Scripting a better marketing strategy

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The balance is tilting—of the 1,300-odd movies produced in India everyyear, the south Indian cinema industry comprising Telugu, Tamil, Kannada and Malayalam films accounts for 60%. The southern industry is estimated at over Rs 1,500 crore and has done better than Bollywood this year with the Hindi film industry showcasing more flops than hits.

Typically, south Indians are avid cinema-goers and hence, it is no surprise that Andhra Pradesh, Tamil Nadu, Kerala and Karnataka house almost 5,000 theatre screens, which is about 50% of the total number of operational theatre screens in India.

And yet, there’s scope for much more, for 75% of the southern film industry’s revenues come from domestic theatrical collections. “The traction for robust growth for south Indian cinema is to tap the vibrant non-theatre revenue streams like radio, TV and mobile,” says Farokh T Balsara, media and entertainment expert, Ernst & Young. “Film content when sliced and diced to suit non-theatrical content like music and comedy clips on mobile, the radio & television market will open new revenue vistas to the south Indian cinema industry,” he explains while presenting the ‘India entertainment down South’ report.

Analysts say the southern film industry is known for pioneering talent not only among actors and artists, but also technicians and crew members who have driven innovation in cinematography, sound engineering and post-production techniques. But despite this, the south Indian cinema needs to bring transparency in collections, market films better, especially worldwide, and curb the spiralling production costs, according to analysts. Something—rationalisation of production costs—the Hindi film industry has already started doing after meltdown pressures brought about a severe cash crunch, made all the more worse by a two-month strike, poor content and the swine flu scare.

According to Balsara, both the Telugu and Tamil segments posted a revenue of around Rs 700 crore each in FY09, while the Malayalam and Kannada films contributed Rs 100 crore and Rs 50 crore, respectively. In terms of overall share, Telugu and Tamil segments account for approximately 45% each, while the Malayalam segment accounts for 8% and Kannada segment accounts for 2%.

As for revenue streams, the domestic theatrical revenue is by far the most dominant, accounting for nearly three-fourths of the total revenues. While 17% revenue comes from cable and satellite TV rights, international theatrical rights contribute 5% to the total revenue pie. The other revenue streams—music rights, domestic home video rights, Internet and mobile right, etc—contribute merely 5% of the total revenues earned.

Many southern releases are held up at the censors, too. Says Kamal Haasan, actor, director and producer: “The Censor Board has double standards in liberally allowing expletives in Bollywood and denying the same to South-based movies. The board should have egalitarian standards so as to promote equality of film product without the Bollywood-South regional biases.”

The cross-over market

Unlike Bollywood, the south market is characterised by cross-overs with each state’s movies having a notable presence in the four states. The size of the cross-over market, however, varies considerably, depending on market for films by language and state as also the format in which the films are released. For example, Tamil movies are typically always dubbed in Telugu.

Tamil films have a significant market in Kerala and Karnataka where they are released without dubbing. These states contribute up to 5% of Tamil Nadu’s theatrical revenues. Selected Tamil films, say 10 to 12 a year, are dubbed or remade in Telugu. Films from leading actors are released simultaneously in Tamil and Telugu. The Tamil film producer either dubs the film himself and releases it in Andhra Pradesh or sells the dubbing and remake rights to a Telugu producer. In the latter case, the Telugu producer decides whether to dub the film and release it or remake it with Telugu actors.

Telugu films have a significant market in Tamil Nadu. Around 20-25%of them are released in the state. Earlier, these films used to be dubbed or remade into Tamil films but of late, with increase in the Telugu-speaking population in Tamil Nadu, they are being released without being dubbed. Another trend is that of Telugu films being dubbed into Tamil solely for the satellite TV market. Telugu films also have a significant market in Karnataka that accounts for around 3% of theatrical revenues in Andhra Pradesh. A few Telugu films are dubbed into Malayalam and released in Kerala.

As for Malayalam films, there is a limited market in Tamil Nadu. Only a few starring reputed actors are dubbed into Tamil. Malayalam films have an insignificant market in Andhra Pradesh and Karnataka.

The winds of corporatisation are slowly blowing through the southern film industry as well, with banks now willing to lend to film producers. According to a field general manager of UCO Bank, the bank has lent up to Rs 400 crore to 67 films in the four southern markets with no bad debts. But he admitted that banks were not allowed to finance movies produced at the cost of over Rs 100 crore.

Unlike Bollywood, the south Indian film industry hasn’t tapped its full overseas potential. For example, the international market for Telugu films is highly unorganised and under-tapped.

Says Allu Sirish of the Telugu Film Producers Council: “At a time when marketing cost of movie-making rivals production cost, the Telugu industry is yet to exploit the multiple media streams of publicity to enlarge the revenue pie.” For example, he points out that as an industry that produces more number of films than any other southern movie market, it is hampered by the curb on releasing a movie in a home video segment after a year of the theatrical release.

According to Balsara, the industry can evaluate options such as a joint venture by producers to set up an international network to market and distribute Telugu films. The market can also be expanded beyond the Telugu diaspora. The industry should draw analogies from Japanese and Korean cinema in getting international attention and viewership, point out experts.

Malayalam producers are not able to realise the optimum value of international theatrical rights in the Middle East, as there is a single buyer who dictates the price. Further, producers may not have explored other international markets such as the US, the UK, Canada and Europe. As Malayalam cinema is artistic, it is likely to appeal to an international audience if the films are sub-titled in English.

The geographical reach of Kannada movies is limited outside Karnataka, with a few producers exploring certain selected parts of west and northern India, while hardly one or two movies actually get distributed in the international market. Kannada-speaking population is present outside the state as well as in countries such as Australia, the US and pockets of the Middle East. However, these markets are not exploited, like in the case of Tamil and Telugu movies.

As the E&Y report highlights, the limited exploitation of non-theatrical revenue streams will hamper growth of the southern film industry. This is where the Hindi film industry fares better—it exploits each revenue stream to the hilt. In contrast, the southern Indian industry often bundles rights together and sells them for life. This results in substantial under-exploitation of rights. In order to realise their full revenue potential, the rights should be split and sold separately, says Balsara. Further, the rights should be sold only for a specific period of time. Additionally, producers can consider entering into revenue-sharing agreements with the acquirers of rights instead of an outright sale.