list of individuals who perform
the physical production of a given film, the post-production work and all of the related
expenditures. These positions include but are not limited to the following:

Assistant Director Graphic Artist

Art Director Hair Stylist

Key Grip Make-up Artist

Production Assistant Script Supervisor (continuity)

Sound Engineer Stage Manager (television)

Stage Carpenter Technical Director (television)

Video control (television) Film Editor

Visual Effects Editor Line Producer

Best Boy Grip Boom Operator

C.G. Operator (television) Costume Designer

Director of Photography Camera Operator

Composer Dolly Grip

Individuals considered below-the-line do not have any official influence on the creative
direction of the film. However, depending on the film director's discretion, they will still
influence certain aspects of the film's overall look, feel and tone through their work in their
respective departments. The head of each department is known as a "key". These individuals
are responsible for the overall workings of their area, such as hair, make-up, wardrobe, grip
and electric (G&E), lighting and camera. The head of the camera department is the Director of
Photography, also known as the cinematographer. Below-the-line costs include allowances for
non-starring cast members and the technical production crew and post-production team(s).

22
Costs for locations such as filming sites, film studios and sound stages with its related technical
equipment are also considered below-the line expenditures. Crew travel expenses, catering
costs, craft service and many other expenses fall under the below-the-line banner. Keys will
often move around their expenses to suit their departmental needs unless absolutely necessary
during production. In addition, below-the line costs include production insurance, errors and
omission coverage (E&O) insurance and other unforeseen expenses under the heading
"contingency", which usually begins at around 10%. Below-the-line costs are generally fixed,
meaning they were already budgeted for a particular department before principal photography
begins in what is known as a "locked" budget

Format

Film budgeting refers to the process by which a line producer, unit production manager or
filmmaker prepares a budget for a film production. This document, which could be over 150
pages long, is used to secure financing for the film and lead to pre-production and production

of the film. Multiple drafts of the budget may be required to whittle down costs. A budget is
typically divided into four sections: above-the-line (creative talent), below-the-line (direct
production costs), post-production (editing, visual effects, etc), and other (insurance,
completion bond, etc).

23
 CHAPTER : 2

INDUSTRY AT INTERNATIONAL LEVEL

24
World cinema has an unofficial implication of films with "artistic value" as opposed to
"Hollywood commercialism." Foreign language films are often grouped with "art house films"
and other independent films in DVD stores, cinema listings etc. Unless dubbed into one's native
language, foreign language films played in English-speaking regions usually have English
subtitles. Few films of this kind receive more than a limited release and many are never played
in major cinemas. As such the marketing, popularity and gross takings for these films are
usually markedly less than for typical Hollywood blockbusters. The combination of subtitles
and minimal exposure adds to the notion that "World Cinema" has an inferred artistic prestige
or intelligence, which may discourage less sophisticated viewers. Additionally, differences in
cultural style and tone between foreign and domestic films affects attendance at cinemas and
DVD sales.

Foreign language films can be commercial, low brow or B-movies. Furthermore, foreign
language films can cross cultural boundaries, particularly when the visual spectacle and style
is sufficient to overcome people's misgivings. Films of this type became more common in the
early 2000s, as Crouching Tiger, Hidden Dragon, Amélie, Brotherhood of the Wolf, Y Tu
Mama Tambien and Talk to Her enjoyed great successes in United States cinemas and home
video sales. The first foreign and foreign language film to top the North American box office
was Hero in August 2004. "The rule for foreign-language films is that if you've done $5 million
or better (in United States cinemas), you've had a very nice success; if you do $10 (million) or
better (in United States cinemas), you're in blockbuster category," Warner Independent Pictures
ex-president Mark Gill said.

On the other hand, English-dubbed foreign films rarely did well in United States box office
(except Anime films). The 1982 United States theatrical release of Wolfgang Peterson's Das
Boot was the last major release to go out in both original and English-dubbed versions, and the
film's original version actually grossed much higher than the English-dubbed version. Later on,
English-dubbed versions of international hits like Un indien dans la ville, Godzilla 2000,
Anatomy, Pinocchio and High Tension flopped at United States box office. When Miramax
planned to release the English-dubbed versions of Shaolin Soccer and Hero in the United States
cinemas, their English-dubbed versions scored badly in test screenings in the United States, so
Miramax finally released the films in United States cinemas with their original language.

Although the start of the history of film is not clearly defined, the commercial, public screening
of ten of Lumière brothers' short films in Paris on 28 December 1895 can be regarded as the

25
breakthrough of projected cinematographic motion pictures. There had been earlier
cinematographic results and screenings but these lacked either the quality or the momentum
that propelled the cinematographer Lumière into a worldwide success.

Soon film production companies and studios were established all over the world. The first
decade of motion picture saw film moving from a novelty to an established mass entertainment
industry.

The earliest films were in black and white, under a minute long, without recorded sound and
consisted of a single shot from a steady camera.

Conventions towards a general cinematic language developed over the years with the use of
several shots (mostly through editing), continuity between shots, camera movements (panning,
tracking, tilt), camera angle, field size (long shot to extreme close-up) and other cinematic
techniques all contributing specific roles in the narrative of films.

Special effects became a feature in movies since the late 1890s, popularized by Georges Méliès'
fantasy films. Many effects were impossible or impractical to perform in theater plays and thus
added more magic to the experience of movies.

Technical improvements added length (reaching 60 minutes for a feature film in 1906),
synchronized sound recording (mainstream since the end of the 1920s), colour (mainstream
since the 1930s) and 3D (mainstream in theatres since the first decade of the 21st century).
Sound ended the necessity of interruptions of title cards, revolutionized the narrative
possibilities for filmmakers, and became an integral part of moviemaking.

Different film genres emerged and enjoyed variable degrees of success over time, with huge
differences between for instance horror films (mainstream since the 1890s), newsreels
(prevalent in U.S. cinemas between the 1910s and the late 1960s), musicals (mainstream since
the late 1920s) and pornographic films (experiencing a Golden Age during the 1970s).

The popularity of television seemed to form a threat to cinemas in the 1950s (at least in the
U.S. and other western countries), which resulted in attempts to make theatrical films more
attractive with technological innovations. New widescreen formats enticed filmmakers to
create more epic films and spectacles that looked better on a big screen than on television. 3D
films experienced a short golden age from 1952 to 1954. Television also opened up a new

26
market for filmmakers, introducing new possibilities that led to new genres, especially in
serialized form.

Since the 1950s video became a viable, cheaper alternative to film, with direct results, forming
a more accessible moving image medium for many more artists and amateurs to experiment
with. This led to the emergence of video art in the late 1960s and to much more home movies
being made.

By the 1980s home video had opened a big market for films that already had their theatrical
run, giving people easier access to titles of their choice in video rental shops. Direct-to-video
(niche) markets usually offered lower quality, cheap productions that were not deemed very
suitable for the general audiences of television and theatrical releases.

Improving over time, digital production methods became more and more popular during the
1990s, resulting in increasingly realistic visual effects and popular feature-length computer
animations.

Since the late 2000s streaming media platforms like YouTube provided means for anyone with
access to internet and cameras (a standard feature of smartphones) to publish videos to the
world. Also competing with the increasing popularity of video games and other forms of home
entertainment the industry once again started to make theatrical releases more attractive with
new 3D technologies and epic (fantasy and superhero) films became a mainstay in cinemas.

27
(2.1) Demand &supply scenario in film industry

2.2.1. Film Production Semen

 International/foreign films gaining share in the Indian industry: International films

is a growing segment in the Indian film industry, having increased its box office share
from almost 5% a few years ago to approximately 7% today. This is mainly due to:
 Dubbing of international films in regional languages: The number of foreign films
dubbed into Indian languages has doubled over the past 5 years. These films are being
dubbed into Hindi, Tamil, and Telugu which has helped them reach audiences beyond
Tier 1 cities.
 Rise of multiplexes: Multiplexes have witnessed significant growth across major
Indian cities and continued penetration in smaller towns. Investments in multiplexes is
mainly driven by improved per-ticket realization, rising urbanization, and growing
disposable incomes. Entry of international studios through acquisitions and
collaborations: Several international film studios such as Warner Bros., Disney, Fox,
and DreamWorks have not only set up distribution houses in India, but have also
entered into partnerships with local film production houses through acquisitions and
co-production agreements. For example: • Walt Disney acquired a 50% stake in UTV
and now has a controlling stake in UTV Software Communications. • Viacom18, a JV
between Viacom and Network 18, was the first studio model based production house.
Viacom18 engages in production, syndication, marketing, and worldwide film
distribution.
 Additionally, a key example of collaboration has been Fox Star joining hands with
Dharma Productions in a deal worth INR 5,000 million. Fox has produced almost 30
Bollywood films, as well as a few Tamil and Malayalam language films.
 Local film production can leverage the experience of these international studios to
expand their international reach and incorporate enhanced project planning and cost
controls.

28
(2.2) Major player

(2 .2.1) Paramount Pictures

Paramount Pictures is another member of the Big Six. They are owned by media conglomerate
Viacom.

The study was founded in 1912 and they have produced some of the greatest movies ever. Their
most successful movie ever is Titanic, which has gathered a worldwide gross of over $2 billion.

Over the years, Paramount Pictures have produced some great movie series such as Mission
Impossible, Indiana Jones and Transformers.

Among the divisions owned by the studio is Paramount Animation, which was started in 2011
after DreamWorks Animation departed the studio. Paramount Animation was announced as a
division dedicated to the creation of animated feature films that could compete with the likes
of DreamWorks, Walt Disney and Pixar.

Paramount Pictures also owns other divisions such as:

 Paramount Home Media Distribution

 Paramount Famous Productions
 Nickelodeon Movies
 MTV Films

Paramount Pictures at the Box Office

29
Of the top 50 highest grossing movies of all time, three have come from Paramount Pictures.
One of them cracks the top 10 at the number two spot.

Top Box Office Films for Paramount Pictures

Titanic - Ranked at 2 with $2,187,463,944.

Transformers: Dark of the Moon - Ranked at 18 with $1,123,794,079.

Transformers: Age of Extinction - Ranked at 21 with $1,104,054,072.

(2.2.2)- Lionsgate Films

Lionsgate Films is the most commercially successful mini-major movie and television
distribution company in North America as well as the seventh most profitable movie studio.

Lionsgate has its origins go back to 1962 with the founding of Cinépix in Montreal. They would
be purchased by the Lion Gate Entertainment Group in 1997 to form the studio as it is known
today. They have succeeded through the help of other studios they have acquired such as
Trimark Pictures, Vestron Pictures and Artisan Entertainment.

Lionsgate have helped produce some great movies series like Kick-Ass, The Expendables and
The Hunger Games. There is no telling where Lionsgate will be in the future but I would
imagine if they keep up with their smart investments they may soon make the transition to
becoming a major studio. All they need is time!

Among the subsidiaries owned by the studio is Summit Entertainment, which is possibly their
most successful subsidiary at the moment having produced fairly recent hits like Twilight,
Knowing and Now You See Me.

Lionsgate also owns other divisions and subsidiaries which include:

 Lionsgate Premiere
 Roadside Attractions

30
  Pantelion Films
 Codeblack Films

Lionsgate at the Box Office

The studio does not currently have any of their films in the ranking of top 50 highest grossing
films.

Top Box Office Films for Lionsgate

1. The Hunger Games: Catching Fire: $424,668,047

2. The Hunger Games: $408,010,692
3. The Hunger Games: Mockingjay - Part 1: $337,135,885
4. The Twilight Saga: Breaking Dawn - Part 2: $292,324,737
5. The Hunger Games: Mockingjay - Part 2: $281,723,902

(2.2.3)- The Weinstein Company

The Weinstein Company was formed by brothers Harvey and Bob Weinstein in 2005. It was
formed after they left Miramax, which they formed in 1979.This studio was at one point the
largest mini-major studio in Hollywood. Their successful films included Derailed, Scream 4
and 1408. They quickly gained a reputation for churning out quality films that became
profitable. Their highest grossing film is Django Unchained, which received over $425 million
at the box office in worldwide gross.

The studio owns Dimension Films, which was bought from Disney who owned Miramax. They
have produced some great sequels to some older movies from the label such as Scary Movie 4
and 5, Scream 4 and Spy Kids: All the Time in the World.

31
The studio entered into some turmoil with the sexual abuse allegations toward Harvey
Weinstein in late 2017. He was fired from the company and the studio declared bankruptcy on
March 19, 2018. The private equity firm Lantern Capital won the assets of the studio in an
auction.

The Weinstein Company at the Box Office

None of the films from The Weinstein Company crack the ranking of the top 50 highest
grossing films.

Top Box Office Films for The Weinstein Company

1. Django Unchained - $162,805,434

2. The King's Speech - $138,797,449
3. Silver Linings Playbook - $132,092,958
4. Inglorious Basterds - $120,540,719
5. The Butler - $116,632,095

(2.2.4)- Metro-Goldwyn-Mayer Studios

Metro-Goldwyn-Mayer Studios (aka Metro Goldwyn Mayer, Metro Goldwyn Pictures and
MGM) is an American media company which primarily produces movies and television
programs. They were founded in 1924 and were the largest and most revered studio at the time.
They were bought and sold multiple times over the years until they filed for bankruptcy in
2010. They recovered but are now considered a mini-major studio.MGM have produced some
timeless classics over the years such as Ben-Hur, The Dirty Dozen and GoldenEye. There is
no doubt that a lot of MGM's success came in the later years through the ownership of the

32
James Bond series. However, their future success or failure will depend on the box office
success of their films. Time will tell if they can regain their status as a major studio.

MGM at the Box Office

MGM currently has one film on the top 50 list. It is Skyfall, which ranks in at 20 with
$1,108,561,013.

(2.2.5) DreamWorks Pictures

DreamWorks Pictures is a movie studio owned by Amblin Partners. It was founded in 1994 by
Steven Spielberg, Jeffrey Katzenberg and David Geffen.Some of their best films include
Saving Private Ryan, Gladiator and Transformers. The studio was doing well around the turn
of the millennium by winning three Academy Awards for Best Picture and having box office
grosses of over $100 million. However, debt of over $400 million led to the sale to Viacom in
2005.One of their biggest and most successful divisions was DreamWorks Animation. It
brought huge financial success with movies such as Antz, The Prince of Egypt, Chicken Run
and Shrek. The division was spun off in 2004 and is currently owned by NBCUniversal.

DreamWorks at the Box Office

DreamWorks does not currently have any movies on the list of 50 highest grossing films.

Top Box Office Films for DreamWorks

 Shrek 2 - $441,226,247
 Shrek - $267,665,011
 Saving Private Ryan - $216,540,909
 Madagascar - $193,595,521
 Gladiator - $187,705,427

33
 CHAPTER-3

INDIAN SENARIO

34
(3.1) Introduction of Indian film industry

The cinema of India consists of films produced in the nation of India. Cinema is immensely
popular in India, with as many as 1,600 films produced in various languages every year. Indian
cinema produces more films watched by more people than any other country; in 2011, over 3.5
billion tickets were sold across India, 900,000 more
than Hollywood. Mumbai, Kolkata, Chennai, Kochi, Bangalore and Hyderabad are the major
centers of film production in India.

As of 2013, India ranked first in terms of annual film output, followed

by Nollywood, Hollywood and China.[11] In 2012, India produced 1,602 feature films.[8] The
Indian film industry reached overall revenues of $1.86 billion (₹93 billion) in 2011. In 2015,
India had a total box office gross of US$2.1 billion, third largest in the world.The overall
revenue of Indian cinema reached US$1.3 billion in 2000.[13] The industry is segmented by
language. The Hindi language film industry is known as Bollywood, the largest sector,
representing 43% of box office revenue. The combined revenue of the Tamil and Telugu film
industries represent 36%. The South Indian film industry encompasses five film
cultures: Tamil, Malayalam, Telugu, Kannada and Tulu. Another prominent film culture
is Bengali cinema, known as Tollywood, which was largely associated with the parallel
cinema movement, in contrast to the masala films more prominent in Bollywood and Tamil
films at the time.

Indian cinema is a global enterprise. Its films have a following throughout Southern Asia and
across Europe, North America, Asia, the Greater Middle East, Eastern Africa, China and
elsewhere, reaching in over 90 countries.[16] Biopics including Dangal became
transnational blockbusters grossing over $300 million worldwide.[17] Millions of Indians
overseas watch Indian films, accounting for some 12% of revenues.[18] Music rights alone
account for 4–5% of net revenues. Global enterprises such as Universal Pictures, 20th Century
Fox, Sony Pictures, Walt Disney Pictures and Warner Bros. invested in the industry along with
Indian enterprises such as AVM Productions, Prasad's Group, Sun Pictures, PVP
Cinemas, Zee, UTV, Suresh Productions, Eros International, Ayngaran International, Pyramid
Saimira, Aascar Films and Adlabs. By 2003 as many as 30 film production companies had been
listed in the National Stock Exchange of India (NSE).

35
 (3.2)History

 Silent films (1890s–1920s)

In 1897, a film presentation by one Professor Stevenson featured a stage show at Calcutta's
Star Theatre. With Stevenson's encouragement and camera Hiralal Sen, an Indian
photographer, made a film of scenes from that show, namely The Flower of Persia (1898). The
Wrestlers (1899) by H. S. Bhatavdekar, showing a wrestling match at the Hanging Gardens in
Bombay, was the first film to be shot by an Indian and the first Indian documentary film.

The first Indian film released in India was Shree Pundalik, a silent film
in Marathi by Dadasaheb Torne on 18 May 1912 at Coronation Cinematograph,
Bombay. Some have argued that Pundalik was not the first Indian film, because it was a
photographic recording of a play, and because the cameraman was a British man named
Johnson and the film was processed in London.

 Producer-director-screenwriter Dadasaheb Phalke, the "father of Indian cinemaAVM

Studios in Chennai, India's oldest surviving film studio.

36
The first full-length motion picture in India was produced by Dadasaheb Phalke, Phalke is seen
as the pioneer of the Indian film industry and a scholar of India's languages and culture. He
employed elements from Sanskrit epics to produce his Raja Harishchandra (1913), a
silent film in Marathi. The female characters in the film were played by male
actors. Only one print of the film was made, for showing at the Coronation
Cinematograph on 3 May 1913. It was a commercial success. The first silent film
in Tamil, Keechaka Vadham was made by R. Nataraja Mudaliar in 1916.

Talkies (1930s–mid-1940s)

Ardeshir Irani released Alam Ara, the first Indian talkie, on 14 March 1931. Irani later produced
the first south Indian talkie film Kalidas directed by H. M. Reddy released on 31 October 1931.
Jumai Shasthi was the first Bengali talkie. Chittor V. Nagaiah, was one of the first multilingual
film actor/singer/composer/producer/directors in India. He was known as India's Paul Muni.

In 1932, the name "Tollywood" was coined for the Bengali film industry because Tollygunge
rhymed with "Hollywood". Tollygunge was then the centre of the Indian film industry. Bombay
later overtook Tollygunge as the industry's center, spawning "Bollywood" and many other
Hollywood-inspired names. In 1933, East India Film Company produced its first Telugu film,
Savitri. Based on a stage play by Mylavaram Bala Bharathi Samajam, the film was directed by
C. Pullaiah with stage actors Vemuri Gaggaiah and Dasari Ramathilakam. The film received
an honorary diploma at the 2nd Venice International Film Festival.

37
(3.2) Demand and supply of film industry

Dubbing of international films in regional languages: The number of foreign films dubbed into
Indian languages has doubled over the past 5 years. These films are being dubbed into Hindi,
Tamil, and Telugu which has helped them reach audiences beyond Tier 1 cities.

Rise of multiplexes:

Multiplexes have witnessed significant growth across major Indian cities and continued
penetration in smaller towns. Investments in multiplexes is mainly driven by improved per-
ticket realization, rising urbanization, and growing disposable incomes.

Local film production can leverage the experience of these international studios to expand their
international reach and incorporate enhanced project planning and cost controls.

Rise of regional cinema:

While mainstream Bollywood dominates the Indian film industry, regional cinema has been
witnessing a surge in investments from major film studios to tap the potential of
underpenetrated markets. Large national producers such as Reliance Entertainment, Eros,
Disney, Viacom 18 Motion Pictures, Fox Star Studios as well as independent producers like
Emmay Entertainment (Nikhil Advani), Akshay Kumar, and Grazing Goat Productions plan to
spend 20% of their annual budgets on regional cinema. This is not only due to the relatively
untapped nature of the market but also because of cheaper cost of production of regional
movies. The average cost of producing a commercial Hindi film is INR 150 million versus a
cost of INR 40 million for a Marathi or Punjabi film.

South Indian film industry is very vibrant with revenue expected to grow at a CAGR of 12%
reaching over INR 42 billion over by 2017. This segment is dominated by Tamil and Telugu
films (90%) with 365 films released in 2015. However, the profitability of these films has been
low with only 30% recovering production costs.2 While big budget films continue to account
for a large share of revenue (approximately 40%), smaller budget films with strong content
have been gaining popularity. Further, Tamil and Telegu films have started to gain nation-wide
and international popularity

Malayalam film industry has witnessed high growth and profitability driven by strong content
and large audience in 2015. Over 140 films were released during the year in Malayalam. High
profitability was demonstrated by films with good content making over INR 500 million at the
box office over movie budgets of INR 120–150 million. • Bengali film industry has seen a

38
slump in the recent years as poor content, shift of audience to English and Hindi cinema, and
lack of infrastructure became growing challenges in the sector. Single screen theatres have
been successively shutting down in the state with over 100 screens closed in the last one and a
half years.

Production of regional films:

The demand for films in non-metro cities with distinct cultures, languages and content
preferences is a rapidly growing segment. This represents huge markets within markets and
provide a variety of opportunities to deliver localized and regional content. While many global
film studios have already entered regional markets and are producing regional language
content, this is expected to be a key growth driver going forward.

Addition of screens: Currently, screen distribution is largely skewed to Mumbai and

Delhi/Uttar Pradesh which account for 60% of the box office collection of films. However, the
next wave of expansion of screens is expected to be driven by the Tier 2 and Tier 3 cities as
mall development in Tier 1 cities has reached saturation point. At present, only 25% of malls
are located in smaller cities and retail attractiveness of Tier 1 cities has been stagnant. Smaller
cities and towns offer large and inexpensive spaces for infrastructure development with rising
disposable income making them attractive for investments. Further, there are many small cities
and towns that have an appetite for cinema consumption, but are still virgin pockets for
multiplexes. Over 50% of screen additions in FY15 by Inox and PVR has been in Tier 2 and 3
cities.7

Diversifying into international markets: While domestic markets provide the Indian film
sector with steady growth, diversifying to international markets can provide a large upside in
demand as well as revenue. For example, Hollywood currently derives almost two-thirds of its
revenue from overseas market versus 15% overseas revenue collected by the Indian film
industry. Since only few international markets have an established film sector, Indian
production houses are well positioned to tap the domestic demand in these regions. This can
be realized through forming collaborations with local studios and talent for distribution of
dubbed movies, co-production of local and international films. For example, Eros tied-up with
three Chinese film and entertainment companies in May 2015 to co-produce, distribute and
promote Sino Indian films in both countries.8

39
Releasing the potential of digitization: Going forward, digitization is expected to increase with
digital becoming an independent revenue stream, rather than part of a bundle, and the entry of
more international players in the film industry. Digital revenues are expected to grow
significantly owing to the rapid development of the digital channel. This shift towards digital
is expected in turn to give a thrust to the small budgeted good content films which can then be
monetized through personal devices. Further, digitization can result in creation of new release
windows by enabling studios to explore release of films through various platforms with
differentiated prices to consumers. Films are now available for home theatrical screening the
day of release and pay-per-view, with DTH, digital cable and Internet Protocol television
(IPTV) distributors at prices as low as INR 50 per screening.

Upside from ancillary revenue streams:

Apart from the box office revenues, ancillary revenue streams can provide an increasing share
of the film revenues driven by digitization, onset of next generation networks and availability
of sophisticated devices to access media. Releasing the potential of these revenue streams can
provide a large upside to the theatre related income. For example, Star Wars grossed total
revenues of $42 billion while only $7.3 billion (approximately 17%) came from box office
revenues. Home sales entertainment, toys and merchandise and video games where the largest
contributors with $5.7 billion, $17 billion and $4.3 billion respectively.

Some ancillary sources of revenue that can be explored in the Indian film industry are as
follows:

• Merchandising: While merchandising currently contributes miniscule amount of revenue, it

has immense potential with the development of Indian movie franchise and strong content. In
order to drive this stream of revenue, films require strong story lines, relatable characters, and
innovative ways of engaging with the audience. For example, Ra.One wasone of the first Indian
film to be launched with an overall campaign. It had over 25 brands associated with the film
covering merchandising, licensing, publishing, video games, board games and figurines. •
Licensing content for games and mobile apps: Consumption of media and entertainment related
mobile content, such as songs, games and mobile themes, accounts for almost 30% of overall
VAS revenues in India. Developing bandwidth-light games and apps that engage consumers
can significantly increase recall and add value to the movie brand while bringing in additional
revenues.

40
• Web-based home entertainment: The home movies market had been steadily declining over
the last few years owing to relatively high pricing and piracy. This has led to large repositories
of movies being underutilized after release. With the proliferation of 4G and broadband
services, the home entertainment can be revived through online delivery of movies over PCs,
mobile phones and tablets. To fully capture this segment, there is a need to develop effective
distribution channels and invest in digitizing and meta-tagging content for digital delivery.

Upcoming use of Visual Effects (VFX) in movies:

VFX involves the creation of live action imagery by using computer-generated effects. It is
being increasingly used by the visual media in India in three categories, i.e., movies, TV shows
and advertisements. In India, the VFX segment is currently in its nascent stages with low
domestic consumption; most of the work comes from outsourced projects from the USA and
the UK. However, with viewers becoming increasingly sophisticated, the domestic market is
seeing bigger budget movies and ad campaigns leading to a rise in VFX spend. Currently, India
has nearly 300 animation and 40 VFX studios, employing more than 10,000 professionals.

The film sector has been increasing its usage of VFX and visual effects is expected to play a
bigger part in Indian cinema going forward. This can also be seen in the regional films where
VFX is a growing trend; for example, the Marathi film Mitwa used a total of 325 VFX shots.
In 2015, the Indian film industry saw a number of VFX heavy films such as Baahubali, Bajirao
Mastani, I, Dilwale, Bombay Velvet, Bajrangi Bhaijaan, Baby, amongst others. The industry
(including post-production) is expected to grow rapidly in the coming 5 years. However, the
VFX industry is still inhibited by cost constraints and skill gaps in the country leading to slow
adoption.

To tap into the growing VFX space, production houses in India are setting up their in-house
VFX divisions. For example, Yash Raj Films (YRF) has commenced an independent VFX
division, titled yFX, which released its first film in July 2016.9

• Marathi film industry has re-emerged over the last few years owing to strong content, lower
budgets, and government support. The segment has shown 40–45% growth in 2015 reaching
INR 1.5 billion in revenue. The state government has bolstered sector growth through
mandating screening of at least one show of a Marathi film in a multiplex.

• Gujarati film industry is showing indications of coming out of a long slump due to
production of urban centric films and higher investments in the sector. There has been a

41
considerable jump in box office collections reaching INR 550 million last year from INR 70
million in 2014.

• Punjabi film industry experienced a strong growth of 15–20% over the previous year.

Digital adoption across the value chain: Real Image and UFO Movies have facilitated the
digitization of movies enabling wider distribution of films across various regions and curbing
piracy. Key benefits of digitization can be witnessed across the value chain:

• Film makers: Digital printing costs 80% less than conventional printing which allows
producers to scale up to 5 times the number of screens than originally in the same budget. Due
to this, digitization has enabled the penetration of content to smaller cities and towns. In the
current scenario, over 60% of box office collections are realized in the first week of a movie’s
release. Increased penetration, simultaneous release across theatres, and front-ending of
revenue has resulted in a drastic increase in number of films generating over INR 1 billion in
box office revenues.

• Distributors and exhibitors: Digitization of content has resulted in the reduction of costs of
physical transportation and print manufacturing. Digital content is delivered by way of satellite
or hard drive adding convenience and cost effectiveness to the process. Nearly all theatres have
adopted digital technology resulting in shift from large-sized projection systems to smaller and
more efficient digital projection systems. Although digital projection systems have a heavy
initial investment, the running costs as opposed to analogy are minimal.

• Consumers: Digital projection in the cinemas has superior quality of images which are not
subject to deterioration with the passage of time. It has also given viewers access to
technologies such as VFX, animation, and 3D films .Digital cinema has also helped in
addressing piracy as well. With the advent of digital technologies, piracy of films and songs
has decreased tremendously. With digital distribution, movies are released on the same day in
all places and checks can be kept on where movies are showing and how many times they are
screened, resulting in reduction in the scope for piracy.

Organic and inorganic growth in multiplexes: Multiplexes have shown a growth rate of 15%
in Indian cities, increasing from 925 in 2009 to 2,100 in 2015. Over 2,000 single screen cinemas
have been shut down or converted to multiplexes in the last year mainly due to greater cost of
operations (higher entertainment taxes, increase in distributors’ share, and lower ticket prices),

42
non-viability of running on a standalone basis and low occupancy rate. Multiplexescurrently
account for approximately 26% market share of the screens; however, they contribute more
than 40% of box office collections. Wider content and programming flexibility result in higher
occupancy and hence profitability of multiplexes. With comparison to growing economies,
India has a low penetration of multiplexes with a potential to have almost 7,500–10,000
multiplex screens across the nation. Going forward, the key multiplex operators such as PVR,
Inox, Cinepolis, and Carnival Cinemas have aggressive expansion plans in the coming three
years.3

Industry leaders in the film exhibition segment have grown not only through organic screen
additions, but also through acquisition of smaller regional multiplex chains and single screen
players. Consolidation of the multiplex segment has resulted in the top four cinema operators
(PVR, Inox, Carnival, and Cinepolis) controlling almost 70% of the market.

Emergence of alternative streams of revenue: Other sources of revenue have started to make
an increasing contribution to the film industry realizations. In the last few years, the window
available to monetize a film’s revenues at the box office has shortened considerably. This is
driving film studios to exploit ancillary streams of revenue such as the following:

• In-cinema advertising: In 2015, the in-cinema advertising revenues reached approximately

INR 6.3 billion exhibiting a 28% growth over the previous year. This is mainly due to increased
digitization of ads, shift from public sector advertising to corporate advertising, and higher ad
durations in multiplexes. Going forward, ad revenues are expected to grow at 1820% over
FY16-20 and play an important role in growth of revenues.

• Video on Demand (VOD): While OnDemand services for video and audio form a small
segment of the industry (less than 5%), it is at the inflection point in India. With the growing
mobile and internet segment, an ecosystem around these services has developed with content
providers, aggregators, distribution channels, technology platforms, advertising platforms,
payment channels and marketing channels.

Mobile and online platforms: Revenue from new media, including mobile and online rights, is
expected to increase with the high penetration and accessibility of 3G services by mobile
operators. Further, film production houses can reduce their dependence on theatrical
performance by monetizing content through gaming on mobile and online platforms

43
(3.3)Growth of Indian film industry

The Indian media industry has tremendous scope for growth in all the segments due to rising
incomes and evolving lifestyles. Media is consumed by audience across demographics and
various avenues such as television, films, out of home (OOH), radio, animation and visual
effect (VFX), music, gaming, digital advertising, and print.
The Media & Entertainment industry is anticipated to grow at a Compound Annual Growth
Rate (CAGR) of 13.10^ per cent during 2018-23 to reach Rs 2,660.20 billion (US$ 39.68
billion) in FY23 from Rs 1,436.00 billion (US$ 22.28 billion) in FY18. The industry provides
employment to five million people, including both direct and indirect employment as of 2017.
Advertising revenue in India is expected to grow 15.20 per cent during 2018-2023, to reach Rs
1,232.70 billion (US$ 18.39 billion) in FY23 from Rs 608.30 billion (US$ 9.44 billion) in
FY18. India digital advertising market has reached Rs 8,202 crore (US$ 1.27 billion) in 2017
and is forecasted to grow at a CAGR of 32 per cent to reach Rs 18,986 crore (US$ 2.95 billion)
by 2020*.India’s advertisement spending is projected to grow 15 per cent year-on-year to reach
Rs 72,169 crore (US$ 10.28 billion) in 2019@.India’s digital revenues are expected to reach
US$394.22 million by 2021. India is the largest television market in the world with Rs 651.90
billion (US$ 10.11 billion) in revenue in FY18. The Indian film industry is expected to grow
at a CAGR of 7.60^ per cent during 2018-2023.
The Government of India has supported this sector's growth by taking various initiatives such
as digitising the cable distribution sector to attract greater institutional funding, increasing
Foreign Direct Investment (FDI) limit from 74 per cent to 100 per cent in cable and Direct-to-
home (DTH) satellite platforms, and granting industry status to the film industry for easy access
to institutional finance. FDI inflows into the Information and Broadcasting sector during April
2000 to March 2019 rose up to US$ 8.38 billion.

44
The Indian film segment grew 27% in 2017 due to a combination of high growth in overseas
theatrical releases (particularly in China), growth in satellite rights values and domestic box
office collections. All sub-segments, with the exception of home video grew and the film
segment reached Rs 156 billion in 2017.According to the latest FICCI-EY report, ‘Re-

45
imagining India's M&E sector’, the growth would be 18% if global theatrical revenues are
restated based on what the Indian studios earned, and not at gross box office values.

“While the overall growth in films is promising, it is not a linear business, and depends heavily
on the number and type of releases. In 2017, growth was narrow - it was due to select movies
like Baahubali and Dangal driving growth in both domestic and international markets,” the
report said. Though the success of Baahubali may result in increased focus on high budget and
regional movies in years to come, the domestic box office collections also need to support such
higher investments.

According to the report despite comprising only 17% of the films made in the country,
Bollywood contributes almost 40% of the net box office collections annually. Films in 29 other
Indian languages account for approximately 75% of the films released but they contribute
approximately 50% to the annual domestic box office collections. Hollywood and international
films comprise the balance.In 2017, nine films joined the Rs1 billion club, the biggest grosser
for the year was Baahubali 2: The Conclusion which was a Tamil-Telugu bilingual dubbed in
Hindi. This film emerged as one of the greatest blockbusters of all time selling 52.5 million
tickets at the box office for its Hindi language release. Tiger Zinda Hai, Golmaal Again, Judwaa
2, Toilet Ek Prem Katha, Fukrey Returns and Badrinath Ki Dulhania were the big hits for
Bollywood in 20172.

The top 50 films contributed approximately 97.75 per cent of the total net box office collection
while box office collections of the top 50 films grew by 11.60% in 2017. Further, the number
of films crossing the Rs 1 billion mark in terms of net box office has also increased in the year
2017 as compared to the previous years. Bollywood stories aside regional cinema too left a
mark in 2017. Baahubali 2: The Conclusion didn’t just bring in great numbers to the box office
but also took regional cinema to new heights in 2017. The Telugu film segment clocked a 47%
growth. Backed by Baahubali, Telegu film’s net domestic collection in 2017 was Rs 15.33
billion, up from Rs10.42 billion in 2016.

Online ticketing platform Book My Show reported average occupancy of 45-46% for regional
films last year, compared to around 39-40% in 2016. Within the regional space, Gujarati films
registered a 44% increase over 2016 in terms of transactions on the site, followed by Malayalam
films registering a 38% rise. Malayalam, Bengali and Marathi cinema in particular have been
known to for their keen focus on content-driven cinema and they did not disappoint this year

46
as well. A very significant revenue for the regional language films, with the exception of Tamil
and Telugu to some extent, still accrues from theatrical window while the growth of vernacular
television and OTT make incremental contributions.

The box office collections of Hollywood (inclusive of all the Indian language dubbed versions)
in India remained stagnant in 2017, totalling Rs 8.01 billion, as against Rs 7.95 billion in 2016.
This comprises around 13% of the total theatrical box office. After three consecutive years of
healthy growth since 2013, Hollywood footfalls in India remained stagnant at 75 million last
year, marginally down from 78 million in 2016.

47
(3.4) Investment related aspects in film industry

Investing directly in a movie may sound glam, but it can be a risky endeavour. Scouting the
right talent, managing production costs, and finding the right distributor are only a few of the
hurdles investors share as production moves forward. The hardest thing to gauge, though, is
the personal whim of the moviegoer. After all, taste is fickle. A story with a broad appeal in
one decade could fall flat in the next. If a movie does well, it may open the possibilities of a
franchise, but if it flops, it could claim a number of casualties—from studios to the careers of
actors.

KEY TAKEAWAYS

 Investing directly in a movie may sound glam, but it can be a risky move.
 Before investing in any project, do your due diligence and research the project, the
producers, the talent, and the potential for return.
 Ask yourself if the film will appeal to the mass market or if it's just meant for a niche
audience.
 Consider private equity, hedge funds if you have a lot of cash to invest, or crowdfunding
sources for general projects.
 Hedge funds use slate financing, which invests in a portfolio of films, to manage risk
and generate returns.

Considerations Before Investing

Before you even consider investing your money, make sure you do your due diligence. Ask
yourself the following:

 What is the producer's reputation?

 What experience does he or she have?

Backing someone who doesn't have a proven track record is akin to investing in a mutual fund
with rookie portfolio managers. But don't forget about the project itself.

Ask yourself whether the film will appeal to a broad market. If it's only intended for a niche
audience, there's a good chance you may sink your money. Blockbusters tend to have a broad
appeal, while foreign films, documentaries, and small pictures tend to have less. There are, of

48
course, notable exceptions like Spike Lee's "She's Gott Have It" and the 2016 Academy Award
Best Picture winner, "Moonlight." Films with a religious message or ones with more
intellectual humour could be a hard sell to the distributor, as well, since their audience is
typically quite narrow.

What if the film has no A-list talent? That could be a problem, though sometimes the film itself
is the talent—think "Slum Dog Millionaire". Name recognition could vary, too, depending on
where the film is targeting its release. Learn about the director's vision. An outsized ego can
prove fatal, as was the case with "Heaven's Gate," which came nowhere near to recouping the
runaway costs its perfectionist director Michael Cimino incurred.

Are the interests of the filmmaker properly aligned with the distributor and investors, or does
much of the revenue inure to the benefit of the filmmaker? Is the investment a fair arrangement?

Investment Vehicles

If you've got a lot of money at your disposal, consider the private equity and hedge funds.
These investment vehicles appear to be the most common for direct investment in cinematic
ventures. Sadly, this usually means one thing: Unsophisticated investors need not apply. The
risks of such an enterprise can be substantial and often are better suited for the family office
or institutional investor. If you can—and do—go this route, congratulations. But be sure to
check any offering documents, which must accord with applicable securities law.

But that isn't the only way. Crowdfunding has become a very popular form of investing for
many movie-mogul-wannabes, and a great way for filmmakers to raise capital. Filmmakers
who may not have had ready access to capital now do by raising small amounts of money from
a very large group of people. Investor and The Movie Fund are just two examples of film-
related crowdfunding sites that are running right now.

Before you promise your millions to a film project, you should also do your due diligence here
as well—just like you would with any other investment. After all, a project may sound good
on paper, but you still have to look at the fine details. Research the project(s), the personnel,
and their track records. And be sure to check what the filmmaker promises as a return. Some
may just pass on some film merchandise as a thank you instead of a big reward.

49
You can, of course, invest in the traditional way. Entertainment-related stocks are a great option
in which to invest, but remember, you won't get that producer credit. Companies like Viacom,
Netflix, Disney all produce big-budget films. And because they're generally diversified in their
offerings in the entertainment industry, there's a good chance you can mitigate some of the risk
of a stock market investment.

The Way Forward

On its own, film appears to be an asset class unto itself—uncorrelated to the other types of
investments. Movies are somewhat recession-resistant because even in hard times, people still
go need entertainment. so they will not stop going to the movies or streaming them online.

Slate financing is the hedge funds' approach to risk management and return generation. This
approach simply entails investment in a portfolio of films, rather than a single production.
Through diversification comes a more proper balance of risk and return. What films are
included in the portfolio may be a function of how the fund's co-financing efforts with the
production and distribution company work through the film studios. Part of the challenge is
untangling opaque financial accounts through due diligence in the quest for greater
transparency.

There are plays in the movie industry itself, in the form of common shares. But individual
investors need to understand where in the chain of production the companies lie and to what
risks those companies are subjected to. For example, is the investment in a studio like
Lionsgate—which nearly doubled its price since the beginning of 2012—or in
distribution like Netflix or Coin star?

Clauses and Returns

Any investment proposals should be in writing and contain an arbitration clause for a more
cost-effective dispute resolution. Filmmakers may find it useful to have such a clause when
dealing with financially stronger distributors in order to protect the former's interests.

The producer should have a completion bond, which is a surety bond that kicks in to pay for
cost overruns, rather than having the investors shoulder the burden. Different fundraising
options should be considered, depending upon the script and budget. Tax incentives properly

50
pursued are another revenue-generator, so long as the incentive tail does not wag the movie
dog.

The filmmaker should escrow funds during the fundraising stage of the film. This helps to
ensure transparency and accountability. If insufficient funds are raised, then they should be
returned to investors. All of these considerations point to the need for an investor to work with
a professional with experience in the film industry.

As for returns, film revenues are used to repay investors all of their investment and debts
incurred first. The process is akin to a return of basis or of the principal investment. Profit-
sharing, or the return on the investment, is the next link in the chain. The split is often even
between the producer and investors. The film's stars, writers, and director are paid from the
producer's profits.

The Bottom Line

Have movies been commoditized? Consider how easy it is to access a favourite movie. The
theater is but the first of several distribution channels which include cable television, the
internet, and other streaming outlets. The ready availability of content has stolen a march on
the movie theater experience and created more revenue streams and greater profitability.

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51
(3.5) Key drivers of film industry

10 key drivers for the growth of the Indian media and entertainment industry. These are
as follows:

1. Digitization to help in spreading the reach and impact of M&E industry: Availability
and penetration of newer distribution platforms like Digital Cable, DTH and IPTV, digitization
of newspapers, magazines, films and sale of online and mobile music are some of the ways in
which the M&E industry has benefited from digitization and the growth is likely to continue in
years to come.

The digitization of TV platforms has given way to better technology and picture and sound
quality for viewers, more transparent distribution of revenues for stakeholders in the value
chain and more band width becoming available to broadcasters giving them opportunity to
provide value add services. This will enable niche content being available in future.

Digital production in films has reduced film processing and storage costs and digital
distribution and exhibition has led to enhanced picture quality, reduced costs, shortened release
window and a wider reach.

Digital music distribution is mainly restricted to the telecom segment, through ring tones and
caller ring back tunes. With increase in mobile and broadband penetration and expected 3G
rollout, market for other digital distribution platforms such as full track downloads, streaming
music and subscriptions etc might also open up.

2. Regionalization to aid in inclusion of untapped markets: 2009 was the year of providing
content in regional languages across sectors like Print, TV, Music, Films and Radio. Going
forward, it is expected that regionalization will be one of the significant factors driving growth
with growing increase in literacy, consumption and disposable incomes in Tier 2 & 3 cities.
Advertisers are also increasing focus on rural markets due to saturation of urban markets.
Demand for regional content is emerging fast.

Ad spends on regional TV channels is increasing and national broadcasters are looking at

adding regional channels to their portfolios. The share of local advertisers on radio and in print

52
is increasing. Corporates involved in the filmed entertainment business are taking exposure in
regional cinema in order to diversify.

Multiplexes, which were largely based in HSM, are now increasingly opening up properties in
other regions. Over last few years, Hindi cinema has lost share to other languages in terms of
total films certified. Tapping of regional markets is growing in importance in the India strategy
of international film studios, which are releasing prints and doing dubbed language screenings
in these markets. The untapped potential and latent demand in these markets is also leading to
the roll out of Phase III radio licenses largely in Tier 2 and 3 towns and OOH space seeing
increased investments in these cities.

3. Convergence and Impact of new media to benefit media players: Advertisers are looking
at multiple delivery platforms for content to break through the clutter in existing platforms.

4. Consolidation leading to emergence of players with superior capabilities: The M&E

industry is increasingly becoming fragmented in nature due to entry of newer players and newer
customers and regions getting added. We have seen existing players expanding horizons by
coming out of their traditional businesses and establishing presence in other domains.

5. Competition expanding the operating market: The entry of newer players in the market
has had a positive impact on the overall market as it has helped in expanding the market size.

6. Talent development and management key to business success: The M&E industry relies
heavily on its human capital for business success and differentiation, as it is talent driven to a
great extent. The industry has dealt with a lack of supply of trained professionals in the sector
for a long time. Investment in educational institutions providing specialized courses for skilled
technicians is a step in the right direction to develop talent and meet the demand of the industry.

7. Innovation across product, process, marketing, distribution and business model by

media players: Innovation is essential for players to adapt to the changing market scenario,
technology and consumer behavior.

8. The growing importance of pay markets in media business models: Traditionally

advertising revenues have had a strong hold in the M&E industry, but now even subscription

53
revenues are becoming important with consumers paying for media services. The media
business models in India are undergoing a change with audiences becoming more willing to
pay for content and value added services. Technology has brought about convenience and
offered superior quality to consumers who have responded positively. The growth in ticket
prices of movies at multiplexes, increasing number of Pay TV subscribers, increasing
penetration of DTH with its user friendly interface and technology, and introduction of VAS
by media players are some examples of pay markets gaining importance.

Growth in this will be driven by research in consumption trends and better understanding the
set of audiences who are likely to pay more for these value added services. This will ensure
going beyond basic monetization of audience through ad sales.

9. Consumer research to ensure consumer-oriented media products and delivery: With

increasing fragmentation of audiences and competition within and from outside media sectors,
it is becoming difficult for players in the M&E industry to rely purely on past experience and
creative expression. There is an increasing need for investments and focus on research in
concept testing, new product development and delivery platforms. Companies are increasing
spends on consumer research as the stakes have increased. Many players have a separate team
within the organization to concentrate on research as an ongoing process, whereas others take
help of outside research agencies for specific projects / concepts.

10. Focus on 360 degree connect with consumers: The players are looking beyond just the
traditional mediums by reaching the consumers across multiple platforms in order to establish
a stronger connect. They are taking the help of multiple touch points at the same time to
communicate to the consumer across platforms like TV, Print, Radio, OOH, Films, Internet,
Mobile and Retail. Recent examples of two very successful 360 degree marketing campaigns
of films are Avatar and 3 Idiots. Avatar was released globally with one of the most successful
digital marketing campaigns. 3 Idiots repeated the success story in India with their innovative
techniques and all-inclusive marketing strategy. These films managed to explore multiple touch
points and reach out effectively through digital media and experiential marketing techniques.

54
(3.6) Different strategies adopting in film industry

As anyone who’s ever worked on a movie knows, there’s a lot that goes into it. The average
person usually has no idea what it takes to create a good film. Filming, acting and production
are just the beginning, of course. Filmmakers need help with financing, producing, promotion
and marketing.

Movie marketing is almost as important as the quality of the movie itself. Your movie could
be incredible, but unless people know about it and are compelled to go and see it, it will never
be successful. With that in mind, let’s take a look at some of the strategies you can use to get
the word out about your next project.

For Movie Success, You Need Good Marketers and Communicators

You can’t do it all yourself. Although it is possible to learn the best practices and strategies for
marketing, getting beyond the basics takes a lot of time, effort, and dedication. You should
understand how marketing works, but you will also need to know when you’re in over your
head and you should think about outsourcing.

Hiring a team to market your film is money well spent, as long as you choose people who are
experienced, on top of current marketing trends, and have stellar communication skills.
Because so much of your success in the film industry depends on connections, having a team
that can navigate relationships and disagreements is key. Mediation skills are valuable in the
film industry, as they can help your team form relationships and develop creative solutions
when conflicts arise. Regardless, you will need people with great communication skills and a
marketing mindset.

Digital Marketing and Video Techniques Help Promote Films

What better way to promote video than with video? Digital marketing, including video ads, can
help spark interest in your film. It’s necessary to create visually compelling ads and trailers and
to show them to the right audience. If you’re releasing an action movie, advertising to people
who prefer historical dramas won’t get you anywhere. These basic principles of digital
marketing, combined with the power of video, social media, and digital technology, can help
generate the right kind of attention for your film. Choosing the right social platforms to share
your content is key to reaching your intended audience. You could even use memes and

55
interactive content to get people engaging and sharing. There are so many tools and tactics out
there that it’s important to focus on what makes the most sense for your movie.

Your Content Always Matters

People only talk about what they find exciting, interesting or offensive. Since you don’t want
to be in that last category, you’ll need to think about your content strategy and optimize your
content for different channels. Your goal is to get your content seen, but it also needs to be
good enough that people will want to share it and talk about your movie with their friends.Think
about your trailer—it’s one of the most important pieces of content you’ll put out in the advance
of your movie’s release. Make it count! 95% of Gen Z uses YouTube, and if you’re not showing
the right clips for your video advertising, you won’t get the kind of interest you’re looking for.
Striking the right balance of showing clips that are exciting but don’t give the whole movie
away is a challenge, but it’s what you need to do to capture your audience’s attention.

Producing a Movie Requires Marketing Knowledge

Filmmakers are storytellers, and storytelling is a powerful tool in marketing. In order to engage
potential viewers, you need to tap into their emotions and give them an experience. Good
examples of how marketing and videography can be used together are brand films, using
storytelling to connect with audiences. These can serve as inspiration as you develop strategies
for marketing your own film. It’s key to think about marketing throughout the process, not just
at the end.

The Power of Marketing

No matter what industry you’re in, understanding marketing strategies and being able to
leverage the power of film can help you in your business efforts. Filmmakers and those
involved with movie production can create a more successful film by knowing and speaking to
a specific audience and ensuring they are strategic in their promotion efforts.

56
(3.7) Major Players

Active film production houses

Name Headquarter

Aamir Khan Productions Mumbai

Aashirvad Cinemas Kochi, Kerala

AGS Entertainment Chennai

Ajay Devgn Ffilms Mumbai

Annapurna Studios Hyderabad

Anurag Kashyap Films Mumbai

AVM Productions Chennai

Balaji Motion Pictures Mumbai

Big Bang Entertainments Kochi, Kerala

57
Name Headquarter

Bhansali Productions Mumbai

Chilsag Entertainment Network Mumbai

CineMan Productions Ahmadabad

Clean Slate Films Mumbai

Cloud Nine Movies Chennai

Colour Yellow Productions Mumbai

DAR Motion Pictures Mumbai

Dharma Productions Mumbai

Drishyam Films Mumbai

Emmay Entertainment Mumbai

Eros International Mumbai

Eskay Movies Kolkata

Excel Entertainment Mumbai

Felis Creations Bangalore

Fox Star Studios Mumbai

Geetha Arts Hyderabad

Gemini Film Circuit Mumbai

Grazing Goat Pictures Mumbai

Hari Om Entertainment Mumbai

HDR Play Pictures Kolkata

HMAC Entertainments Private Limited Mumbai

Illuminati Films Mumbai

58
Name Headquarter

Jaaz Multimedia Kolkata

Jeetz Filmworks Kolkata

Kanteerava Studios Bangalore

Kavithalayaa Productions Chennai

Lyca Productions Chennai

Madras Talkies Chennai

Maxlab Cinemas and Entertainments Kochi

Medient Studios Mumbai

Mukta Arts Mumbai

Nadiadwala Grandson Entertainment Mumbai

NFDC Cinemas of India Mumbai

Pen India Limited Mumbai

Percept Picture Company Mumbai

Phantom Films Mumbai

Pranavam Arts International Thiruvananthapuram

PVR Pictures Gurgaon

Rajshri Productions Mumbai

Red Chillies Entertainment Mumbai

Reliance Entertainment Mumbai

Rhythm Boyz Entertainment Amritsar

Riverbank Studios New Delhi

Qube Cinema Technologies Chennai

59
Name Headquarter

S Pictures Chennai

Sahara One New Delhi

Salman Khan Films Mumbai

Shree Ashtavinayak Cine Vision Mumbai

Shree Venkatesh Films Kolkata

Sivaji Productions Chennai

Studio Green Chennai

Sun Pictures Chennai

Sudha Productions Mumbai

Suresh Productions Hyderabad

Surinder Films Kolkata

UTV Motion Pictures Mumbai

Viacom18 Motion Pictures Mumbai

Vinod Chopra Films Mumbai

Vishesh Films Mumbai

Y NOT Studios Chennai

Yash Raj Films Mumbai

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(3.8.1)Yash Raj Films (YRF)

Yash Raj Films (YRF) is an Indian film production and distribution company working in Hindi
cinema. Since its inception in the 1970s, the company has grown to be one of the largest film
studios in India.[1] YRF has been approached by various American conglomerates such as
Disney for a potential buyout, but YRF has opted to remain as a sole entity without becoming
a subsidiary of a larger company.

(3.8.2)UTV Motion Pictures

UTV Motion Pictures (also known as Disney-UTV) is the feature film unit of UTV Software
Communications. UTV Motion Pictures is one of the leading film studios in India and one of
the largest production studios in South Asia. The Studio's activities span creative development,
production, marketing, distribution, licensing, merchandising and worldwide syndication of
films in Indian territories. It is currently the distribution label of Disney for Walt Disney
Studios Motion Pictures's feature films.

UTV Motion Pictures has a library of domestic regional films and animation productions
alongside select international productions. Notable UTV Motion Pictures' films that have won
Academy Awards in India are Rang De Basanti (2006), Harishchandrachi Factory (2009)
Peepli Live (2010) and Barfi! (2012). As of 2017, Disney-UTV has suspended producing
domestic films, with its latest domestic entry being Jagga Jasoos. The label is overseen by
Amrita Pandey who oversees Walt Disney Studios feature films in South Asia.

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(3.8.3) Super Cassettes Industries Private Limited

Super Cassettes Industries Private Limited, doing business as T-Series,[note 1][1][2] is a music
record label and film production company in India founded by Gulshan Kumar in 1983.[5] It is
primarily known for Bollywood music soundtracks[5] and Indi-pop music.[6] As of 2014, T-
Series is India's largest music record label, with up to a 35% share of the Indian music market,
followed by Sony Music India and Zee Music.[7] T-Series also owns and operates the most-
viewed and most-subscribed channel on YouTube, with over 111 million subscribers[8] and
81 billion views as of August 2019.[9] While best known as a music label, T-Series has also had
some moderate success as a film production company. Kumar, initially a fruit juice seller in
Delhi, founded T-Series to sell pirated Bollywood songs before the company eventually began
producing new music. Their breakthrough came with the soundtrack for the 1988 Bollywood
blockbuster Qayamat Se Qayamat Tak, composed by Anand-Milind, written by Majrooh
Sultanpuri, and starring Aamir Khan and Juhi Chawla, which became one of the best-selling
Indian music albums of the 1980s, with over 8 million sales. They eventually became a leading
music label with the release of Aashiqui (1990), composed by Nadeem–Shravan, which sold
20 million copies and became the best-selling Indian soundtrack album of all time.[10] However,
Gulshan Kumar was murdered by the Mumbai mafia syndicate D-Company in 1997. Since
then, T-Series has been led by his son Bhushan Kumar and younger brother Krishan Kumar.

On YouTube, T-Series has a multi-channel network, with 29 channels (excluding Lahari

Music) that have more than 184 million subscribers as of July 2019. The company's YouTube
team consists of 13 people at the T-Series headquarters.[11] The company's main T-Series
channel on YouTube primarily shows music videos as well as film trailers. It became the most-
viewed YouTube channel in January 2017.[12] The T-Series channel primarily features content
in the Hindi language, and occasionally several other languages including English, Portuguese
and Spanish. T-Series also have other channels dedicated to content in several Indian languages

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including Punjabi, Urdu, Tamil, Telugu, Kannada, Malayalam, Bhojpuri, Gujarati, Marathi and
Haryanvi.

(3.8.4) PVR Pictures

PVR Pictures is the film production and distribution arm of PVR Group, which also owns
PVR Cinemas, one of the largest multiplex companies in India. The company has its origin is
Priya Cinema in Vasant Vihar in South Delhi, which was bought by current owner 's father in
1978, who also owned a trucking business, Amritsar Transport Co. In 1988, Bijli took over the
running of the cinema hall, which was revamped in 1990, and its success led to the founding
PVR Cinemas.

PVR Pictures film production début came in 2007 with Taare Zameen Par and Jaane Tu Ya
Jaane Na. It has distributed over 200 Hollywood films, including The Aviator, Mission:
Impossible III, Kill Bill, The Hurt Locker, The Twilight Saga and Chicago; over 100
Bollywood films, including blockbusters such as ‘Ghajini’, ‘Golmaal Returns’, ‘All The Best’,
‘Don', ‘Sarkar Raj’, ‘Omkara’ and nearly 25 regional films since its inception. In October 2012
the company acquired the Indian distribution rights for the film adaption of Salman Rushdie's
Booker Prize-winning novel Midnight's Children. Its president is Kamal Gianchandani, and its
current promoters are Ajay Bijli and Sanjeev K Bijli. Ajay Bijli is the chairman and Managing
Director of PVR Ltd while Sanjeev K. Bijli is the Joint Managing Director of PVR Ltd.
Recently, the group had a tie-up with HP to open Asia’s first Virtual Reality (VR) Lounge at
PVR ECX, Mall of India, Noida.

(3.8.5 )Big Bang Entertainments

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Big Bang Entertainments' debut venture was Jacobinte Swargarajyam released in 2015. The
film was directed by Vineeth Sreenivasan, and stars Nivin Pauly, Renji Panicker, and Lakshmy
Ramakrishnan. The film was made on a budget of ₹7.5 crore (US$1.1 million) and grossed ₹25
crore (US$3.6 million) at the box office and completed 100 days in Kerala. The film received
positive reviews from critics, particularly for the performance of Ashwin Kumar and the
editing.

Later, in 2017, Big Bang Entertainments released a music video titled "Kande Kande"
composed and directed by Nijad Babu Thomas, and sung by Vineeth Sreenivasan and penned
by Manu Manjith.

Aravindante Athidhikal, was their next production, associated with Pathiyara Entertainments
and directed by M. Mohanan starring Vineeth Sreenivasan, Sreenivasan and Nikhila Vimal. It
was released on 27 April 2018. The film was a critical and commercial success and it was
recorded as the highest running Malayalam film of 2018 when it completed successful 112
days theatrical run in Kerala.

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 CHAPTER:4

STRETEGIES ANALYSIS of ONDUSTRY

65
(4.1) OT Analysis of film industry

(4.1.1) Opportunity of film industry

 Slumdog Millionaire success which bagged more than $80 million revenue added new
dimensions to Bollywood movies
 International brands like L’Oréal prefer Indian celebrities to be their brand ambassadors
for their global market.
 Reliance Big entertainment has signed deals with production companies of Brad Pitt,
George Clooney, Tom Hanks, Nicholas Cage, and Jim Carrey etc
 The overall Indian movie market is expected to grow at a rate of 14% YOY.
 Ficci-KPMG report has mentioned in its report that the revenues from Media and
Entertainment (M&E) would reach INR 1.3 Trillion by the year 2015.
 Marketing in M&E has become very powerful with the help of viral marketing, for
instance “Why this Kolaveri” was a straight away success.
 Viewers for Bollywood movie are increasing every year
 The concept of crossover movies, such as Bend It Like Beckham has helped open up
new doors to the crossover audience and offers immense potential for development.
 The increasing interest of the global investors in the sector.
 The media penetration is poor among the poorer sections of the society, offering
opportunities for expansion in the area.
 The nascent stage of the new distribution channels offers an opportunity for
development.
 Rapid de-regulation in the Industry
 Rise in the viewership and the advertising expenditure.
 Technological innovations like animations, multiplexes, etc and new distribution
channels like mobiles and Internet have opened up the doors of new opportunities in
the sector

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(4.1.2) Threats of film industry

 Government and sensor board regulations are becoming high due to the increase of
adulthood and violence scenes in movies
 Pirated CDs and DVDs impose a major threat for this industry
 Movies are watched and shared across internet
 Many movies face legal issues and threats from political parties during their releases
 Negative reviews on websites and social media are major threats
 Piracy, violation of intellectual property rights pose a major treat to the Media And
Entertainment companies.
 Lack of quality content has emerged as a major concern because of the Quick- buck
route being followed in the industry.
 With technological innovations taking place so rapidly, the media sector is facing
considerable uncertainty about success in the marketplace.

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(4.2) Porter’s Five Forces analysis of film industry

By analysing Porter’s Five Forces model we can see that the Film & TV Entertainment segment
of Time Warner fits into the “bigger picture” of the industry as a whole. The strongest of these
fives forces is the competitive rivalry Time Warner Inc. faces. The main competition for Time
Warner consists of News Corporation, NBCUniversal, Viacom Inc., and The Walt Disney
Company. Overall, these companies make up 81.2% of the industry, with Time Warner only
capturing 9.8% of the total market share. The main reason this is so important to understanding
the profitability of the industry is because of the size of the companies in competition. It is
expected that the growth within the industry in the future will be based off two main things:
acquisitions and advertising expenditure iii. In order to help neutralize parts of its competition
and continue to reach the public with its product, Time Warner Inc. has begun negotiating with
companies like Samsung and Apple in order to package its product with theirs. One example
of this is the discussion between Time Warner Inc. and Apple regarding the inclusion of HBO
Go as par to Apple TV iv. This would mean that, along with the inclusion of a Time Warner
app to be included with products like Samsung’s Smart TV that Time Warner could directly
streamline significant amount of programming to its customers for a lower price and with added
convenience.

The threat of new entrants

The threat of new entrants is another of the Five Forces which, in recent years has proven to be
high and continues showing growth. The reason for this is because of the growing number of
on-demand media streaming sites. While Time Warner Inc. currently has licensing agreements
with some of these suppliers such as Netflix an Amazon the stakes are slowly growing, thereby
putting entertainment providers at risk. To explain, Time Warner currently receives 5% of its
operating income from licensing agreements with subscription services and it is expected that
this number will begin to grow. This means that by gaining revenue from these media
providers, Time Warner is also eliminating some of the opportunity for the advertising revenue
it can gain by using its TV and Film entertainment in other ways. Another important thing to

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note is that both Netflix and Amazon have begun, albeit on a very small and limited scale, to
produce programming by themselves. This creates more competition in the market. The largest
barrier to entry which Time Warner was able to maintain was the extremely high cost of
production. By providing their content to\subscription services they have allowed these
services to eliminate much of the cost of production and subsidize parts of that production with
the income they receive. By looking at the chart in appendix C, one can look at the major
barriers which may deter new entrants, however online services such as Netflix and Amazon,
based off the nature of the way they provide their product are able to overcome many of these
barriers because they already have the new technology needed and are able to provide it at a
relatively low cost. One of the more complex aspects of TV and Film Entertainment industry
is that, because of the growing number of media available, many of the competitors and new
entrants are also substitutes because of the economies of scope they are creating through a
varied mix of delivery channels. Aside from the increased use of internet to deliver TV and
film to consumers as discussed in the previous two paragraphs, other entertainment substitutes
have started to take steps to become more competitive. One of the substitutes I see as an
increasing threat in entertainment is theatre. This is because of its increasing availability. For
example, the showing of plays in movie theatres is a trend which growing in popularity.
Because of how difficult it has been in the past to see world-class theatre, the opportunity to
see top quality shows with the comfort and superior a/v of a movie theatre has become very
appealing to people who otherwise might not have the opportunity.

The bargaining power of customers

The bargaining power of customers within the industry is moderate. Consumers can choose to
spend their money with one of the many companies providing TV and film entertainment.
Customers may choose from many choices of product available. Customers may choose
between different subscription networks, broadcast networks, and many different films. This
creates huge impacts on the ratings which, in turn, affect advertising expenditure. The
interrelationship between the two makes the choice of the customers very important to the
company. While many of the costs of the film and entertainment industry are charged at a
premium to the customers, they are paying for is higher quality. This means that bargaining
power of the customers comes into play when companies do not produce a high quality product
and customers switch, meaning that advertising expenditure drops and therefore the
competition has the opportunity to capture it. Companies are beginning to see this as one of the
biggest hurdles they must overcome. The increase of delivery methods has further segmented

69
the consumers into many different categories (i.e. Techno-savvy consumer vs. consumers who
don’t even have internet). Time Warner is beginning to understand that unless all these
segments are satisfied they will not be able to stay competitive. One solution to this could be
creating an economy of scope by expanding into more mobile services as a way of delivering
their product. This keeps the value of their product higher allowing them to please more people
and stay competitive.

The bargaining power of suppliers

The bargaining power of suppliers within this industry is very low overall. The suppliers for
this industry is listed as celebrity and sports agents, fine arts schools, IP licensing, and
performers and creative artists. While the absolute major players in each of these supply areas
obviously maintain some control when it comes to those suppliers with the absolute best
quality, however for the most part, Time Warner and other companies within the industry and
able to maintain such a high level of control that many of these suppliers are left at the will of
the industry.

Porter’s 5 Forces Analysis

Threat of Rivalry

• Extremely high threat of rivalry

• Industries compete based on product and advertising expenditure

• Customer loyalty is difficult to gain

Threat of Substitutes

• Moderate

• New technology allows for different subs to become readily available

• Many different entertainment outlets available besides Film and TV entertainment

Threat of Buyers

• Low (people need entertainment)

• Switching costs for consumers may be relatively low

• Viewer ratings drive opportunities for profit

Threat of Suppliers

• Low threat from suppliers

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• Supply far exceeds demand

Threat of Entry

• Threat of entry is low

• High entry and exit costs

(4.3) PESTLE Analysis

Political

The treaties with other countries concentrate on sharing of costs by partner nations and also the
dispersion of technical know-how amongst the partner nations.

Politically, the Film and Entertainment industry is subject to the FCC and the regulations
imposed upon it. Obviously this is something to keep in mind when producing TV and film as
FCC fines can range up to millions of dollars. Another important thing to keep in mind is the
policy control the FCC has. Recently, the FCC just declared it legal for cable companies to do-
away with unscrambled channels. This means that companies are no longer required to transmit
certain channels which can be accessed by anyone, only cable subscribers with set-top boxesx.
While there are still rules in place which will make the previously unscrambled channels
accessible, the times are changing and cable providers will now be able to garner more revenue
due to the increase in the need of cable subscriptions to even access some of the most basic
cable. This will definitely affect TV and film production because now that consumers will be
forced to have access to more channels than they previously had, allowing for greater
distribution of products and an increase ad sales.

Economic

Presence of an English-speaking workforce, high-quality software engineers, a large pool of

creative talent, good studios and low costs is encouraging animation industry in India.<

Economically, the environment within which Time Warner operates in is a very expensive one.
The industry alone exceeds $35,597,000,000 in annual revenues and being able to capture just
a small portion of this is very valuable, however such a large amount of money at stake creates
a very risky environment. In addition, the high cost of production helps keep major players at
the top and deters others from entering the industry. The industry also has an extremely high
cost of capital; however this cost is generally a one-time expenditure. Even with the high risk,
the large companies, such as Time Warner, will still be able to increase revenue as broadcast

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cable continues to shrink and more people are forced to subscribe to companies in order to
access programming.

Social

Almost 35 per cent of India’s over 1 billion population is illiterate. There is great demand from
this segment of Indian population for an innovative medium that facilitate communication and
information sharing, while at the same time.

The sociological environment under which Time Warner operates in is relatively stable for the
entertainment industry. The industry has to deal with attitude changes, obviously, just like
everyone else but online other industries pressured with things such as “going green”, the Film
& Television industry is able to adapt very well and not allow it to be a huge impact.

Technological

There are not many academic institutes which provide technical training for film production.
Only National School of Drama and National Film and Television Institution produce world
class technicians.

Technologically, Time Warner must be able to adapt with the many changes taking place
throughout the industry. With a large segment of entertainment taking place through internet
platforms and streaming, the industry has found ways to adapt to growing concerns from
advertisers that this would cut out opportunities for advertising as they could be eliminated
through pirating. Other technological advancements include the use of mobile devices as well
as new video formats allowing for higher quality. 71% of respondents to a survey done by
Motorola shows that consumers what to take advantage of new technology and be connected
to cable via their mobile advices and “take cable with them.” Being able to adapt to this new
technology associated with online streaming, different formats, HD televisions, and 3D
televisions is one of, if not the most, important key to success when it comes to staying involved
and relevant in the industry. Appendix E shows how many different mediums are used in order
to view television programs, aside from just a regular television set in order to see the new
technologies companies must keep up with.

Legal

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Legally, the industry toes an interesting line regarding what it may or may not produce.
Although regulators such as the FCC and organizations such as the MPAA act as watchdogs,
protection by the freedom of speech counteracts that. This has played a huge part, as much of
Time Warner’s revenues come from subscription services which allow it to still produce
programs the FCC does not allow for to be broadcasted without special subscription. One very
interesting topic which has recently changed the legal environment for Time Warner is the
FCC’s decision that cable providers (such as Time Warner) may now buy phone companies in
their franchise areasxiv. The reason that this ruling may be so important is because it helps
company’s such as Time Warner integrate into other fields and create bundles which may allow
them to generate more customer loyalty and raise switching costs, thereby generating another
barrier to entry.

Environment

The environment plays a very small roll in this industry. The main way environment plays a
factor is during production. Location and climate during production may raise or lower costs,
but as most production takes place in relatively stable areas, this doesn’t seem tocause many
issues.

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(4.4) The Film Value Chain

If you have ever been involved in the production of a film, you will probably have heard the
expression “the film value chain”. But what is it exactly?

In this series of articles, we are going to look at the film value chain in order to understand the
processes involved in the production of a film and where these intersect with its funding.

A good starting point is to understand the concept of a value chain. A simple example can be
seen by looking at a manufacturing company. A manufacturing company creates value by
converting raw materials (cloth, for example) into something people want to buy (say, designer
clothes). Its profit is the difference between the value it creates and captures (i.e. money it
receives for its goods) less the cost of creating that value.

So far, so simple. But producing and distributing an independent film is infinitely more
complex. The main reason for this is that these films are made by several unconnected
freelancers and businesses. Each is involved in a different part of the chain at a different time.
(In contrast, a film produced entirely by a studio is a simple corporate value chain).

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Everyone who contributes to the film gives some kind of value, be it financial or artistic. It is
important to understand that the value chain doesn’t show how income from a film flows.
Rather, it shows how value is added at various stages of a film’s production.

Credit for defining the film value chain goes to Peter Bloore, who introduced the idea in his
ground breaking paper Re-defining the Independent Film Value Chain in 2009

The diagram sets out the steps involved in the production of a film. The intersecting lines show
where there are opportunities for financial transactions. We can break the film value chain
down broadly as follows:

 Development
 Pre-production
 Production
 Post-production
 Distribution
 Exhibition

In this first blog, we are going to look at development and pre-production.

Development

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This is the starting point for making a film. It is shown separately from production as it is often
funded by a different party than the production itself. This development stage includes:

 Creating or buying the idea for the film

 Drafting a screenplay
 Securing development funding (to include payment to the writer of the screenplay)
 Starting the production financing process
 Contracting the talent: director, actors

Films often spend a long time in development, which is why it is a high-risk part of the project.
In his paper, Bloore refers to research that says only 18% of films developed in the UK reach
production. Funders of the development stage are often repaid out of the production budget
rather than wait for a share of the proceeds of the finished film.

Pre-production (also referred to as financing and pre-sales)

This is the stage at which the involvement of a film financing company such as Iron Box capital
is so crucial. It is now that the financing of the film is arranged. This involves signing up
investors, applying for government subsidies and tax breaks, and arranging pre-sales.

Often, the producer or financier will pre-sell the rights to a distributor in a particular territory
for a minimum guarantee and overages determined by the success of the film. This is usually
done via sales agents who have relationships with distributors in territories around the world.
Other potential pre-buyers will be pay-per-view channels such as Amazon or Netflix.

When financing a film, an accurate assessment of the value of pre-sales gives a more realistic
basis for calculating the return on investment than projected box office figures.

In the next part of this blog, we will look at production and post-production.

Production:

Shoot and post: Quite simply this is the segment where the film is shot and edited. Post
production includes the whole editing process, including the addition of computer generated
special effects and music. The shoot is usually the point at which the director is most powerful;
however this can reduce during the edit and post production process, since the financiers are
concerned to protect their investments and get involved in creative decisions. Often the

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director, financiers and producers are all involved in approving the final edit (who has final
sign off is often a closely fought contractual issue).

Distribution

Exhibition and Exploitation As described above this is the process where the intermediary of
the distributor prepares for and delivers the segment of Exhibition and Exploitation in each
territory, sometimes selling on portions of the rights. The “windows” (or time-sensitive
opportunities of different types of exploitation) could be listed as follows, in order of value to
the distributor (rather than the timing of exploitation, which is discussed later in this paper):
DVD and VHS sales / rental; Pay TV (satellite and cable); Cinema (a.k.a. the Exhibitor); Free
TV (PSB or Advertising); Video On Demand (VOD); and finally Online download (rent or
own). Due to changing business models, this order of value will probably soon change,
especially as DVD sales decline to be replaced by online download or VOD. Those not
accustomed to the film industry may be surprised to see that cinema box office is not the area
of highest value, and indeed it often makes a loss because of the level of marketing cost incurred
at this stage. Note that in the independent sector (as opposed to the studio sector) the windows
are mainly controlled and negotiated by the national distributor, in negotiation with the
exhibitor and other exploitation rights owners, and not the producer. Note that the exploitation
at this stage of “Spin-off” secondary products or merchandising (such as toys; computer games;
book / screenplay; soundtrack CD or download) is sometimes carried out at this distribution
stage, and might not involve the original film’s producer or financiers (although some profits
may go back to them, according to individual deals). These secondary products may involve
their own separate value chains and various revenue shares, especially since they are often
being sold in different retail outlets to the film itself (for example record shops, toy shops,
clothing shops etc). Again the American studio system tries to keep as much control as possible
of this stage of the process.

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(4.5) Product life cycle – Movie

Movie life cycle (tangibility or intangibility?)

If we assume that a movie is a good that is produced to be consumed, then we assert that a
movie is a product. Then it is fair to say that like human beings or animals, a movie has a life
cycle. Movies, like any product will go through various stages that are similar to human life,
such as birth, growth, maturity, decline and death.

A product life cycle goes through multiple phases and is about the life of a product in the
market with respect to business/commercial costs and sales measures. To say that a product
has a life cycle is to assert three things:
- Products have a limited life
- Product sales pass through distinct stages, each posing different challenges, opportunities,
and problems to the seller
- Products require different marketing, financing, manufacturing, purchasing, and human
resource strategies in each life cycle stage.

There are four main stages of a product's life cycle.

First stage is the market introduction, for a typical product, costs are very high, sales volumes
are slow to start, there is little or no competition, demand has to be created, customers have to
be prompted to try the product and the producing company makes no money at this stage.

The second stage of a product’s life cycle is the growth stage, typically, costs are reduced due
to economies of scale, sales volume increases significantly, profitability begins to rise, public
awareness increases, competition begins to increase with a few new players in establishing
market and increased competition leads to price decreases.

The third stage is about maturity, as the product matures costs are lowered as a result of
production volumes increasing and experience curve effects, sales volume peaks and market
saturation is reached, competitors entering the market increase, prices tend to drop due to the

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proliferation of competing products, brand differentiation and feature diversification is
emphasized to maintain or increase market share, last industrial profits go down.

The last and fourth stage is the declining stage, costs become counter-optimal, sales volume
decline, prices, profitability diminish, and profit becomes more a challenge of
production/distribution efficiency than increased sales.

But movies are not typical products, although they are consumed goods, many factors influence
each stage of the lifecycle and such as movie critics, social media, and the improvement or the
introduction of new technologies. Distribution channels rhythm and dictate the movie life
cycle. Movie would start their ‘shelf’ life in cinemas theatres, then can be sold or rented
through DVDs, following by a release on VoD/Pay-Per-View services on the internet or cable
TVs, and end up on broadcast television.

But as movies go through multiple distribution channels, we can almost talk about multiple
lives, the product being reborn every time it enters a new distribution channel. Indeed movie
makers use sequential distribution to maximise producer income by making their product
available in different markets in succession (Hennig, Thurau, Houston, and Walsh 2006, Vogel
2004).

If we take the life cycle of a Hollywood movie in the context of modern digital Video-On-
Demand services (My Mythical Online Movie Rental Service, Farhad Manjoo, Slate,
April 17, 2009.) the timeline as follow :

- Release to Theatres
+3 Months to DVD (sales, rental)
+3 Months on VoD/Pay-Per-View services (hotels, cable, etc.)
+6 Months on Premium services (HBO, Stars, etc.)
+7 Years on broadcast television (TNT, USA, etc.)
In the sections below we will look at the four stages of a movie life cycle following product
lifecycle theories. We will then look at costs, sales volumes, competition, demand, customers
and profitability.

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Cinema release:

The very first introduction of a movie in a market is in cinema theatres.

The success of a movie at every stage of the distribution channel depends on the success of the
release of the movies at cinema theatre. Cinema/box office revenue will indeed influence
overall movie popularity and typically the higher the box office revenue and the higher the
overall revenue of the movie at every stage of the distribution channel.

At introduction costs are high, movie makers invest a lot in advertising, try to create a buzz
around the movie. It is even fair to say that a movie is born before it is released as actors,
commercials and media critics start signalling before the movie is even released.

The life cycle of a movie at cinema is short-lived, producers make on average of their revenue
at cinema and a movie never really last more 3month at cinema theatres.

There are three main types of release: Wide release, Platform release, and Limited release.
Wide releases are those in which screening of the movie begins in a large number of cinema
theatres promoted bu a very extensive national advertising campaign. Platform releases involve
an initial release in a smaller number of theatres, often only in big cities, with advertising
concentrated more in local newspapers. In subsequent weeks the movie expands to additional
screens and to more rural areas.

Limited releases are those in which the movie is released in two or three cities—typically New
York, Los Angeles, and occasionally Toronto—without strong expectations of the movie’s
potential for a wider release. Distributors typically use Platform and Limited releases with
movies that are not considered to have obvious immediate appeal to mainstream audiences, for
example because the movies’ actors are unknown or the subject matter is difficult.

Gradual release creates a buzz by word-of-mouth which is crucial for the success of smaller
movies. Gradual release drives expansion to a wide release within two to four weeks of the
initial screening. Thus, these releases can be viewed as an alternative method of advertising
prior to a movie’s wide release. An additional benefit is the reduction in the risk facing the

80
distributor due to the additional opportunity to forego a wide release upon receiving more
interim information.

Film distributors usually release a film with a launch party, press releases, interviews with the
press, press preview screenings, and film festival screenings. Actors, budgets, movie critics,
the media and offline word of mouth would have an impact on the success, and up to 2005, a
blockbuster* movie with good critics would be released in cinema for 3 months. However
since the introduction of new methods of communication technologies, social media has had a
massive impact on box offices and the timing of a movie life cycle at cinemas. Indeed, now
that the consumer’s view is heard and communicated immediately through word of mouth via
online social networks, consumers can decide not to take the risk in going to watch a movie
with bad word of mouth.

Researchers at Cass university have demonstrated that WOM had a massive impact on box
office revenues. A movie that’s been advertised very heavily and expected to be very good can
exceed revenue forecasts on the first date of launch, but have extremely poor results on the
second date of its release.

Revenue impact timing and cinemas are not ready to keep screening blockbusters with poor
revenue and therefore the movie goes through the second, third and last stage of their life cycle
or just go from the first to the last directly : introduction and immediate fiasco.

There is no price competition in movie releasing. But other film titles represent the ultimate
competition. Movie distributors try to avoid launching a new movie at the same time as another
similar, or at the same time as a highly expected blockbuster or sequel. For example, in the
summer of 2010 more films have been presented in 3-D and IMAX than ever before, increasing
a lot the competition. By the third day some potential hits were already in the decline. Many
sequels such as Shrek 2 or Iron Man 2 as well as remakes from the 80s such as "The A-Team,"
or "The Karate Kid" affecting smaller productions with less awareness or budget.

Seasonality plays also an important part in box office revenues and therefore in the life cycle,
there are peaks of strong seasonality in demand, and therefore the release date of first-run
movies is one of the main strategic decisions taken by movies’ distributors. A study by Liran
Einav from Stanford University in 2002 shows that distributors may significantly increase their
revenues by pushing some of their Memorial Day releases to August.

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Once a movie has survived the first stage, it will quickly go through growth and maturity,
capitalizing on positive word of mouth, critics and extended promotion. The decline will
happen once customers are ready to consume other movies.

(4.6 )Four P’s concept applied on Movie industry:

PRODUCT:

For a movie to be selected by its target audiences, it needs to be clearly identified by the
audiences in its Marketing. Marketing shoul-d include the knowledge of genre, core cast, theme
of film, special effects, etc. If we take Movie as a Product we can say that it is an intellectual
product that can be delivered by different ways: like, by theatres, video tapes, DVD’s, CD’s of
sound tracks, television and also by Internet, etc.

PRICE:

Pricing in movie industry looks to be very standardized as in multiplexes, a movie ticket cost
same for all the movies. But if we considered the broader concept of movie product then the
price is very fluctuating. There are certain contracts which are made between producers and
distributors and according to the distribution contract the returns are given to producers. It can
be negotiated on the bases of:

 Market segments
 Percentages
 Promotional budgets
 Theatrical schedules

PLACE:

Now innovation in technology has discovered so many ways as people find venues for
entertainment not only by Theatres and broadcast, but on in homes, by internet, on phones, etc.
options for delivering the movie product are expanding.

PROMOTION:

Promotion is a very important marketing tool for every movie form the initial stage but till end
of lifecycle of that movie. Promotion of the film is done by many of the techniques like through
merchandising; media tie up, in film placements, promoting new games and toys with in the
market. Promotion helps in attracting audiences towards theatre.

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(4.7) Financial analysis of film industry

The Indian media industry has tremendous scope for growth in all the segments due to rising
incomes and evolving lifestyles. Media is consumed by audience across demographics and
various avenues such as television, films, out of home (OOH), radio, animation and visual
effect (VFX), music, gaming, digital advertising, and print.

The Media & Entertainment industry is anticipated to grow at a Compound Annual Growth
Rate (CAGR) of 13.10^ per cent during 2018-23 to reach Rs 2,660.20 billion (US$ 39.68
billion) in FY23 from Rs 1,436.00 billion (US$ 22.28 billion) in FY18. The industry provides
employment to five million people, including both direct and indirect employment as of 2017.

Advertising revenue in India is expected to grow 15.20 per cent during 2018-2023, to reach Rs
1,232.70 billion (US$ 18.39 billion) in FY23 from Rs 608.30 billion (US$ 9.44 billion) in
FY18. India digital advertising market has reached Rs 8,202 crore (US$ 1.27 billion) in 2017
and is forecasted to grow at a CAGR of 32 per cent to reach Rs 18,986 crore (US$ 2.95 billion)
by 2020*. India’s advertisement spending is projected to grow 15 per cent year-on-year to
reach Rs 72,169 crore (US$ 10.28 billion) in 2019@. India’s digital revenues are expected to
reach US$394.22 million by 2021. India is the largest television market in the world with Rs
651.90 billion (US$ 10.11 billion) in revenue in FY18. The Indian film industry is expected to
grow at a CAGR of 7.60^ per cent during 2018-2023.

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The Government of India has supported this sector's growth by taking various initiatives such
as digitising the cable distribution sector to attract greater institutional funding, increasing
Foreign Direct Investment (FDI) limit from 74 per cent to 100 per cent in cable and Direct-to-
home (DTH) satellite platforms, and granting industry status to the film industry for easy access
to institutional finance. FDI inflows into the Information and Broadcasting sector during April
2000 to March 2019 rose up to US$ 8.38 billion.

The global film industry shows healthy projections for the coming years, as the global box
office revenue is forecast to increase from about 38 billion U.S. dollars in 2016 to nearly 50
billion U.S. dollars in 2020. The U.S. is the third largest film market in the world in terms of
tickets sold per year, ranking behind China and India. There are about 5,750 cinema sites in
the U.S. as of 2017, although this number has steadily decreased since the year 2000, and stood
at 7,480 back in 1997.

According to a recent survey, 19 percent of Americans go to the movies about once a month,
eight percent go see movies in the movie theater several times a month, whereas four percent
go about once per week. This is a considerable share taking into account the 54 percent of
American adults who prefer watching movies at home.

Film entertainment is big business in the United States. It is expected that the film
entertainment business will generate 35.3 billion U.S. dollars in revenue by 2019. Among film
studios, Buena Vista achieved the most in 2017 – it held the largest market share,
approximately 22 percent, and generated the highest box office revenue, over 2.4 billion U.S.
dollars. Warner Bros. accounted for just over 18 percent of the total box office gross in North
America, and 20th Century Fox held 12 percent of the market share. Warner Bros, Universal
and Miramax have all been awarded with the prize of “Best Picture” in the Academy Awards
four times each.

In 2017, 724 movies were released in North America, with drama being the most common
genre amongst movie releases in the region. Until now, the most successful movie franchise in
the region was the Marvel Cinematic Universe, which generated over 6.8 billion U.S. dollars
of box office revenue in North America alone. Movies like “Iron Man”, “Marvel’s The

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Avengers”, “Spider-Man”, “The Incredible Hulk” are a few examples of franchise films. “Star
Wars: The Force Awakens” is the highest grossing 3D movie in North America, with lifetime
gross of around 937 million U.S. dollars.

Scarlett Johannsson, well-known for films like "Lost in Translation”, "Vicky Cristina
Barcelona", "Match Point" and more recently for her role as Black Widow within the Marvel
Cinematic Universe, was the highest paid actress in the world in 2018, with an annual income
of 40.5 million U.S. dollars. Other high-paid actresses include Jennifer Lawrence, Angelina
Jolie, Mila Kunis and Melissa McCarthy. In regards to male stars, George Clooney leads the
list of best-paid actors, followed by Dwayne "The Rock" Johnson, Robert Downey Jr. and Chris
Hemsworth. With a total of four awards, Katharine Hepburn set the record for number of
Oscars won by an actor.

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CHAPTER 5

CONCLUSION

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1. The film industry is built on the dreams of millions of such people. The country produces
more than 1000 films every year in over 20 languages.

2. The Movie Industry is one of most exciting and informative businesses in the world, a
business where the revenue of a single feature film (such as Titanic), can approach or
exceed $1 billion.
3. In 2001, worldwide gross revenues generated by motion pictures in all territories and
media (including music and ancillaries) amounted to over $40 billion. Over 70% of the
population rents or goes to movies regularly, thus accounting for over 1.5 billion movie
attendances each year in the U.S.
4. Prior to 1985, feature motion pictures had one major source of revenue in the United
States and abroad: the movie theater. Today much of the world is undergoing a mass
communications revolution; hence, new movie markets (such as home video, cable and
pay-per-view) have been growing so rapidly that they are no longer just ancillary
markets to the basic theatrical market but have become basic markets in themselves.
5. Industry statistics reveal that the past ten years have marked an overall increase of at
least 30% in many "ancilliary markets" and, over 200%, as in the case of home video.
The ability to exploit a movie in many markets diminishes investment risk and increases
earning potential. In many instances, low budget movies have lost money theatrically
and still earned profits overall from ancillary sales.
6. With the advent of the new computer-based technologies, "cable" markets and direct
digital-delivery of motion pictures via satellite and the Internet are expected to increase
dramatically over the next five years, creating an accelerated demand for original and
re-run motion pictures.
7. The worldwide market for the sale and exploitation of feature motion pictures is divided
into "territories" and "media." The territories are divided into two major regions known
as "foreign territories" and "domestic territories." The broad foreign territories are
Europe, "AustralAsia," Latin America, Eastern Europe and Others (that include Israel,
the Middle East, South Africa and Turkey). The United States and Canada are usually
grouped together and referred to as the "domestic territory," from the point of view of
the United States.
8. The current "media" by which feature motion pictures are delivered to the territories
includes movie theaters, home video cassettes, cable TV (monthly subscription and pay-

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 per-view), direct broadcast satellite TV, free broadcast TV (Network and Syndication),
and ancillaries (such as airlines and libraries).
9. According to a study conducted by Monitor Co., the movie and television industries
contributed over $16 billion to the State of California's economy, directly employing
164,000 and indirectly employing another 184,000. The study also found that the vast
majority of feature films and television programs are produced by independent
producers. Independent production is becomming more prevalent in other areas of the
United States, especially Nevada, North Carolina and the Tri-State Area (of New York,
New Jersey and Pennsylvania).

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