Monday, June 6, 2011

Distribution Strategies


The Indian Movie Industry - Uniting catalyst with the extensive Indian Diaspora

The Indian movie industry (including Bollywood) is said to produce twice the number of films produced by Hollywood or the American film industry. It sells nearly three times the number of tickets with majority contribution from India and now the growing Indian expat community settled abroad (which is very particular about its culture and want to cling on to it).
 But there is still some way to go before the largest movie industry by volume mints money from markets outside India. While American filmmakers are staring at a global box office with more than 70 per cent ticket sales coming from markets outside the US, Indian movies still sell the most in their home country. Let’s not forget, most Bollywood movies are made on a shoe-string budget in comparison to most Hollywood movies and do not have the luxury to release infinite number of prints to address many territories within the Indian sub-continent, let alone geographical markets such as US, UK and Australia which are buoyant with Indian activity. However, rapid globalization as well as emergence of large distribution companies such as Eros, Big (Reliance – now also a 50% owner in Dreamworks) and UTV are changing the landscape and trying to address the international markets via their established networks with sub- distributors who are located within the relevant market.  The scattered fragmentation of players within Bollywood is now slowly converging with co-operation between various production houses, distributors and exhibitors leading to a wider portfolio of films being released, both domestically and globally. (Companies such as Fox Searchlight have now collaborated with production houses on international distribution rights – using their presence to penetrate untapped markets such as Morocco, Syria, Jordan, Portugal etc)
While film festivals are fertile grounds for distribution tie-ups, the real value derivation for studios with the small budget movies (75% of the movies) is to distribute digitally. With 15-20% revenue being generated for mid budget movies from international markets and up to 40% for “A starrers”, it is important for the Indian Movie Industry to leverage on its enormous consumer base via the digital platform. Some early adopters have already entered this space to target expats as well as non-Indians. The increase in fan base will surely lead to incremental revenues and digital platforms such as Netflix have potentially increased the customer lifetime value for studios which produced “classics” and by adopting the long tail strategy to increase economic value in the chain.
With a 1000 movies being produced, distributed and exhibited every year catering to a population of over 1 billion domestically and approximately 35 million expats; it is no surprise that Indian superstar Shah Rukh Khan is more popular than Tom Cruise!  With the rapid and dynamic changes in better distribution, marketing and astute positioning, along with the cross-over genre of Indian cinema (many big budget Indian movies are in Hinglish); it is simply a matter of time before many more Slumdog Millionaire’s emerge to conquer the Kodak Theater we well as worldwide box office receipts. 

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