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Bollywood readies to derisk cinema biz
MUMBAI: The 2007-08 capital market boom had a spectacular impact on the film and entertainment industry. An otherwise unorganized sector, the entertainment space saw many corporate opportunists foraying into the film making business to mint revenues. Result? Star prices rocketed sky high while multiplex culture sheepishly sneaked in to discover a new set of "deep pocket" spendthrifts.

Come year 2009 and there is a different story to be told…the story of the ‘bursting bubble’. The industry is now looking at adopting new strategies to cut costs in a bid to de-risk the cinema trade.

Speaking at the session on "De-risking the cinema business", director-producer Ramesh Sippy noted that the inflationary push in the cinematic space had heavily soared up remuneration prices of not only tinsel town actors but also technicians. Furthermore, since international studios saw Bollywood as the next moolah-breeding ground, they too started pumping in money into this newly discovered zone.

"Consequently, there came a time when the industry slowly began to bleed. Still ignoring indications, the industry went on pushing up prices until the recession bullet hit us hard that finally led the industry to rethink on cost realization propositions," Sippy ascertained.

Currently under the downturn fire, the entire industry collectively believes that the film sector can only scale high to monetise products better if the entire value chain that encapsulate the filming process stand benefited through the film generation to the presentation stage.

"The best way to monetize on the final product reaching consumers is by the sharing of risks. Be it profit or loss, the allocation has to happen across the complete value chain ranging from producers and marketers to distributors and exhibitors. If only one body singularly benefits in the chain while the others loose cash, the money making prospects for the end product will anyway scale down," opined Vistaar Religare managing director Sheetal V Talwar.

Fighting piracy would be another route to create new revenue streams, thereby de-risking the business. Bulk of the cinema audience of today fall in the age group of 14-35 who are highly technology oriented and hence, somehow tend to add on to the piracy plague. Therefore, to fight piracy better and churn out better numbers, new technologies have to be adopted as part of the de-risk module.

Another region that needs generous consideration to combat piracy is the maintenance of a specific time gap between theatrical releases and other windows of exploitation.

For Fox Star Studio India CEO Vijay Singh, home video, television and DTH are also important avenues to scale up revenues beyond the theatrical space.

"Almost 50 per cent of revenues in Hollywood are generated through home videos, while 33 per cent come from broadcast. Bollywood too has to purposefully exploit other such windows to scale up the cinema economics," suggested Singh.

With the money inflow heading downwards, 2009 will be a year of tight budget films wherein input costs will have to be really low, the industry opines. And to market such films better across a wider audience, proper identification of consumers will be extremely essential to build profits.

"Year 2009 will have to be a year of targeted releases to generate maximum revenues where marketing and promotion will play pivotal roles. Also, apart from the multiplex goers, the tier II and tier III cities have to be tapped to cultivate the process of audience segmentation amongst the industry professionals," Singh added.

Meanwhile, contesting against the recession logic, Moser Baer head entertainment Harish Dayani, noted that this could be fought against if the film fraternity was ready to showcase the right content at the right pricing. "Recession has only forced Bollywood to adopt a better business model. If Bollywood starts generating great content at best pricings coupled with targeted marketing strategies, the downturn bullet cannot penetrate the industry much," Dayani observed.

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