Entertainment industry

Entertainment Industry
The words that come to our mind when we think of entertainment are
Pleasure, Fun and Relaxation. Entertainment exists from the time man exists.
He always found some way or the other to entertain himself. Though the
methods and sources of entertainment differed the essence remained the same
that was to get pleasure. We would say a lot has changed over the years in
other words everything is getting more and more modernized. But, yet the
truth is that the basic mode of entertainment yet remains the same. Earlier the
scope of entertainment was narrower unlike today. Now services are available to
entertain us in other words it is commercialized.
All, young & old, rich & poor, man & woman, require entertainment. Every
individual needs some sort of entertainment in his life. Entertainment provides
some sort of a change from the normal course of life.
Modern age, man has been found facing a number of problems. They are
supposed to follow the busy schedule to earn more and at the same time also
required to be a high performer. Management of a family is also important. This
necessitates entertainment. The changes in the taste and temperament in the
masses, increasing disposable income, the changing lifestyle due to corporate
changes has paved the way for the development of healthy entertainment
facilities. Opening of new air-conditioned cinema halls, open-air theatres, drama
centers, music centers, pub, club, art and handicraft and painting centers have
been found gaining popularity. Many entrepreneurs have been seen promoting
entertainment services. By doing this, they not only entertain the masses but
also inculcate awareness, promote education, and develop knowledge. The focus
today is on development of entertainment services in a right fashion. In the
Indian perspective, where majority of the population is illiterate, it is the
responsibility of the entertainment services to inculcate awareness even in the
rural areas of the country.
The entertainment industry in India has outperformed the economy and
is one of the fastest growing sectors in India. However, it registered a
moderate growth of over 15 per cent in 2003. The FICCI-Ernst and Young
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Study titled "The Indian Entertainment Industry: Emerging Trends and
Opportunities", scheduled to be unveiled during FICCI-FRAMES 2004 - the
Global Convention on the Business of Entertainment on 15th of this month at
Mumbai, has projected that the industry will grow from Rs.19,200 crores in
2003 to Rs. 42,300 crores in 2008, at a compounded annual growth rate of 17
per cent.
Estimated Turnover of Entertainment Industry
19.200
22.608
26.945
31.634
36.690
42.300
0
10
20
30
40
50
2003 2004 2005 2006 2007 2008
Years
(in crores)
Estimated Turnover
(Source: Ernst and Young Study)
Zee Telefilms has secured top position in Indian entertainment industry
with a market cap of Rs 4,739 crore and no one comes anywhere near. Media
Matrix Worldwide, at No 2, is way behind with Rs 406 crore.
Top 5 Companies By Market Cap
Sector
Rank
Company
Market Cap
(Rs Crore)
1 Zee Telefilms 4,739
2 MediaMatrix Worldwide 406
3 Sahara India Mass Communications 387
4 Balaji Telefilms 357
5 Pentamedia Graphics 161
(Source: Economictimes.com)
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Top 5 Media Companies By Net Profit
Sector
Rank
Company Net Profit (Rs Crore)
1 Zee Telefilms 87
2 Balaji Telefilms 57
3 Padmalaya Telefilms 17
4 Adlabs Films 17
5 ETC Networks 14
(Source: Economictimes.com)
Entertainment sector is divided into many segments. Some of the segments are
as follows:
Amusement parks
The roots of the amusement park industry go back to medieval Europe
when pleasure gardens began to spring up on the outskirts of major European
cities. These gardens were a forerunner of today's amusement parks, featuring
live entertainment, fireworks, dancing, games, and even primitive amusement
rides. Today the amusement park remains an international favorite. Many
developing nations are experiencing the joys of the amusement park for the
first time, while the older, more established amusement parks continue to
search for new and different ways to keep their customers happy. Rides are
taking advantage of technology to reach heights and speeds that thrill seekers
only dreamt about not too long ago.
www.napha.org/history.html
Essel World: Essel World offers over thirty-four thrilling and scintillating
rides, games and amusements, guaranteed to pep you up.
Water Kingdom: The Water Kingdom is Asia's largest Theme Water Park. Set
amidst an exotic jungle, complete with quaint sculptures, ruins and tropical
vegetation, the Water Kingdom has several innovative attractions - the
worlds biggest wave pool, activity pools, river adventure cruises and lots
more.
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Radio
Radio is a theater to the mind. Radio is also a mass medium. It is only an
audio medium. It is best suitable for local advertising followed by spot and then
by network. Unlike print media, a radio set can accommodate a group of
individuals all at the same time. Listening does, however, usually compel all or
almost all the individual's attention. No doubt housewives turn to radio and
listen. Some household jobs or activities can be combined satisfactorily with
radio listening.
Radio had great response in the beginning but with the higher
penetration of television, the radios was out shadowed in other words people
preferred tantalizing both their senses.
Just a few 3 - 4 years back listening to the radio was not looked upon.
Thanks to the revolution brought about in 2001 with the entry of lots of private
radio stations and cheap handsets in the metros number of people harping on
radio as a source of entertainment has zoomed up again.
Radio covers 90% of India and entertains about 98.81% of population
through programmes broadcasted by AIR. Many private players are now
plunging into this industry giving the listeners a world of choices namely Radio
City, Radio Mirchi, Go, Win and RED. These five players in Mumbai spent an
estimated Rs 500 million last year; the aggregate revenues did not amount to
more than Rs 260 million. The high licenses, that came into effect after a
blistering bidding process three years ago, are killing the fledgling private FM
players.
www.indiantelevision.com/headlines/y2k3/may/may211.htm
The temporary closure of Win 94.6 due to alleged non-payment of license
fees for the current year is bad news for the entire radio industry. The growth
rate of private FM is directly proportional to the number of stations in a city.
Disruptions and closures will only add to the woes of the industry and not help
matters.
www.studio-systems.com/hotnews/audionews/mayjune2003/audio61.htm
Televisions
Unlike radio TV was a great source of entertainment right from the
beginning. This aspect is now changing. Apart from being entertaining it is also a
great source of information now as well as a source of education. Earlier it was
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only for those lucky few, as everyone could not afford it. Now it’s become like a
necessity (common commodity), which has grabbed the attention of all age
groups.
Television is broadcast and electronic medium. Television combines three
attributes like sound, picture and motion. Television broadcasts audio-visual
programmes. Television is a theatre of the home. Receiving a television set is a
glamorous family medium. No other medium can compare with television for its
great penetration of the market. Print media like newspapers and magazines are
hard on the eyes to read and understand. The problem of illiteracy is also there.
The readers have to put in a lot of effort on reading and understanding the
message. In case of television broadcasting it is just enough if the viewer keeps
his or her eyes open. Commercials are broadcast only during breaks, and cuts
are usually only for a few seconds and require no efforts to view. It is an
entertainment and information mass medium possessing all the qualities
essential for a mass medium.
Television was introduced in India, as an experimental service in
September 1959, with a limited transmission three days a week. There have
been two ignition points: the first in the eighties when colour TV was introduced
by state-owned broadcaster Doordarshan (DD) during the 1982 Asian Games. It
then proceeded to install transmitters nationwide rapidly for terrestrial
broadcasting. In this period no private enterprise was allowed to set up TV
stations or to transmit TV signals.
The second spark came in the early nineties with the broadcast of
satellite TV by foreign programmers like CNN followed by Star TV and a little
later by domestic channels such as Zee TV and Sun TV into Indian homes. Prior
to this, Indian viewers had to make do with DD's chosen fare which was dull,
non-commercial in nature, directed towards only education and socio-economic
development.
www.indiantelevision.com/indianbrodcast/history/historyoftele.htm
The initial success of the channels had a snowball effect: more foreign
programmers and Indian entrepreneurs flagged off their own versions. From
two channels prior to 1991, Indian viewers were exposed to more than 90
channels by 2002.
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Today cable TV has become so addictive that previously where women’s
were more toward their household work now its different, they now make sure
they complete their chores before their favorite serial starts and they can
relax. Two main revenue streams of TV are Advertisement (A) and Subscription
(S) revenues.
Cable penetration has increased in leaps and bounds. Cable connectivity is
provided by small and unorganized as well as large, corporate players. Cable
operations are regulated by Cable Televisions Networks (Regulation) Act, 1995.
 Sports
What entertains one the most playing a particular sport or watching a
particular sport? Well the answer is obvious, watching. Earlier in India we had
sports like gulli danda and kabadi but now there is cricket, hockey, football, etc.
Adventure sports:
Sports generates a win and loose relationship where as adventure sports generates a win
and win relationship. India Offers a wide range of adventure sports for tourists.
Trekking and Skiing in the Himalayas, White Water Rafting on the
Ganges and Beas, Camel and Jeep safaris in the deserts of Rajasthan,
Paragliding in Himachal, are just some of the options available to the adventure
seeking tourists.
The perennial challenge of the Himalayas for mountaineers. Coniferous
forests and flower meadows welcome the trekker. And the rapids of snow-fed
rivers are ideal for white water rafting.
Lakshadweep offers excellent wind surfing, snorkelling and scuba diving
in the crystal clear waters of the lagoons which surround each island.
This particular source of entertainment is gaining momentum because of
the changing outlook of the people and even because of the safety facilities
provided with each adventure sport.
Music
Until the 1990s, the Indian music industry was synonymous with Indian
film music. Music cassettes and radio (run by All India Radio) were the only
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delivery media to the music listener. However, over the years, the industry has
undergone a transformation. Non-film genres, such as international music, Indi-
pop and regional music have become significant despite the continuing
dominance of film music. International music has gained popularity owing to the
promotional effects of satellite music television and the entry of global music
majors like Sony Music and Universal. Besides, old genres of Indian music such
as classical and devotional music have received renewed focus and commercial
attention.
This metamorphosis of the industry has been in tandem with changes
such as the retail revolution in music distribution (with the emergence of music
retailing outlets), increasing penetration of Compact Discs (CDs), and emerging
distribution channels such as the Internet. These factors, coupled with the
increased affordability of quality music hardware.
www.screenindia.com/20010413/mcover.html
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BRIEF HISTORY OF INDIAN FILM INDUSTRY
 The Beginnings
In 1886 the Lumiere Brothers Cinematographe unveiled six soundless short
films at Bombay's Watson's Hotel. Soon
after, Hiralal Sen and H.S. Bhatavdekar
started making films in Calcutta and Bombay,
respectively. Like Lumiere Brothers
Bhatavdekar made India's first actuality films
in 1899. Tough there were efforts at filming
stage plays earlier India's first feature film
Raja Harishchandra was made in 1913 by
Dadasaheb Phalke who is known as the Father of Indian Cinema. This was a
silent movie.By 1920 there was a regular industry bringing out films starting
with 27 per year and reaching 207 films in 1931.
Advent of Sound
By the time of the First World War, and the phenomenal expansion of
Hollywood, 85% of feature films shown in India were American. But the
introduction of sound made an immediate difference. In 1931, India's first
talkie, Alam Ara, was released, dubbed into
Hindi and Urdu. As the talkies emerged
over the next decade, so too did a new
series of issues. The most prominent of
these, of course, was language, and
language markets; alongside, there are
considerations of regional identity, of the
different places that separately and together make up India. Many films of the
time were produced both in the regional language (Bengali, Marathi), and in
Hindi, so that they could be oriented to the larger Hindi-speaking market. The
Indian public quite naturally preferred to see films made in their own language
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and the more songs they had the better. In those days, the films made had upto
40 songs.
 The 1950s
By the start of the 1950s, Calcutta became
the vanguard of the art cinema, with the
emergence of the film society movement at
the end of the 1940s and Satyajit Ray's
Pather Panchali/Song of the Road, produced
with West Bengal state government support in
1955. International recognition came with
Satyajit Ray's Pather Panchali in 1955. Satyajit Ray is considered as one of the
greatest directors of all times. Post-independence, despite a relatively
sympathetic government enquiry in 1951, the industry became the object of
considerable moral scrutiny and criticism, and was subject to severe taxation. A
covert consensus emerged between proponents of art cinema and the state, all
focussing on the imperative to create a "better" cinema. The Film and Television
Institute of India was established at Pune in 1959 to develop technical skills for
an industry seen to be lacking in this field. However, active support for parallel
cinema, as it came to be called, only really took off at the end of the 1960s,
under the aegis of the government's Film Finance Corporation, set up in 1961 to
support new film-makers.
Ironically, this pressure and vocal criticism occurred at a time when arguably
some of the most interesting work in popular cinema was being produced.
Radical cultural organizations, loosely associated with the Indian Communist
Party, had organized themselves as the All India Progressive Writers
Association and the Indian People's Theatre Association (IPTA). The latter had
produced Dharti ke Lal/Sons of the Soil (KA Abbas; 1943), and its impact on
the industry can be seen in the work of radical writers such as Abbas, lyricists
such as Sahir Ludhianvi, and directors such as Bimal Roy and Zia Sarhady.
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In addition, directors such as Raj Kapoor, Guru Dutt and Mehboob Khan, while
not directly involved with IPTA, created films that reflected a passionate
concern for questions of social justice. Largely studio-based, the films of this
era nevertheless incorporated vivid stylistic experimentation, influenced by
international currents in film-making. Such effects are evident in Awara/The
Vagabond (Raj Kapoor, 1951, script by KA Abbas), Awaaz/The Call (Zia Sarhady;
1956) and Pyaasa/Craving (Guru Dutt; 1957).
The First International Film Festival, held in Bombay in 1951, showed Italian
works for the first time in India. The influence of Neorealism can be seen in
films such as Do Bigha Zamin/Two Measures of Land (Bimal Roy, 1953), a
portrait of father and son eking out a living in Calcutta that strongly echoes the
narrative of Vittorio de Sica's Bicycle Thief (1948). Mehboob Khan's
Andaz/Style (1949), an upperclass love triangle founded on a tragic
misunderstanding, draws on codes of psychological representation -
hallucinations and dreams that feature strongly in 1940s Hollywood melodrama.
Mehboob's tendency to make a visual spectacle of his material, and his
involvement with populist themes and issues make him a good example of popular
cinema of the time.
 The Indian Popular Cinema and the Superstars
During the 1960s, popular cinema had shifted its social concerns towards more
romantic genres, showcasing such new stars as Shammi Kapoor - a kind of Indian
Elvis - and later, Rajesh Khanna, a soft, romantic hero. The period is also
notable for a more assertive Indian nationalism. Following the Indo-Pakistan
wars of 1962 and 1965, the Indian officer came to be a rallying point for the
national imagination in films such as Sangam/Meeting of Hearts (Raj Kapoor,
1964) and Aradhana/Adoration (Shakti Samanta; 1969).
However, the political and economic upheaval of the following decade saw a
return to social questions across the board, in both the art and popular cinemas.
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The accepted turning point in the popular film was the
angry, violent Zanjeer/The Chain (Prakash Mehra; 1973),
which fed into the anxieties and frustrations generated
by the quickening but lopsided pace of industrialization
and urbanization. Establishing Amitabh Bachchan as the
biggest star of the next decade, its policeman hero is
ousted from service through a conspiracy, and takes the
law into his own hands to render justice and to avenge his
deceased parents.
The considerable political turmoil of the next few years, including the railway
strike of 1974 and the Nav Nirman movement led by JP Narayan in Bihar and
Gujarat, ultimately led to the declaration of Indira Gandhi's Emergency in 1975.
It was as if the state and the people had split apart. As the cities grew, so did
the audiences. The popular cinema generated an ambiguous figure to express
this alienation. At the level of images, there was a greater investment in the
stresses of everyday life and, unlike the 1950s, in location shooting. In Zanjeer,
the casual killing of a witness on Bombay's commuter trains conjures up the
perils of life in the metropolis. This is echoed in images of the dockyard, taxi-
rank, railtrack and construction site in Deewar/The Wall (Yash Chopra; 1975),
also starring Amitabh Bachchan.
The recurrent narrative of these films, of protagonists uprooted from small
town and rural families to the perils of the city, is shared by the street
children researched by professional sociologists in Mira Nair's Salaam Bombay
(1988). The Bombay films' very excesses, their grand gestures, and the priority
given to emotion and excitement may more truly reflect the dominant rhythms
of urban life in India. At the level of plot and character, however, the Bombay
films simultaneously simplify and collapse our sense of India, reducing the
enormous variety of identity - social, regional, ethnic and religious - that makes
up Indian society. Where these identities appear, they do so as caricatures and
objects of fun.
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The Art Cinema of the 80s
To counter this, the art cinema of the 1980s diversified from its Bengali
moorings of the earlier period under the aegis of the Film Finance Corporation.
Works by Shyam Benegal, Gautam Ghose, Saeed Mirza, BV Karanth, Girish
Kasaravaili, Mrinal Sen, MS Sathyu, Ray, and Kundan Shah,
among others, actively addressed questions of social
injustice: problems of landlord exploitation, bonded labour,
untouchability, urban power, corruption and criminal
extortion, the oppression of women, and political
manipulation. Ghatak in particular had addressed many of
these issues earlier, but never had there been such an
outpouring of the social conscience, nor such a flowing of
new images - of regional landscapes, cultures, and social structures. Many of the
films may seem didactic and uncomplex, undercutting the attention to form that
had marked the earlier period - but not all. Benegal's first two films indicate an
unusual concern with the psychology of domination and subordination.
Ankur/The Seedling (1974), starring Shabana Azmi, is particularly striking not
only for this but also for the open, fluid way it captures the countryside. Among
Kannada directors, working in south India, Kasaravalli in Ghattashradha (1981)
effected an intimate vision of the oppression of widows through the view of a
child. And special mention must be made of Kundan Shah's Jaane Bhi Do
Yaaron/Let Sleeping Dogs Lie (1984), a wonderful exercise in farce and
slapstick that is also a brilliant portrait of Bombay.
The South
The most notable of the directors who speak specifically about their own
cultures, and about the possibilities of change, are Adoor Gopalakrishnan and
Aravindan from Kerala. A key to their productivity was the overall development
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of film culture in Kerala, India's most literate state. In his films Gopalakrishnan
transformed the lush countryside, busy towns and animated culture of Kerala
into a strange, dissociated place, fraught with communicative gaps, menacing,
inexplicable characters, and an overall sense of the impenetrable. Subjects
range from the mounting tragedies that beset a young couple in the city
(Swayamvaram/One's Own Choice; 1972), and the effete authoritarianism of a
declining feudal landlord (Elippathayam/The Rat-Trap; 1984), to the mysterious
spiritual decline of a popular communist activist (Mukha Mukham/Face to Face;
1987).
The late Aravindan, sometime cartoonist and employee of the Kerala Rubber
Board, had something of the mystic in him, but went through a range of styles,
including a cinemaverite approach, as in Thampu/The Circus Tent (1978), in
which circus performers speak direct to the camera. His episode from the
Ramayana, Kanchana Sita/Golden Sita, places the action against the grain of the
high Hindu tradition by situating it among tribes in the verdant landscape of the
Kerala forests. At his best, his narrative style refuses a didactic approach,
generating a whimsical sense of how destinies are shaped.
Full circle
The 90's saw the Indian Cinema come
to a full circle with Hum Aapke Hain
Kaun turning out to be the biggest
grosser ever.
Indian cinema has come a long way from
the shaky flickering images and grating
noises and sounds to a very sophisticated state-of-the-art technology for
creation and projection of image and sound track. The film industry has grown
multi-dimensionally with unique blend of commerce, art, craft, star glamour,
social communication, literary adjuncts, artistic expression, performing arts,
folk forms and above all a wide-ranging and abiding appeal to the heart, the
mind and the conscience.
www.meadev.nic.in/earthquake/culture/films/intro.htm
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CURRENT SCENARIO
Film entertainment is the most popular form of entertainment and it is this
undiminished passion through the decades that has driven India to become the
largest producer of films in the world. Since 1931, when talkies were introduced
in the country, the film industry has produced more than 67,000 films in more
than 30 different languages and dialects.
The film industry grossed a turnover of Rs 3,900 crore (Rs 39 billion) in
2002. The current worth of the industry is pegged at Rs 4,500 crore. A market
survey conducted in march by accounting firm Ernst and Young has predicted
that the film industry is expected to grow at the rate of 18 per cent annually to
gross Rs 10,000 crore in the next four years. The Indian film industry is the
largest in the world in terms of number of films produced and also in the
number of tickets sold.The industry produced 1200 films in 2002, and 1,013
films in 2001, up from 855 films in 2000. Bollywood’s annual ticket sales world
wide are 3.8 billion as compared to Hollywood 2.8 billion. But Hollywood's
revenue is much higher because ticket rates in india are among the lowest in the
world. While Hindi films continued to be the largest segment in 2001 (23 per
cent share), south Indian language films (Telegu, Tamil and Malyalam) have seen
growth in their shares.
Times of India
India’s movie industry is a great sector for foreign investment by
corporatised entertainment companies. Though risks are high on a per-movie
basis, the risk spreads out across a number of films. However, the domestic
film-making industry, despite its profligacy, is yet to acquire the character of
professionalism on a large scale.
According to the FICCI report on the Indian Entertainment Industry for
2002, the Indian film industry employs more than 6 million people, most of
whom are contract workers as opposed to regular employees. This statistics
cannot however be used to calculate the movie industry’s share in the GDP or
employment generation. This is because a vast proportion of the turnover takes
place outside the legal economy.
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SIZE OF THE INDUSTRY
A FICCI report 2002 on the Indian Entertainment Industry prepared by
Arthur Andersen India Ltd. states that it is difficult to accurately determine
the size of the Indian film industry because unlike in the developed economies
such as the U.S. and U.K., costs and revenues for films in India are not
monitored by any nodal agency. Therefore, the size of the industry has been
estimated using two different approaches – estimation of total costs and
estimation of total revenues.
Cost and Revenue figures for the film industry for 2002
Average
Number
of
Movies
Total
Gross
Value
INR
Billion
Less: Theatre
Share –
distribution
Commission
INR billion
Net
Revenues
INR
Total
Costs
INR
Hindi
mainstream
75 16.5 6.4 10.1 12.8
Cross-over
Hindi
15 0.9 0.4 0.5 0.4
Foreign
movies
15 0.8 0.4 0.4 NA
Malayalam 93 3.7 1.8 1.9 2.3
Tamil
mainstream
84 5.9 2.8 3.1 3.3
Telegu
mainstream
74 5.9 2.8 3.1 3.3
Bengali 50 0.5 0.2 0.3 0.3
Other Films 150 0.9 0.4 0.5 0.5
Others 640 3.2 1.5 1.7 1.6
*US $ 1 = INR (Indian Rupees 48)
(Source: KPMG and FICCI Report – Indian Entertainment Sector in the
Spotlight.)
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COST-BASED APPROACH
This comprises artists’ remuneration, production expenses, technicians
expenses, marketing expenses, studio charges, and other fixed costs.
REVENUES BASED APPROACH
The revenue models of Indian film makers have undergone a fundamental
shift in the future with a higher probability of exploiting alternate revenue
streams as opposed to relying on domestic theatre viewership revenue stream.
Some of the new revenue possibilitie are overseas theatre viewership, home
video segment, satellite rights, music rights and in-cinema advertising amongst
others.
The Indian films can be sold for fewer territories than a typical US film.
While the domestic theatrical rights can be sold for five to ten different sub-
territories, for a fixed time period, the overseas, music, and C&S TV rights are
usually sold to a single distributor respectively. Unlike the U.S. where home
video distribution contributes 32 per cent of the total revenue, an Indian
film generates negligible revenue from this source because of the unorganised
rental/ state market and piracy.
Overseas Rights
Overseas rights include overseas theatrical rights as well as overseas
video and television rights, which are presently sold by film producers as a
package to overseas distributors. The last few years have seen Indian movies
gain immense popularity overseas. The major export destinations continue to be
the U.S.A., Canada, and the U.K., countries such as Japan, South Africa,
Mauritius, Australia, New Zealand and the Middle East are fast becoming
important export markets for Indian films.
Music Rights
The music industry whose fortunes are closely interlinked with the film
industry is likely to grow at approximately Rs 16.4 billion by 2007. As per
industry sources, sale of music rights contributed Rs 1.5 billion to film industry
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revenues. Music rights include the domestic and international music rights of a
film, which are sold by the film producer exclusively to music companies. As new
film music contributes more than 4 per cent of the music industry revenues,
music companies compete to procure the music rights of new films from reputed
production houses.
Cost of Music rights of some films
Music Company Producer
Cost
(Rs mn)
Films
Sa Re Ga Ma Yash Chopra 15
For 3 films - Saathiyan,
Mere Yaar Ki Shaadi hai,
Mujhse Dosti Karoge
Tips Mukta Arts 85 Yaadein
Sony
Karan Johar
Aamir Khan
Dreamz
Unlimited
120
60
60
Kabhie Khushi Kabhie Gham
Lagaan
Asoka
Universal
Sanjay Leela
Bhansali
120 Devdas
(Source: FICCI Report 2002 - Indian Entertainment Industry)
Telecasting and video rights
In the near future, the home entertainment segment, broadcast TV, DVD
and VCD is expected to increase its share, even as multiplexes emerge as a
strong distribution platform. The share of satellite rights in the consolidated
revenue pie has grown from 4 per cent to 14 per cent between 1999-2002. Even
channels have started a new trend by acquiring and broadcasting new titles at
exorbitant prices, within 3 to 4 months of their release. As telecasting
blockbuster films is an effective way of driving up viewership, there is a
demand for these channels to acquire television rights of hit films.
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Corporate Sponsorships and Merchandising:
Corporates have also started marketing their products through films.
And in exchange film makers get additional revenue in the form of Corporate
Sponsorships. For example, Mukta Arts had earned Rs 35 million from Coke,
Pass Pass and Hero Cycles for product endorsements in Yaadein. Today revenues
are also generated from the sale of Internet rights and merchandising.
FICCI Report
2002- Indian Entertainment Industry
Revenue Break up segment wise
(Rs. bn)
Domestic theatrical sales 36.00
Overseas theatrical rights 5.25
Music rights 1.50
Telecasting and video rights 2.00
Corporate Sponsorship/ Merchandising 0.10
TOTAL 44.85
Source: FICCI Report 2002 - Indian Entertainment Industry
Source: FICCI Report 2002 - Indian Entertainment Industry
EXTERNAL ENVIRONMENT OF FILM INDUSTRY
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Domestic
theatrical sales
Overseas
theatrical rights
Music rights
Telecasting and
video rights
Corporate
Sponsorship/
Merchandising

(I) POLITICAL ENVIRONMENT
SUPPORT AND PROMOTION BY DIFFERENT GOVERNMENT BODIES
Films Division
The Ministry of Information and Broadcasting over the last 47 years
through an exclusive Films Division, set up in 1948, has been securing the active
participation of the public in nation building activities, through the medium of
film. The largest agency dedicated to the production, and distribution of
documentaries and news agencies, the Films Division produces news magazines
from its headquarters at Mumbai, films on agriculture, defence and family
welfare from Delhi and featurettes from its regional centres at Calcutta and
Bangalore. The Division caters to more than 12,911 cinema theatres allover
India and to non - theatrical circuits like units of the Directorate of Field
Publicity, mobile units of the State Governments, Doordarshan, field units of
the Department of Family Welfare, educational institutions and voluntary
organisations. The Division's films are also screened abroad through the Indian
embassies, television networks, Government departments, educational, cultural,
and social organisations as well. The Division aims to foster the growth of the
documentary film movement - which is essential to the realms of information,
communication and integration.
The Division has been given the responsibility of organising the Mumbai
International Film Festival for Documentary, Short and Animation films, which
is a biennial event.
National Film Development Corporation Limited
The National Film Development Corporation Limited set up on 11 April,
1980 aims at bringing an overall improvement in the quality of Indian cinema and
also increasing its access. As films constitute a vital segment of audio - visual
culture, NFDC covers a large gamut of activities - production of films, export of
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Indian films, import of foreign films, import and distribution of raw stock,
construction of cinema theatres and development of technology. The
Corporation promotes the concept of low - budget yet high quality films, which
is a possible solution to the financial problems faced by the film - makers of the
country. The Corporation imports about 20 to 30 films annually for theatrical
release. India exports films to over 100 countries. It participates in various
international film markets to promote Indian cinema and also plays host to a
number of buyers from various countries. NFDC's main objective is to expose
the Indian audience to a plethora of fine films from various countries, however
due to limited resources the emphasis is on good quality family entertainers.
To fight video piracy, NFDC, in collaboration with the Indian film
industry has set up an anti - piracy body, Indian Federation Against Copyright
Theft (INFACT), which is registered as a company under the Companies Act.
The Theatre Financing Scheme was launched by NFDC to ensure the creation of
additional seating capacity in India and to provide outlets for fine cinema.
Directorate of Film Festivals
The Directorate of Film Festivals was set up in 1973, under the Ministry
of Information and Broadcasting, to help promote Indian films of aesthetic and
technical excellence, both within India and abroad. Since then, the Directorate
has supplied a platform for the best in Indian cinema by holding the National
Film Festival every year. The Directorate has been successfully promoting
Indian cinema abroad and also given a chance for Indians to appreciate some of
the finest works of international cinema. Within the country, it has made the
newest trends in international cinema accessible to the general public.
The Directorate was brought under the NFDC in July 1981, and in July
1988, it was again transferred to the Ministry of Information and Broadcasting.
National Film Awards
20

The National Awards for films, known as state awards till 1966, were set
up in 1953, for promoting the country's film art by acknowledging the
outstanding achievements in various fields of film - making.
The Dadasaheb Phalke Award is decided by the Government of India, and
the entries for the National Awards are judged by two national juries, one for
the feature films and the other for short films.
National Film Archive of India
The National Film Archive of India ( NFAI ) was established in February
1964, as a media unit of the Ministry of Information and Broadcasting. Its
objective is to acquire, preserve and restore the rich heritage of national
cinema, and the cream of international cinema. The archive has made significant
progress in the preservation of films, audio and video material, documentation,
research and dissemination of film culture in India.
The archive functions as the main repository for Indian and foreign
research workers for viewing film classics, relating to their research projects.
National Centre of Films for Children and Young People
The National Centre of Films for Children and Young People ( N'CYP ),
earlier known as Children's Film Society, was established in 1955, as an
autonomous unit with an aim to provide children value - based entertainment
through the medium of films, and is engaged in production, acquisition,
distribution and exhibition of children's films. N'CYP conducts ' International
Film Festivals for Children and Young People' every two years. The Centre
produces feature films, television serials, short featurettes and short
animation films for children and young people. It also purchases the rights of
foreign films and presents them in the country after dubbing in Indian
languages. The films produced by N'CYP are entered in several National and
International Film Festivals and have won many awards.
21

Film and Television Institute of India
The Film and Television Institute of India ( FTII ) located at Pune,
imparts technical training in the art of film - making and also gives in - service
training to the personnel of Doordarshan. The FTII conducts 3 - year
specialisation courses in motion picture photography, cinematography, film
direction, sound recording and sound engineering with one - year integrated
training.
The TV wing of the Institute primarily caters to the training
requirements of various production and technical staff of Doordarshan.
Television training is given in TV programme production, studio technical
operations, TV films and TV graphics and design. The Institute regularly sends
its students' films in national and international film festivals, in order to give
exposure to students' work, not only on the national, but the international level.
Federation of Film Societies of India
The Federation of Film Societies, an apex body of the film societies in
India, is provided grants - in - aid by the Ministry of Information and
Broadcasting to spread film awareness and development of audience taste in
the realm of cinema. These Film Societies aim at nurturing and developing film
culture in the country.
www.meadev.nic.in/media/films.htm
FDI POLICY
100% foreign direct investment (“FDI”) is permitted in the film sector.
(II) ECONOMIC ENVIRONMENT

22

Purchasing Power Parity (PPP) in India has increased from $300 in 1992
to $ 1600 in 1997 and from $ 1600 to $ 2660 in 2002-03. So today
people have more money to spend on entertainment which leads to
increase in turnover of the industy.
http://www.theodora.com/wfb/
Interest rate: As there is a fall in interest rate in last several years,
film producers get funds at low rate. This encourages people to venture
into the business of film production.
(III) SOCIO-CULTURE ENVIRONMENT
Bollywood is perceived to be ‘The Place where Dreams come true’. Every
Indian would wish to be like, look like, see like or talk like a particular actor/
actress from this magic world. Imagine the level of etching this industry has on
the hearts and minds of people.
The Indian film industry has moulded itself very perfectly with the
ongoing traditions, values, beliefs and lifestyle. A flashback into the history of
the country and its people would reveal the impact it had on the industry.
Just after India broke from the shackles of dependency, patriotism was
deep down there in the hearts of the people. To serve the country better,
there were thinkers and actors like Manoj Kumar who had come with films like
Kranti, Roti Kapda Makan, Purab Paschim, etc.
Next came in the phase of action and drama where our very own Mr.
Amitabh Bachan was aptly called the Angry Young Man. He worked in the movies
like Zanjeer, Sholay, Deewar , etc.
The present era inspired by westernisation with more broader mindsets
and a complete shift in paradigm has resulted in movies like Dil Chahta Hai,
Murder, Julie, etc.
23

From hairstyles to costumes, from beliefs to lifestyle, from house
concepts to the toy in the hands of a kid, every thing which is seen in the daily
cores is reflected on the Silver Screen.
(IV) LEGAL ENVIRONMENT
THE FILM INDUSTRY AND COPYRIGHT LAWS
The Threat
The film industry in India today is facing its biggest threat, that of
piracy. This includes, cable piracy, VCR piracy and its new avatars, VCD piracy.
The development of these new forms (VCDs and now DVDs) are a double edged
sword. Whereas, on the one hand they provide for additional sources for
commercial exploitation of the film, on the other hand, the ease with which
they can be copied, reproduced and disseminated to the public, is giving the film
industry nightmares. Films appear on cable without any authority whatsoever,
almost as soon as they are released in the theatres, sometimes even prior to
their theatrical release. Overseas rights of Indian films are sold almost
simultaneously along with the release in India.
Copyright Laws in India
With the advancement of technology, Copyright laws in India have also
been changing to keep pace with the times. The Copyright Act, 1957 was
enacted and came into force on the 21
st
of January 1958. In its Objects and
Reasons the legislature recognized that "new and advanced means of
communications like broadcasting, litho-photography, etc." call for certain
amendments in the existing laws (Copyright Act, 1911). The legislature also
commented that "adequate provisions have to be made for fulfillment of
international obligations in the field of copyright which India must accept". It is
in this year (1957) that cinematograph films derived separate copyrights apart
from its various components, namely, story, music etc.
24

The laws have thereafter been subjected to certain changes. It was
Amending Act 65 of 1984 which specifically addressed the issue of piracy. The
Statement of Objects and Reasons to the amendment acknowledged piracy as a
"global problem due to the rapid advances in technology". Besides addressing
the loss in the form of royalties to the legitimate copyright owners, the
legislature also realized the losses to the exchequer by way of tax evasion.
Certain relevant portions from the Object and Reasons for the amendment are
reproduced below :
"….recorded music and video cassettes of films and TV programmes are
reproduced, distributed and sold on a massive scale in many parts of the
world without any remuneration to the authors, artistes, publishers and
producers concerned. The emergence of new techniques of recordings,
fixation and reproduction of audio programmes, combined with the advent of
video technology have greatly helped the pirates. It is estimated that the
losses to the film producers and other owners of copyright amount to
several crores of rupees. The loss to Government in terms of tax evasion
also amounts to crores of rupees. In addition, because of the recent video
boom in the country, there are reports that uncertified video films are being
exhibited on a large scale. A large number of video parlours have also sprung
up all over the country and they exhibit such films recorded on video tapes
by charging admission fees from their clients. In view of these
circumstances, it is proposed to amend the Copyright Act, 1957, suitably to
combat effectively the piracy that is prevalent in the country"
In its effort to address the above issues, by way of the amendments, the
following changes were incorporated in the Act, namely: -
i. The punishment provided for the infringement of the copyright was enhanced
to a maximum of three years, with a minimum punishment of imprisonment of six
months, and a fine upto to Rs. 2 lakhs, with a minimum of Rs. 50,000/-.; An
enhanced punishment in the case of second and subsequent convictions was also
provided for;
25

ii. The provisions of the Act were now specifically made applicable to video films
and compute programes;
iii. The producers of records and video films were now under a statutory
obligation to display certain information in the records, video films and
containers thereof, which included the name of the copyright owner, year of
first publication etc.

India's new copyright law, passed in June 1994, became effective on May
10, 1995 and establishes an entirely new potential for reducing piracy in India.
According to the Statement of Object and Reasons, the legislature recognized
that "effective copyright protection promotes and rewards human creativity
and is, in modern society, an indispensable support for intellectual, cultural and
economic activity. The legislature further recognized that copyright law
promotes the creation of literary, artistic, dramatic and musical works,
cinematograph films and sound recordings by providing certain exclusive rights
to their authors and creators. It was felt that the present Act needs
revamping on the following grounds:

·to extend more effective protection to owners of copyright and related
rights in the context of technological developments affecting the
reproduction of words by, inter alia, bringing within the scope of copyright
the subsequent hire or sale of copies of cinematograph films, computer
programmes and sound recordings.
·to further clarify the law in respect of cable, satellite and other means of
simultaneous communication of works to more than one household or private
place of residence, including the residential rooms of a hotel or a hostel.
·to make provisions for licenses whereby the reproduction of works by
reprographic equipment or by means of devices such as tape recorders and
video cassette recorders, where such reproduction would not under the
existing law be infringement of copyright, shall be subject to payment or
remuneration to copyright owners by means of a levy on such equipment.
26

The law protects cinematograph films as a distinct work, giving the producer of
the film the exclusive rights
i.to make a copy of the film, including a photograph of any image forming
part thereof;
ii.to sell or give on hire, or offer for sale or hire, any copy of the film
regardless of whether such copy has been sold or given on hire on earlier
occasions;
iii.to communicate the film to the public
India, being a member of two of the major copyright conventions of the
world (The Berne Convention and The Universal Copyright Convention), Indian
works and works of Indian authors are accorded copyright protection in all
major countries of the world. Likewise, foreign works and works of foreign
authors are accorded the same protection as Indian works.
In addition to the law bringing India newly into compliance with its
substantive TRIPS obligations in the copyright area, the law provides for new
minimum criminal penalties including a mandatory minimum jail term which, if
implemented, will go far to controlling piracy.
The government has initiated some measures for better enforcement of
copyright laws. A summary of some of these measures is given below :
·The Department of Education, Ministry of Human resource Development,
Government of India has constituted a Copyright Enforcement Advisory
Council (CEAC). The CEAC is reconstituted from time to time to review
periodically the progress of enforcement of the Copyright Act and to advise
the government on measures for improving the enforcement.
·Creation of separate cells in state police headquarters. Special cells for
copyright enforcement have so far been set up in the following 23 States
and Union Territories: These are the States / Union Territories of Andhra
Pradesh, Assam, A &N Islands, Chandigarh, Dadra & Nagar Haveli, Daman &
27

Due, Delhi, Goa, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir,
Karnataka, Kerala, Madhya Pradesh, Meghalaya, Orissa, Pondicherry, Punjab,
Sikkim, Tamil Nadu, Tripura and West Bengal. States have also been advised
to designate a nodal officer for copyright enforcement to facilitate easy
interaction by copyright industry organizations and copyright owners.
·Encouraging setting up of collective administration societies and organization
of seminars and workshops to create greater awareness about copyright law
among the enforcement personnel and the general public. For collective
administration of copyright, copyright societies are set up for different
classes of works. At present there are three registered copyright societies.
These are the Society for Copyright Regulations of Indian Producers of
Films & Television (SCRIPT) for cinematographic films, Indian Performing
Rights Society Limited (IPRS) for musical works and Phonographic
Performance Limited (PPL) for sound recordings.
There is now an urgent need for all the constituent parts, i.e. the rights owners,
the government, the enforcement agencies and the judiciary, to work jointly in
eradicating the menace of piracy.
www.filmpiracy.com/artic.html#a
FILM CERTIFICATION
All films meant for public exhibition, irrespective of their length,
whether in celluloid or video or CD or DVD version are subjected to censorship.
Programmes produced exclusively for broadcasting through the Television are
excluded.
"Film censorship becomes necessary because a film motivates thought
and action and assures a high degree of attention and retention as compared to
the printed word. The combination of act and speech, sight and sound in semi
darkness of the theatre with elimination of all distracting ideas will have a
strong impact on the minds of the viewers and can affect emotions. Therefore,
28

it has as much potential for evil as it has for good and has an equal potential to
instill or cultivate violent or good behaviour. It cannot be equated with other
modes of communication. Censorship by prior restraint is, therefore, not only
desirable but also necessary"
SUPREME COURT OF INDIA
Film Censorship In India
The Cinematograph Act 1952, apart from including provisions relating to
constitution and functioning of the Central Board of Film Certification (then
called the Central Board of Film Censors), also lays down the guidelines to be
followed for certifying films. Initially, there were only two categories of
certificates "U" (Universal exhibition) and "A" (restricted to adult audiences),
but two other categories were added in June 1983 "UA" for unrestricted public
exhibition subject to parental guidance for children below the age of twelve and
"S" films for public exhibition restricted to specialized audiences such as
doctors. The 1952 Act has been amended to bring it up-to-date, and the last
amendments were in 1981 and 1984. The present censorship of films is governed
by the 1952 Act, the Cinematograph (Certification) Rules promulgates in 1983
and the guidelines issued from time to time, The guidelines are issued under
section 5(B) of the Act.
Legislation
The censorship of films is governed by the The Cinematograph Act,1952,
the Cinematograph (Certification) Rules promulgated in 1983 and the guidelines
issued on December 6, 1991. The guidelines are issued under Section 5B of the
Act. This section says that ' a film shall not be certified for public exhibition,
if, in the opinion of the authority competent to grant the certificate, the film
or any part of it is against the interests of the sovereignty and integrity of
India, the security of the States, friendly relations with foreign States, public
order, decency or morality or involves defamation or contempt of court or is
likely to incite the commission of any offence.
29

 Enforcement
a. Introduction
1.The Central Board of Film Certification is responsible mainly for certifying
films. The enforcement of the penal provisions of the Cinematograph Act,
1952 is with the State Governments /Union Territory Administrations,
since exhibition of films is a State subject...
2.The CBFC does not have any enforcement agency or manpower directly
under its control. It has to depend on the local police force for
enforcement of laws.
3.There are various forms of violations which often go unchecked because
there are no checks and no complaints from either the law enforcement
agencies or members of the public.
b. Violations of Cinematograph act
The following are the major violations that agitate the minds of the public:
(a) exhibition of an 'A' certified film to a non-adult
(b) exhibition of an 'S' certified film to persons other than those for whom it
is meant;
(c) exhibition of a film in a form other than the one in which it was certified.
Such violations are known as interpolations. Interpolations can be described as
follows:
(i) re-insertion in prints of a film for exhibition those portions which were
deleted by the Board before certification of the film
(ii) insertion in prints of a film, portions which were never shown to the
Board for certification;
(iii) exhibition of 'bits' unconnected with the certified film.
30

(d) exhibition of a film which was refused a certificate (or 'banned' in common
parlance)
(e) exhibition of uncensored films with forged certificates of other films.
(f) exhibition of films without censor certificates.
C. Penalties
1.Offences with regard to violations of censorship provisions are Cognizable.
Furthermore, they are non-bailable.
2.Section 7 of the Cinematograph Act provides penalties for violation of
censorship provisions. Penalty can also be imposed for failure to comply with
section 6A which requires that any person delivering a film to an exhibitor
or a distributor will also give to him details of all cuts, certification, title,
length and conditions of certification.
3.A person guilty of violation while exhibiting celluloid films is punishable with
imprisonment for a term which may extend to Three years, or with fine
which may extend to Rs.1/-lakh, or with both, and with a further fine up to
Rs.20,000 for each day for a continuing offence. Similarly, Showing of video
films which violate the rules in the manner prescribed in this section will
attract imprisonment of not less than three months but which may extend to
three years and a fine of not less than Rs.20,000 but which may extend to
Rs.1/-lakh and a further fine up to Rs.20,000 for each day for a continuing
offence.
4.Furthermore, the trial court can direct that the offending film be forfeited
to the Government. Under Section 7A, any police officer can enter a hall
where an offending film is being screened, search the premises and seize
the print. Films can also be seized when they are likely to be exhibited in
violation of Cinematograph Act.
Who Does Film Censorship?
31

In keeping with this responsibility, the Central Board of Film
Certification known till June 1, 1983 as the Central Board of Film Censors) was
set up in Mumbai, with regional offices in some other cities (at present there
are nine such offices in Mumbai, Calcutta, Chennai, Bangalore, Hyderabad,
Thiruvananthapuram, New Delhi, Cuttack, and Guwahati). A Film Certification
Appellate Tribunal (FCAT) has also been constituted under section 5D of the
1952 Act for hearing appeals against any order of the CBFC. While the work of
certification of films is a central subject, the states have to enforce these
censorship provisions and bring any violations to the notice of the CBFC. The
organizational structure of the CBFC is based on the provisions of the 1952 Act
and the Cinematograph (Certification) Rules 1983. The Chairman and members
are appointed for a term of three years or till such time as the Government may
direct. They comprise eminent persons from different walks of life such as
social sciences, law, education, art, film and so on, thus representing a cross-
section of society.The CBFC is assisted by the Advisory Panel in various regional
offices which are headed by Regional Officers. The members of these panels
are also representative of cross-section of society and interests. These
members hold office till such time as the Government may direct but not
exceeding two years. However, the members can be re-appointed. The CBFC has
divided itself into Examining and Revising Committees to provide a two-tier
system for certification of films in the event of the applicant or the Chairman
himself not being satisfied with the decision of the Examining Committee. The
certification rules also apply to foreign films imported into India, dubbed films,
and video films. In the case of dubbed films, the Board does not have any fresh
censorship for the visuals in general cases. The Certification does not apply to
films made specifically for Doordarshan, since Doordarshan has its own system
of examining such films.
The Process of Certification
- Examination
32

1.The Cinematograph (Certification) Rules, 1983 have laid down the procedure
that a producer must go through to get his celluloid, video, CD or DVD film
certified.
2.The film, document specified in rule21, censor fee and cess fee have to be
submitted to the regional officer of the concerned regional centre. The
regional officer will form an Examining Committee to view the film. This
Examining Committee, in the case of a short film, will consist of an officer
of the CBFC and one member of advisory panel either of whom shall be a
woman, and in the case of a long film/feature film, one officer of the CBFC
and four members of the advisory panel of whom two persons shall be
women. After the film has been previewed, a report indicating the
recommendations of EC along with the category of certificate recommended
and deletions / modifications as deemed necessary is prepared and given to
the Chairman of CBFC who may approve the decision of the examination
committee and ask the regional officer to initiate further actions necessary
to issue the certificate.
-Appeal
3.However, if the Chairman, on his own motion or on the request of the
applicant, so feels, he may refer the film to a Revising Committee. The
Revising Committee will consist of the Chairman, in his absence, a Board
member, and not more than nine members, drawn either from the Board or
the advisory panel, provided none of them was on the Examining Committee.
The Revising Committee will view the same film print shown to the Examining
Committee without any changes, and each member will be required to record
his verdict before leaving the theatre. If the Chairman is not in agreement
with the majority view, he may direct another Revising Committee to see the
film.
4.After the applicant is apprised of the decision of the Board, he will delete
or modify any portions (if so directed) and submit them to the regional
officer along with one copy of the film (in video cassette format) as
certified.
33

5.Before any order prejudicially affecting the applicant of a film is passed by
the Board, he is given an opportunity to represent his views in the matter.
-Appeal in Tribunal
6.An applicant aggrieved by the order of the Board can go on appeal to Film
Certification Appellate Tribunal.
7.If the matter goes in appeal to the Film Certification Appellate Tribunal
which is headed by a retired judge as Chairperson and not more than four
other members, the FCAT may view the film and hear both the applicant and
the CBFC before coming to its judgement.
8.Certificate is finally issued by the concerned Regional Officer on behalf of
the Board.
www.cbfcindia.tn.nic.in
AN OVERVIEW OF FILMS CERTIFIED
(From 1.1.2003 to 31.12.2003)
U UA A S TOTAL
INDIAN FEATURE FILMS 479 198 200 - 877
FOREIGN FEATURE FILMS 34 67 181 - 282
INDIAN SHORT FILMS 1056 64 57 - 1177
FOREIGN SHORT FILMS 47 109 72 - 228
INDIAN LONG FILMS
OTHER THAN FEATURE
- - - - -
FOREIGN LONG FILMS
OTHER THAN FEATURE
- - - - -
TOTAL 1616 438 510 - 2564
(Source: Central Board of Film Certification)
ENTERTAINMENT TAX
Films are a huge source of government receipts on account of the high rate
of entertainment tax which stands at an average of 25 per cent for the
country as a whole. In fact, in Maharashtra, it is as high as 60 per cent.
34

Gujarat has an incidence of 100 per cent, while Madhya Pradesh has a tax
rate of 75 percent. Andhra Pradesh has low tax rate of only12 percent.
Texemption for export earnings raised abroad according to Section 80HHF
is 20%.
Tax benefits to multiplex construction companies :
50% of the profits and gains derived from the business of building, owning
and operating multiplex theatres are allowed as a tax deduction. In order to
avail of this deduction, the theatre must have been constructed during the
period between April 1, 2002 and March 31, 2005 and must not be situated
in Mumbai, Kolkatta, Chennai and Delhi. The deduction is available for five
(5) consecutive assessment years beginning from the first assessment year.
(Section 80IB(7A) of the Income-tax Act, 1961).
www.incometaxindia.gov.in
(V) TECHNOLOGY ENVIRONMENT
The Indian film industry is increasingly adopting digital technology in its
processes. The cameras that are being used in India are the same as those used
in Hollywood today. Digital breakthroughs and digital creation of scenes is
increasingly becoming part of Indian cinema. There is marked improvement on
the technical side such as dolby sound, computerized editing, special effects
etc. It is expected that digital technology will bring a sea change in the film
production.
Areas which need to be addressed are in the Digital Space are:
- Animation: Currently the global outsourcing in the animation space is being
done in the Philippines, Taiwan and Korea. There are more than 50,000
animation specialists working in this space. In India, there are just four major
studios and about 2,000 to 3,000 professionals are available. The scope for
providing training in Animation and creating opportunities for outsourcing from
India is untapped and huge. Individuals with basic drawing and visualization
skills can be easily trained in animation.
- Special Effects: It requires very high capital investments. Large IT players
have the opportunity to enter this space and can also provide high-end
consultancy.
35

- Digital Cinema: Infrastructure
FICCI has tied with NASSCOM which can be called as “ e-Entertainment
Alliance”.
This Alliance will establish:
1. A forum to create ‘Human Capital’ from India in the creative and performing
arts and related technologies, provide young and budding entrepreneurs
opportunities to compete globally in the technology space in animation, special
effects, digitization etc. and produce winners in the International arena.
Training Programs and workshops are to be organized for both IT as well as
entertainment techies.
2. Every possible form of media will be covered in the e-entertainment space be
it print, radio, TV, electronic/internet based, films, sports, … … the opportunity
lies in developing the abilities to digitize the contents.
3. There is a need to Create an ‘Advanced Institute for Digital Arts ‘ (AIDA) in
Mumbai.
4. The source of funding in the Hollywood film industry generally comes from
Germany through the “Completion guarantors” and not through the Venture
Capital Funds at this point of time. Hence eE@ needs to research and develop
alternate sources of funding.
5. Better interaction with International Bodies like Motion Pictures Association,
USA etc.
6. Leveraging the TiE network in bridging the gap between Hollywood &
Bollywood and getting marketing support from the Indian Community abroad.
7. Working closely with the Investor community in India and abroad.
8. Lobbying with the Govt. in technology related issues benefiting the
entertainment industry.
FICCI Report 2002- Indian Entertainment Industry
36

MICHAEL PORTER’S 5 FORCES
1.Threat of Subsititute:
There is no threat of substitute for film industry as no other sector can
give entermainment to people in a way film industry provides. But inside the film
industry there can be threat of new advanced technology, in near future, which
will eliminate the work of film processing units. In USA and UK, experiments on
new technology have been started.
2.Threat of New Entrant:
For an industry threat can be sport like cricket world cup which comes once
in 4 years. During world cup theatres incurs the loss of many unsold seats. But
this threat is temporary one. Inside the industry one threat can be an entry of
prevailing international players into the Indian market with the concepts like
Spider man, Anaconda etc. which are totally different from Indian movies.
3.Bargaining Power of Buyers:
a.Producers: For film producers, buyers are distributors. In case of
reputed film producers like Yashraj Films, Dharma Production, Sanjay
Leela Bhanshali etc. who have a track record of delivering successful
films, bargaining power of distributors is very less. So there is less
bargaining power of distributors. Distributors have to buy the rights of
film at high price as said by the company. Where in case of other films
distributors have high bargaining power and films are sold at low price or
below the expectation level of the producers.
b.Distributors: For distributors theatres are buyers. There is less amount
of bargaining as prices are generally fixed and more or less same
depending upon the contract and the mutual understanding.
37

c.Theatres: For theatres, buyers are public who can not bargain for the
prices of tickets. But in many states, government has put some
restriction on the prices of tickets.
4.Bargaining Power of Supplier:
Big suppliers like film-processing units, camera and equipments suppliers,
actors etc. generally have the fixed rate in the market. So less bargaining
prevails.
5.Intensity of Competition:
Film industry faces competition from other entertainment segments like
amusement parks sports, television etc. In order to compete with them industry
has come up with Video Games Section, Art Gallery, Music Station and Trendy
Cafeterias inside the theatres which provides a complete family entertainment.
And inside the industry the intensity of competition among producers is less but
high in case of directors, actors, film processing units etc.
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R E V E N U E C O N T E N T A U D I E N C E C E R T I F I C A T I O N
P R O D U C T
C L A S S I F I C A T I O N
PRODUCTS
Domestic Sales
Overseas Sales
Music Rights
Telecasting and
Video Rights
Corporate
Sponsorships and
Merchandising
Romantic
Comedy
Social
Thriller
Horror
Patriotic
Science Fiction
Animation
Kids
Youth
Family
Niche Market
Universal
Adult
Universal Adult
Specified
Audience
39

PROCESS FLOWCHART
Output
Output
Output
Output
40
Dubbing
Backgroung Music
Sound Effects etc.
STORY WRITER
/SCRIPT
DIRECTOR
PRODUCER
HIRING OF TECHNICIANS, ACTORS, ACTRESS
ETC.
SHOOTING EXPOSED NEGATIVE
FILM LABORATORY
FINAL NEGATIVE CUTTING
POSITIVE / RUSH PRINT
RE-CORDING
FINAL POSITIVE EDITING
MIXED SOUND
NEGATIVE
RELEASE PRINTS
FILM CERTIFICATION MARKETING
DISTRIBUTORS
CINEMA HALLS

PROCESS EXPLANATION
The story writer provides story to director. Initially only the concept of
the story is explained. Then director approaches the
producer to finance the film. The making of film starts as
soon as producer gets ready to finance. Story writer and
director sit together to prepare the script which is made
up of number of scenes. Sometimes it also happens that
the same person acts as a story writer and a director. At
the same time the director and the producer hire the actors, actress,
technicians etc. And Shooting starts.
After the completion of shooting, film roll is sent to film laboratory. The
film roll undergoes a series of processes in the lab. The lab develops exposed
negative along with rush print which is also called as positive. This positive is
then delivered to editor but the negative is kept in the lab only. Editor also
receives sound negative from sound recordist and assembles it with positive.
And then he starts his work of sorting, cutting and editing the positive. He
makes the film of two and half hours from 4 to 5 hours. And now final positive
is ready. This final positive is sent to the lab for final negative cutting. Then
the works of dubbing, background music and sound effects start. Re-corder
mixes all sound effects and develops mixed sound negative which is also sent to
the lab. The lab liaises with sound correction and editing positive resulting in
the final or release print for the film. This film is then pre-viewed in a pre-view
theatre as a form of quality check. One release print is then sent to the Central
Board of Film Certification (also called the Central Board of Film Censors) in
order to get film certificate. Then duplicate prints are made in lab. Side by side
promotion activities are carried on by producer. The duplicate release prints
are then passed on to distributors and from distributors to cinema halls at the
time of launch of the film.
41

COMPONENTS
Producer Animal Suppliers Art Directors
Art Printers Artificial Plants Artists
Dubbing Artists Costume Suppliers Singers
Actors Auditorium Cameramen
Cine Equipment Editing Rooms/EditorsColour Film Processing
Costume Designers Satellite Televisions Dance Directors
Directors Distributors Preview Theatres
Story Writers Gun & Bomb Suppliers Hair Dressers
Home & Mini Theatres Light & Light Fittings Lyricists
Graphics & Special
Effects
Stunt Artists
Make-up
Artists/Materials
Video Cassette
Conversion
Music
Composers/Directors
Stunt Directors
Orchestras Outdoor units Public Relation Officer
Raw Film Suppliers
Film Training
Institutions
Rain & Fog Machines
Shooting Houses &
Locations
Recording Studio
Equipment
Sound & Light
Equipment - Rentals
Film Trade Bodies &
Associations
Projection & Sound
Equipment
Production Managers
etc.
(Source: www.filmplusindia.com/categ.html)
42

5 MAJOR COMPONENTS
1. Direction
The Director is responsible for executing the shooting process on the
floor. His responsibility does not begin or end with shooting.
He is responsible for converting the ideas which are in the
form of words into visuals. The storywriter and the
screenplay writer may be different persons but the
Director must be good in this department as well. The director is chiefly
responsible for shot-taking which he executes through his cameraman, thus
making it imperative for the director to have basic knowledge of camera,
lighting and the visuals in general.
The actors are made to perform in front of the camera and with the help
of body language and dialogues, reveal the story to the audience. The director
learns the art of handling the actors. The whole story shot in bits and pieces
are assembled together in accordance with the syntax of the film grammar with
the help of the editor.
In the selection of sound and music, the director has to make some
conscious decisions and hence his knowledge of these are essential too. The
director brings out everyone’s talent and puts them together to make a
worthwhile programme.
The field of Direction is vast. It ranges from Directing Documentary
films, News & Current Affair programmes, educational and instructional films,
advertisement and corporate films, entertainment, fictions, soap operas and of
course, feature films too.
2.Camera & Lighting Technique
The painter paints his canvas and his tools are pigments and brushes. The
cinematographer paints his canvas with lights and records on film or video.
43

Though the tools are different yet the
end results have striking similarities.
Photography has it roots in science,
technology, art and aesthetics. Physics,
chemistry, engineering technology are
the means to achieve the end, that is,
the aesthetics. Such a subject needs
serious studies to achieve high-end
results.
The Film and Television technology is growing rapidly and every other day
a new equipment is released in the field. Therefore, people with camera should
be prepared for latest developments in the field. The purpose of artistic
lighting expands beyond merely illuminating the subject for exposure level. A
good lighting can make the subject appear better than what it meets the eye
and good subject may look ordinary if the lighting lacks aesthetics.
3.Video Editing & Sound Recording
The word Editor must not
necessarily to taken as reference to
the technician working in a cutting
room. It simply refers to the person
who is responsible for the particular
editing decision being discussed. The
process of editing is usually a far wide
responsibility involving the syntax of
the film and television grammar. Editing is not merely cutting and joining. In
fact, the shoot material which are shot in pieces needs to be put in order and
joined together abiding by the rules of the film and television grammar to
convey the visual and aural message to the viewer authentically.
44

4.Acting & Presentation
In almost all Film and Television programmes there
is hardly any programme where no actor is involved. It is
through the actors the director conveys his message or
idea to the audience. The role of an actor cannot be
underestimated at any cost. Observation, imagination, body language, emoting
capabilities, verbal and non-verbal communications are the tools of an actor,
which is more important than the superficial beauty and glamour.
Acting for Film and Television is highly technical. The actor doesn’t
perform in isolation and is directly bonded to the camera, lights and
microphone. Besides, his time and pace criteria are totally related to the
editing parameters. This makes it compulsory for a Film & Television performer
to have the basic knowledge of cinematography, editing and the Film grammar.
It is this technology that makes Film and Television acting so different from
theatre.
http://www.filminstituteindia.com/
45

CORPORATIZATION AND FINANCING
The film industry is one sector in India, operations of which have always
remained under cloud, mystery and suspicion. While producers dependence on
underworld and hawala money (money transferred unofficially) for financing has
always been a known fact, it’s a different story that all Hindi films ultimately
end with the victory of “Good” and enemies of the nation, “Evil”, destroyed! The
Film Industry on the whole has always worked like small scale industries in the
unorganized sector. For over five decades of its existence, the industry did not
produce any “Corporate Entity” worth its name.
While the bosses at the film industry have kept demanding more support
from the government, policy & regulatory framework and clean money from
institutions for financing, they did little work in cleaning up their balance
sheets, income tax returns, disclosures and above all, incorporating their
businesses. But the last few years have seen some change.
The famed actor, Amitabh Bachchan called the Big B who promoted
Amitabh Bachchan Corporation Limited (ABCL) took the lead towards
Corporatization of film industry in India. Though still an unlisted company with
shareholders and whatever its fate may be, ABCL set the example for others in
film industry, that things can be done in a little more organized way.
Globalization, Software technology, TV programming and the Music boom in
India have since prompted several traditional players and industry majors to
make their operations more transparent and hence CORPORATIZE.
Scores of film producers, financers, distributors and associates, have
now converted their businesses into “Companies” under law. Some have already
raised capital from the public and are now listed at major stock exchanges,
while several others propose to do the same.
Besides Zee Telefilms, some others who have successfully corporatized
includes music leader Tips Industries, Jitendra promoted Balaji Telefilms,
Dheeraj Kumar’s Creative Eye, Sri Adhikari Brothers, RPG’s Saregama, Pritish
Nandi Communications and of course Subhash Ghai’s Mukta Arts.
46

Films Produced By Corporate Production Houses
Production House Film
Aamir Khan Productions Private Limited Lagaan
Zee Telefilms Limited The Hero
Balaji Telefilms Limited Krishna Cottage
Mukta Arts Limited Yaadein
Yashraj Films Private Limited Dhoom
Padmalaya Telefilms Limited Suryavansh
Tips Industries Limited Fida
Venus Tapes & Cassettes Private Limited Josh
Devgan Entertainment Private Limited Raju Chacha
(Source: FICCI Report 2002 - Indian Entertainment Industry)
Still not many Film companies have availed finance from these sources.
This is because corporate structure in place is a pre requisite for such a
venture. This means that the company has to clearly define the following:
·Documented scripts in place
·Legally enforceable contracts with the artists and technicians
·The entire time schedule documented
·The producer has to make sure the filming activity is completed in time
and there are no time and cost overruns.
Apart from these corporatised players and a few reputed film producers
who have a track record of delivering successful films, other film-makers have
to rely heavily on arranging financing for their films from the unorganised
market comprising “friends”, “relatives” and “private financiers” which is also
difficult and involves high cost of interest.
BANK FINANCING FOR INDIAN FILMS
Earlier, banks were wary of funding films, and producers borrowed money
from private investors at interest rates as high as 25 to 35 %. The scenario has
now changed, and financial institutions are more than willing to lend to film
projects at the much lower rate of 16 to 17 percent.
47

Industrial Development Bank of India was the first institution to make an
allocation of Rs 1 billion for the film industry for 2001-2002 and it sanctioned
film financing to the tune of Rs 635 million in 2001 spread over seven projects
floated by the likes of Crest Communication, Padimini Telemedia, VR Projects
and D. Raama Naidu, which rose to Rs. 995 million in 2002.
FILM PRODUCERS SANCTIONED BY IDBI
Producer Amount sanctioned (Rs mn)
Suresh Production 40
Crest Communications 200
Rajshree Productions 200
V.R. Pictures 70
F.K. Films 50
Alu Entertainment 25
Padmini Telemedia 50
(Source: IDBI)
For instance, Canara Bank, which had earlier funded Gayab, is also bankrolling
K Sera Sera Production’ forthcoming venture James. The movie has a budget of
about Rs. 7 crore, 80% of which was funded by the bank.
LONG TERM PROSPECTS
The long term prospects for the industry look bright. Though nascent at
this stage, companies promoted by serious promoters will also command a good
valuation at the market. While domestic and international investors have got an
opportunity to invest in the sector, strong and positive signals have been sent to
banks and financial institutions that the industry is changing. CII & CRISIL are
also working at developing a financing model that would enable the banks to
weigh the risks in this industry.
It is now hoped that the ensuing restructuring and corporatization will
usher in a new era in corporate India and industry will flourish by producing
quality products for its audience.
The Indo-Italian Chamber of Commerce and Industry
48

INFRASTRUCTURE
The infrastructure for films comprises of production, post-production
and exhibition infrastructure. Production & Post-Production Infrastructure
49

here includes studio floors, film cities, laboratories and post-production
facilities. In 2002, India has 25 studios and three film cities. Studios are
enclosed structures where sets can be built for shooting. A studio floor should
have the necessary dimensions to allow building of these sets and provide the
necessary acoustics for shooting. Mumbai being the hub of film production in
the country has the maximum number of studios.
However, most of the studios are not maintained due to lack of funds.
Many like Famous Studios at Andheri and Ranjeet Studio at Dadar in Mumbai
have closed down. Besides, the studio floors are very small and do not allow
building of huge sets. For example, an average studio floor size in India is 100
feet by 150 feet versus the international standard of 220 feet by 350 feet. An
Indian studio is spread over 5 acres and has one or two studio floors whereas an
international studio is spread over a minimum of 500 acres and has more than 6-
10 studio floors and hundreds of locations. In fact, an international studio is
akin to a film city in India.
Indian films cities do not come even close to international ones. For
example, the Mumbai and Noida film cities are spread over barely 40-50 acres
of land and have only 20 locations each.
Perhaps the only international grade studio in the country is the Ramoji
Rao Studio in Hyderabad, with six studio floors. The film city is spread over
2,800 acres, of which 1,500 acres is developed and has over 100 shooting
locations.
Post-production infrastructure like editing and dubbing suites are given
as part of the overall package to the production houses. Till recently, most of
the equipment used in India was largely outdated. Now, several specialised post-
production studios like Empire Studio, Crest Communications, CMM and
Pentamedia Graphics have been set up which offer modern technology to
producers. Players like Ramoji Rao and Rama Naidu have already set up or are in
the process of setting or investing in post-production facilities. They are
positioning themselves as end-to-end providers, wherein a producer can just
come with a script and can take away a readymade film from the studio, which is
how it is done internationally.
50

Post-production facilities have to keep pace with fast changing
technology. Avid Editing Suites are rapidly replacing the old Steinbeck editing
systems. In fact, even Avid Suites are becoming obsolete and are being
replaced by computer-based editing suites like Adobe Premier.
Exhibition Infrastructure:
The number of theatres has not increased with a speed it should be
increased in the last three years. This is due to the high degree of piracy, low
ticket rates, high incidence of taxes and levies, low collections of theatre
owners which prevent them from spending on renovation. Alternative profitable
options for real estate like retailing has led many theatres in Mumbai to be
converted into shopping complexes and departmental stores.
Another reason for the poor infrastructure is the high incidence of
entertainment tax, which stands at an average of 25 per cent for the country
as a whole. In fact, in Maharashtra, it is as high as 60 per cent. Gujarat has an
incidence of 100 per cent, while Madhya Pradesh has a tax rate of 75 percent.
If one were to reduce the entertainment tax, one would easily see the
improvement in exhibition infrastructure. Andhra Pradesh is such an example.
With 12 percent average entertainment tax rate, the state has the highest
number of theatres and a very flourishing film industry notes Uday Singh,
Managing Director, Colombia Tristar Films of India. Even a country like China,
which has a highly regulated market and produces far less films than India, has
65,000 theatres.
Entertainment Tax Rates In Asian Countries
Country Percentage
Honk Kong 0.00
Indonesia 25 – 30
Japan 3.00
Korea 16.60
Malasia 30.90
Phillipines 33.00
Singapore 3.00
51

Taiwan 7.62
Thailand 7.00
Source: FICCI Report 2002 - Indian Entertainment Industry
SCREENS
As compared to approximately 36,000 screens in the U.S., there are
around 13,000 cinema screens in India. Most of the cinema halls in India
operate in an unorganised environment and are owned by individual businessmen.
More than 95 per cent theatres are single screen and stand-alone. However, the
industry has recently seen the entry of organised corporate players.
Priya Village Roadshow Ltd., a joint venture between the New Delhi based
Bijli Group and Australian media and entertainment conglomerate, Village
Roadshow Ltd., was the first organised corporate player in this space. E-City
Entertainment India Limted, Inox Leisure Ltd. and Adlabs Ltd. are other
corporates who have ventured into this space in 2001.
Till 1997, the concept of housing more than two screens in one theatre
was non existent in India. Priya Village Roadshow Ltd. pioneered the concept of
world class multiple screen cinema halls in India by opening their flagship
property, Anupam-PVR, in New Delhi in 1997.
In the last two years, the state governments of Gujarat, Rajasthan,
West Bengal and Maharashtra have announced entertainment tax exemptions on
new multiplexes which has resulted in an increase in the development of
multiplexes in these states.
With a population totalling more than 1 billion, 13,000 screens translates
into a measly 13 screens per million of the population. This is far below global
averages.
India has witnessed a sharp decline in cinema attendance in the last 10-15
years due to three reasons, namely poor cinema content, poor film exhibition
infrastructure and rampant piracy.
However, the film exhibition industry in India is expected to grow rapidly
over the coming years due to continuous positive developments in the area of
film content (which is improving), film exhibition space (which is witnessing
52

development of multiplexes with as many as 200 multiplex screens planned in
the near future) and a sustained clampdown on piracy (which is likely to result in
a decline in the frequency of watching films in homes through alternative media
platforms). These three factors are likely to lead to higher cinema
attendance in India.
CONTENT OF FILMS
Indian producers and directors are increasingly spending more time on
the development phase of the film and have started toying with experimental
ideas. The film makers have also started paying attention to the packaging of
the film, which goes a long way in improving the final product.
Some of the changes that the Indian film industry has witnessed
recently include shooting in long schedules for a sense of uniformity and timely
and efficient completion ( Lagaan, Dil Chahta Hai), use of technology through
better cameras and synchronous sound ( Lagaan, Dil Chahta Hai), focus on
packaging and marketing ( Kabhi Khushi Kabi Gham, Mujhe Kuch Kehna Hai,
Gadar, Ek Prem Katha, Kasoor, Style, Ajnabee, Pyaar Tune Kya Kiya), production
of small budget niche films ( Bollywood Calling, Monsoon Wedding, Tum Bin) and
experimentation of characters and novel story lines ( Zubeidaa, Dil Chahta Hai,
Asoka, Lagaan, Aks, Chandni Bar and Astitva).
Indian cinema has also arrived on the global stage with “Lagaan” securing
an Oscar nomination, “Monsoon Wedding” winning the Golden Lion at Venice and
Ismail Merchant honoured by the Bafta Academy.
FILM INSURANCE
Most of the developmental work that has happened in the introduction of
insurance cover for Indian films is attributable to Mr. Ajit Gupta, Development
Officer of United India Insurance (UII), who is credited with pioneering this
concept in the India film industry. The credit is also due to film makers like
Subhash Ghai and Bobby Bedi, who have been the forerunners and proponents
53

of taking insurance cover for film production. The importance of insurance
cover assumes significant importance in view of the concerns of institutional
lenders, who want to mitigate risks associated with the film production process
from multiple entities.
Taal (1998) was the first Indian film to be insured for covering risks
associated with the film during the production period. Since then, United India
Insurance has insured more than 20 films with total production outlay in excess
of Rs 1 billion.
Till date, UII has settled four claims out of the films insured by it. The
first claim was from Yash Raj Films India Ltd. for a month’s delay in the
completion of its film, Mohabattein, due to postponement of shooting caused by
an injury to the heroine, Aishwarya Rai. Other films that have received
compensation for production delays include Dil Chahta Hai (unseasonal rains in
Australia), Saathiyaan (camera malfunctioning) and Badhai Ho Badhai (Anil
Kapoor had to hospitalised due to a leg injury).
The Economic Times Entertainment Report
OVERSEAS MARKET
Mr. Supran Sen, Secretary, Film Federation of India speaking about the
export market for Indian films says that the U.S. and Canada are major
markets for Indian films accounting for 30 per cent of exports, followed by the
U.K. accounting for 25 per cent, Mauritius for 10 per cent, Dubai for 10 per
cent and other countries accounting for the remaining 25 per cent. The U.S.
54

market is specially good for sentimental films, as well as China and the East
European countries like Hungary and Czechoslovakia. Russia is another major
market for Indian films.
Co-production is also an important new feature of the industry with a few
U.S. companies showing interest in co-production as well as the U.K., Canada and
Singapore.
Speaking about the export market, an important aspect of the
internationalisation of the Indian film industry, Mr. Nandkumar Bele, Secretary
of the Indian Film Exporters Association, says that exports started way back in
the early sixties and the Association was set up in 1963 to facilitate exports.
The major exporters he named, are Eros Multimedia which is the biggest
exporter of Hindi films followed by CA Corporation, Fair Deal International Pvt
Ltd. and other exporters like Venus Records and Tapes PL, Tips Exporters and
Yash Raj Films. The bulk market is in the U.S. the U.K. and Canada and films are
also regularly exported to Mauritius, Fiji, New Zealand, Australia, Malaysia,
Indonesia, Singapore, Hongkong, Dubai, Tanzania and Kenya. Some exporters
such as Eros, Yash Raj Films and Fair Deal have offices abroad.
Rajnikant is a super hero in Japan and his film, Muthu was a super hit in
Japan and was subtitled in Japanese. The Chinese market is also an interested
market and the Chinese who have a strict censorship board are mainly
interested in family films and romantic films.
The South African film makers are interested in co-producing with
Indian film producers and the South African Government is offering various
facilities for shooting of Indian films in that country.
There are two problems faced by exporters which come in the way of
Internationalization. A major problem is piracy with the emergence of the
latest technology tools like Digital Versatile Discs (DVD). For instance 30,000
copies of DVDs appeared in the American market barely a week after the
theatrical release of the film Devdas there. Similarly, pirated cassettes of
Indian films appear in the Pakistani market barely 2 or 3 days after they are
released internationally. Malaysia is another big centre for piracy of Indian
films. This phenomenon is a major dent in export revenues for film exporters.
55

Another problem is that of income tax. Earlier, the film makers used to
get exemption for export earnings raised abroad under Section 80 HHC of the
Income Tax Act of 1960. An interpretation put forward by an Income Tax
Officer that this exemption does not apply to exports of films because the
rights of the films are given on lease and thus they are not outright sales (this
section applies to sales) and since the rights in the film assigned are intangible
and not on a par with other foods or merchandise, was made the basis of the
removal of this exemption since 1995. Assessed and completed cases were thus
opened up and many exporters had to pay income tax for 5 to 7 years along with
penalties. This was a major setback for several exporters whose liability was
high as well as for small exporters who were badly hit by this interpretation.
After representation by the industry to the Government, while this
provision was no longer made applicable, the new provision under Section 80HHF
introduced and allowed tax exemption of 100 per cent in 1999-2000, 80 per
cent in 2000-2001, 60 per cent in 2001-2002, 40 per cent in 2002-2003 and 20
per cent in 2003-2004.
While the Government on the one hand wants to encourage exports of
Indian films, on the other hand it wants to tax it heavily. The concessions for
instance given to the IT industry are not given to the film industry, even though
the Government has recently given it industry status.
Mr. Mohan Chhabria, Director, Fair Deal Exports Pvt. Ltd., a leading
exporter of Hindi films says in the last three to four years there have been two
developments that have helped with the internationalisation and exports of
films. One is that the Indian industry has technically reached the standards of
America and secondly content wise, the films are now getting into subjects
which are universally liked.
Mr. Chhabria states that if you have a good product, the middlemen and
importers in the business, mostly people of Indian origin settled abroad
approach the exporters themselves. Recently, Australian TV approached Fair
Deal for buying the films Dil Chatha Hai and Hum Dil Chuke Sanam.
Sometimes the suppliers meet the buyers at festivals. New markets are
also often opened up by participating in festivals. However, the cast of the
56

films is important and certain stars like Shah Rukh Khan, Salman Khan, Amir
Khan, Hrithik Roshan, Amitabh Bachchan and Sanjay Dutt are more in demand
abroad.
The Indo-Italian Chamber of Commerce and Industry
According to Pravinder Bhatia, assistant vice - president, corporate
finance, Ernst & Young, the overseas market is more lucrative than the Indian
one. For instant, Kal Ho Na Ho grossed nearly Rs 20,000 crores and Lakshya
about Rs 8 crores in ticket sales alone in the UK & US. And then there is the
additional revenue generated by the sale of audio & video CDs.
Times of India
REGIONAL FILMS
According to the Economic Times Entertainment Report 2001-2002 after
Hindi films, the Telegu film industry is perhaps the biggest, followed by the
Tamil film industry in terms of revenue generation, though in number of films
released, Tamil outranks Telegu. Together, they are called the “Tollywood” film
57

industry. What sets this segment apart from the rest of the industry is its high
degree of discipline. The average time for making these films is 4-9 months.
The producers and directors, along with the artistes do a lot of
homework before making a film. The entire script of the film is usually ready
before shooting begins and the artistes know their roles clearly. Since the
artistes are usually involved in filmmaking, they give continuous dates to the
producers. As a result, none of the South-based artistes take up more than 2
films a year, as opposed to many Hindi artistes who make 4-6 films in a year.
One more peculiarity of the Tamil and Telegu films is the increasing
proportion of integration in the industry. Ramoji Rao owns a studio and a post-
production facilities in Hyderabad. Many top production houses in the South are
owned by artistes. Thus, unlike the Hindi film industry, in A category films, the
artistes have more clout and are involved in the entire process of film making.
These artistes also have a substantial control on the script. Artistes like
Rajnikant also control the theatres, albeit indirectly. The Tamil and Telegu
industry is more integrated than the Hindi industry in many ways, with fewer
players and the top players controlling the industry both in terms of value and
volumes. In this respect the Tamil and Telegu film industry is similar to
international film production houses.
One major difference between the Hindi and South based films is the
extent of star worship. Films are classified under the various categories mainly
based on the star cast. For example, in Telegu films in which famous actors like
a Chiranjeevi or Nagarjuna or Venkatesh or Balakrishna or Alu Arvind star would
be rated as A category, irrespective of the director and the film producer. The
other top stars are Mohan Babu, Pavan Kalyal and Mahesh Babu. Then there are
a lot of other actors like Jagapati Babu, Srikanth, Prakash Raj and Naveen, who
are not as big and do one to two good films in a year. These may be rated as B
films.
Amongst the banners, Suresh Productions, run by D. Rama Naidu and his
son Suresh is one of the most respected. This production house has done more
than 100 films for which it has entered the Guiness Book of World Records.
The other main production houses are Usha Kiran Movies of Ramoji Rao, Anjana
58

Productions of Chiranjeevi, Geeta Art Films of Alu Arvind, Annapurna Studio
Private Ltd of Nagarjuna and his father – the legend and Nageshwar Rao,
Padmalaya Production of Mahesh Babu and his father Krishna and Laxmi
Prasanna Productions of Mohan Babu.
In the South based film industry in general and the Telegu film based
industry in particular, the production houses are mainly owned by the top stars,
who do at least one to two films for their own production houses in a year. This
trend is slowly entering the Hindi film industry too. There are star directors
like Raghavendra Rao, S.V. Krishan Reddy and B. Gopal, whose films are A class.
Finally, there are a number of independent films producers like C. Ashwin Dutt
and Subhiram Reddy who make big budget A grade movies.
In Tamil films, Rajnikant has a special category of his own. He falls
perhaps in the super A category. Rajnikant produces his own films. He works on
the principle of selling a film at areasonable profit so that everybody involved in
the movie makes a winning. His films usually carry the names of 4-5 producers,
who are mainly needy people. His film “Padiaappa” did a business of Rs 320-350
million. The entire film was made for Rs 60 million and was sold for close to RS
250 million. Of the film profits, he usually reserves 35-40 per cent for charity.
The rest goes towards his fee for the film. With close to Rs 100 million per
film, he is one of the highest paid actors in the country.
The other major banners in Tamil films are Supergood Films, which makes
movies under Oscar Movies Banner, Mani Ratnam who makes movies under
Madras Talkies Banner and Kamala Haasan’s home production. Shankar, who was
a director till recently is the most sought after and number one director in
Tamil films.
Another aspect of the Telegu and Tamil films is the large inter-lingual
market. Films in either of the languages usually get dubbed in the other
language.
OTHER REGIONAL LANGUAGE FILM PRODUCTION
The other regional languages have not made a substantial dent in the
market, though they collectively total close to Rs 2 billion to Rs 3 billion. These
59

films are similar to B and C class films in Hindi, Telegu or Tamil languages,
though their subject might be more social and their appeal more universal. The
reason for such low budget films is the low cost of artistes and technicians.
These films do not have special effects and graphics, they usually use stock
music, they have very few songs and hardly any outdoor shoots. Moreover, these
films cannot afford to have very high costs as their target audience is only one
or two states and they rarely have an overseas market. However, some Punjabi
films like “Shaheed Udham Singh” and “Guru Gobind Singh” have done
reasonably well internationally, but these are exceptions.
In terms of value, among the regional languages, the order is Kannada,
Malyalam, Bengali, Gujarati, Marathi, Punjabi, Oriya and others. Kannaada and
Malyalam films have a market in Middle East countries and the USA where a
substantial population from the respective regions resides. Most of these films
have been made at very low budgets and in most cases all these films have one
or two artistes, who act in each of the films. These artistes have a huge public
following and their films usually get a very good reception and make money.
In Bengali films, Devyank Arts owned by Dilip Karkaria is a renowned
production house having produced 8-10 films in the last 4-5 years. All these
films have cross-border appeal and have been dubbed in Bangladeshi Bengali.
The biggest actor in Bangla films is Prasenjit, son of Biswajeet, an icon of Hindi
films in the yesteryears. Similarly, in Gujarati, Mahesh and Naresh Kanodia and
Upendra Trivedi are popular artistes, while Govindbhai Patel is a well known
producer. Unlike Hindi, Tamil and Telegu films, the regional film industry is
mainly dominated by one or two artistes and production house, who make the
bulk of the films.
The Indo-Italian Chamber of Commerce and Industry
CASE STUDY : ADLABS FILMS LTD.
The promoters of the Company, Mr. Manmohan Shetty and Mr. Vasanji
Mamania, formed a partnership firm, M/s Adlabs in 1978 for processing of
films. Initially, they concentrated on processing of advertisement and
60

documentary films. The promoters then decided to form a Company in 1987,
with a paid up capital of Rs.20,000.
As on August 14, 2000, Mr. Manmohan Shetty and Mr. Vasanji Mamania
along with friends, relatives and associates together hold 1,71,00,600 equity
shares of the Company i.e. 100% of the pre-issue equity capital.
Processing documentaries and short films then became a part of Ad lab's
growing business. However, since those early days, Adlabs has continually
strived to evolve and reach out for higher horizons. A fact mirrored in its
market leadership status in terms of both quality and market share.
Importantly, Adlabs has processed films for almost all production companies in
Mumbai. A tribute to the company's continual endeavor for excellence has been
the 4 national awards that they have received for the 'Best Motion Picture
Processing Laboratory'. Its main competitors are Film Lab and Ramnord in
mumbai.
Today, Adlabs is venturing into the entertainment sector by bringing to
India an entirely new experience, the country's first IMAX Dome Theatre as
well as a cinema multiplex. It has added yet another Multiplex (besides Imax
Adlabs) with four screens in Mulund called R-Adlabs, which was opened to the
Public on the 18th of July 2003.
http://www.adlabsfilms.com/
 Organisation Structure
Chairman & Managing
Director
Mr. Manmohan Shetty
Wholetime Directors Mr. Vasanji A. Mamania
Miss Pooja M. Shetty
Other Directors Mr. Berjis M. Desai
Mr. Shyam G. Shroff
Mr. Pradeep K. Guha
Mr. Chandir G. Gidwani
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Company Secretary Ms. Kirti V. Desai
Auditors H. O. Agarwal & Co.
Chartered Accountants
Bankers
Bank of Baroda, Chakala
Branch, Mumbai
(Source: http://www.adlabsfilms.com/)
 PROCESS
A film-processing laboratory is an integral component of film production-
exhibition value chain. It is an essential link between film production and film
exhibition. The filmmaker and the team provide creative inputs during the
shooting of the film. Basic film software is created at the end of shooting. The
film-software thus created, in this form, cannot be exhibited and it undergoes
a number of processes to render it fit for viewing. This is where a film-
processing laboratory comes into the picture. Adlabs provides technical inputs
to the basic film software created after the shooting of the film. The film roll
undergoes a series of processes in the lab. The lab liaises with sound correction
and editing cells resulting in the final print for the film. This film is then pre-
viewed in a pre-view theatre as a form of quality check. The film is then passed
on to distributors. Adlabs then provides a large number of prints to the
distributors at the time of launch of the film.
IMAX ADLABS MULTIPLEX
Imax Adlabs Multiplex is a subsidiary of Adlabs Films Ltd.
8 P’S OF IMAX ADLABS
PRODUCT
Service Product / Service Package:
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The Core Competency here is SCREENING OF MOVIES. The supplementary
products / services are enormous like the Video Games Section, Art Gallery,
Music Station and Trendy Cafeterias. The ambience is pleasant with centrally
air conditioning, well-illuminated layout. IMAX ADLABS is well known for its
DOBLY DIGITAL SOUND.
PRICING
IMAX uses differential or flexible pricing for its Multiplex theatres. In the
multiplex the rates are generally between Rs. 80 & Rs.120 depending upon the
box office performance of the movies screened.
The prices are popularly estimated to be extremely fair prices for the complete
entertainment experience. Reasonable pricing is possible thanks to the
government policies regarding the partial wavier on the extremely high
entertainment tax that multiplex enjoy.
PLACE
It is located at Bhakti Park, Anik Wadala Link Rd, Mumbai-65. It also provides
its own Bus Service for public.
PROMOTION
Initially hyped, IMAX attracted a lot of press attention and subsequently the
public flocked to Wadala to witness the spectacle. However after the initial
hype died down IMAX did not take a more aggressive role in promotion but
instead took a back seat.
The most effective way of promotion is the daily advertisements in the paper,
which promote the movie, which is currently being screened in the theater, and
informs the public.
PEOPLE
Courteous and well-dressed people characterize the Multiplex.
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The employees are highly motivated and trained and exude an aura of energy
and vibrancy as they perform their duty with a smile on their lips and a spring in
their step.
Whilst actually experiencing the movie, the sin-goers around us are just as
important as the employees that escort us to the theater. Therefore IMAX,
which attracts the upper strata of the society, SEC A++, is a very conducive
atmosphere and a pleasant environment to enjoy a movie with the entire family.
PHYSICAL EVIDENCE
Ambient factors
·Air conditioning
·Excellent ventilation
Design factors
·Uniform appearance
·Extensive parking lot
·Spacious interiors
Social factors
·Well dressed employees
·Courteous
·Genial
·Family atmosphere
PROCESS
The process is a sequence of actions to deliver the service to the customer. In
this case the following is the process followed by IMAX.
The customer arrives to IMAX by car and first goes to the ‘pay n park’ to park
the car.
The customer then moves on to the ticket window to purchase the ticket for
the movie he is interested to watch.
64

Then the customer enters the building. Here the usher at the door checks for
the tickets.
Then the customer will move on to the screening area and watch the movie.
In the interval the customer will mostly come out to eat or drink something
from the cafeteria.
The customer goes back to the screening area to continue the movie.
PRODUCTIVITY & QUALITY
Undoubtedly, the IMAX caters to the crème de la crème of the crowd in the
Mumbaikars that patronize the theater. Therefore, these people are treated to
the best of quality and productivity by the employees. The customer is the King
here.
The service for the multiplex goes as far as actually delivering the tickets to
the client’s home so as to limit the customer’s trouble in actually booking the
tickets in advance. The theater, keeping in mind, its limited accessibility is very
considerate towards the people that determine its success.
CONCLUSION
This is not intended to be a scare story, however. As mentioned above, the
overall entertainment industry in India is taking on professional colours and this
will change the culture of the film industry too. Some film production
companies, such as Mukta Arts, have made public share issues, thus keeping out
of the world of murky financing.
65

The Film Federation of India is actively seeking to make film financing a
viable proposition for banks. It is likely that films would also be insured to
offset possible losses for banks.
It is widely believed that the granting of industry status to the film
industry will eventually allow overboard financing of films, though this will result
in production of fewer films than at present.
There will be an increase in the number of screens and multiplexes.
Moreover, stricter enforcement of copyright law will help the film industry
in its fight with cable operators and piracy. If piracy is not curbed, trend of
selling distribution rights for Home Video and C&S TV within 6 months of the
release of the film will prevail.
As 100% FDI is permitted in film sector, foreign entertainment companies,
with steady revenue streams, can do good business if they invest in Indian film
industry.
66

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