The trending news from Bollywood is that Reliance Jio Studios is in the final phase of discussions for buying the major stake in Karan Johar’s Dharma Productions. Earlier talks with Mr Sanjiv Goenka’s Saregama Group fell through because of valuation issues. Founded in 1976 by Mr Yash Johar with a resounding hit ‘Dostana’, the Company has produced 63 Hindi films with 3 on the floors. So why is this such a big deal.?! Karan Johar represents the centre of the elite and entitled Bollywood club; an omnipresent mover and shaker; other than his films, there is the much-watched, controversial TV show, fashion walks and his celebrity Emcee avatar at all the glittering film awards functions. His considered decision to offload much of his stake (90.7%) and his mother’s stake (9.3%) starkly reveals the tumultuous state of the Hindi film industry.

Listen to his comments also. How has the Mumbai film industry run itself to the ground? First, the stars demand high fees, but the films open poorly, creating unstable economics for producers. The budget structure is skewed so heavily in favour of stars (50%) that there is little left for the technical crew. Simply put, if A-listers cannot generate hits, how do they justify their high fees?! Saif Ali Khan has responded that movie stars should not charge exorbitant fees but…shrug…. shrug, this is a part of the economics of the industry. (Read- Dharma Productions itself is complicit in creating this unbalanced structure.)

The Bollywood mogul has also ranted about the high-ticket costs and F&B charges which have driven audiences away from cinemas. His take is that the average cost for a family of 4 works out to Rs 10,000/. Visits to the cinema have plummeted from 8-10 a year to just one or two. The Multiplex Association of India (MAI) has responded that cinema prices are dynamic and flexible depending on location, day of the week, seat zone, film format and star hype. Higher ticket prices also prevail in the first week, weekends and holidays and even night-shows. MAI has said that the average ticket price at PVR-INOX (1700 multiplex screen leader) is Rs 258/. Plus Rs 132/ as average cost for food and drinks- total expenses of Rs 1560/- for a family of 4. Methinks, the IMA has halved the normal expense for a family movie outing at a multiplex. Mr Ajay Bijli of PVR has said that only 14% of the tickets are priced at Rs 350/ with the rest between Rs 180/- and Rs 200/-. Experience suggests otherwise. The ATR for All India Theatres in 2023 was stated at Rs 130/.

Let’s shed some light on Mr. Vashu Bhagnani’s plight. He became Producer No 1 in the 90s with his rollicking David Dhawan- Govinda movies. His recent release, ‘Bade Miyan Chote Miyan’ made on a whopping budget of Rs 350 crores sputtered to a lifetime collection of Rs 64 crs at the BO. Mr Bhagnani had made tall claims of Rs 1000 crs collections at pre-release events. Alas, the film disaster has reduced him from Bade Miyan to Chote Miyan. With Rs 200 crores of debt he is selling his Juhu Office to, he says, redevelop the building into a luxury residential tower. The film’s director, Ali Abbas Zafar, has sued the producer for non-payment of Rs7.3 crs; accusations of unpaid wages to crew members are also doing the rounds. So, what about the 2 lead male stars, Akshay Kumar and Tiger Shroff? With reported paychecks of Rs 80 crs and Rs 40 crs they are laughing all the way to the bank.

Let’s delve into the Indian cinema ecosystem. We produce the largest number of films in the world- 1500 to 2000 every year- in 20 languages. Our huge country has only 9742 screens as compared to 65,500 in China & 35,280 in the USA. Hindi, Telugu and Tamil are the leading film industries, with Malayalam, Kannada and Marathi cinema also punching above their weight. In 2023, South Indian cinema surged ahead of Bollywood with 47% BO market share against 44%. South India also houses 47% of the cinema theatres. According to researcher Mr Hemant Chaturvedi, the number of single screens in India has declined from 25000 in 1990 to less than 6000, with many of them not operational. End of an Era. With the rising cost of real estate, many have been converted into malls and commercial complexes. Even a smaller theatre costs Rs 5 lakhs for monthly upkeep and maintenance plus the pressure of keeping the projection room, sound system and screen in the best condition. The GST on cinema tickets is 18%, but most States levy an additional entertainment tax of 20% to 30%, the highest tax ratio for any sector in India. Business uncertainties add to the gloom.

The Hindi film industry traditionally had 6 territories, which are now defined as 11 circuits. The profit-sharing ratio generally for a single screen owner/ distributor is 25:75; sometimes, it is 20:80 or even 30:70. The Multiplex owners have all the heft and clout—Week 1 is 50:50, Week 2 is 60:40, and Week 3 is 70:30.

For the Producer, the cost of the film is Budget + Promotion and Advertising expenses. They also sell OTT rights to streaming platforms like Netflix, Amazon Prime, Hotstar, Sony Liv… to help recoup their investment. Earlier OTT contracts were pre-sold, and even if a film performed poorly in its theatrical run, the contract was adhered to. This proved to be the lifesaver for the Kartik Aryan film, ‘Shehzada’ which mustered only Rs 32 crores at the cinema counters against a budget of Rs 70 crs. Reportedly, Netflix had paid Rs 40 crs for the streaming rights. Trade analyst Karan Taurani says that now there are clauses in the streaming deals regarding the theatrical performance of the film-where streamers say that only when a film reaches a certain threshold in theatres will the overflow or agreed additional amount be given.

It’s the distributor who takes significant risks when they purchase the rights to distribute a film. They hedge their bets by acquiring the satellite and music rights for the movie. T Series bought the audio rights for Pushpa 2-The Rule for a staggering Rs 65 crs. SRK’s Jawan’s rights had earlier been bought by T series for a record-breaking Rs 36 crs. Tamil-Nadu, Telangana and Andhra Pradesh have a large and passionate fan base for film music. Film songs become chartbusters and are played on a loop on FM stations and streaming platforms like YouTube, Spotify & Rasso. Flashback to the Iconic film ‘Sholay’. In 1975, its dialogues album sold 500,000 copies. By 1979, the platinum 1 million mark was crossed. The film exceeded its Rs 1 crore budget 3X. It grossed Rs 35 crs worldwide and brought in another Rs 35 crores in re-releases. Adjusted for inflation the box-office figures exceed Rs 3000 crores.

The ‘Adipurush’ disaster saga is a cautionary tale for distributors. People Media Factory bought and backed this Rs 550 crs budget film confident of a pan-India hit because of the Prabhas factor; the director Om Raut had delivered a hit with ‘Tanhaji’; plus the fact that it was inspired by the Epic Ramayan meant nothing could go wrong. Superficial performances, shallow storyline, poor VFX and cringeworthy dialogues scripted a mega-disaster. The character, ostensibly inspired by Lord Hanuman, was spouting tapori-style dialogues. Social media was outraged, and the distributors were looking at Himalayan losses of over Rs 150 crores.

The financial challenges for the Indian film industry have been cited as a big drop in audience footfalls, rising cost of production and the growing popularity of OTT platforms offering many options. The Covid lockdown has opened the eyes and sensibilities of audiences to better and more engaging cinema from all parts of India and worldwide. Reliance Jio Studios already holds stakes in Balaji Films and Viacom 18. The phenomenal success of the horror-comedy film Stree 2, which they co-produced with Maddock Films, must have propelled them on. The biggest Hindi film hit of all time with net collections of Rs 600 crores plus and riding on a budget of just Rs 40 crores. The lead actors Rajkumar Rao & Shraddha Kapoor don’t fall into the celebrity guest profile for’ The Koffee with Karan Show.’

Content has become the King. The Vijay Sethupathi-helmed film ‘Maharaja’ is a stellar example. Made on a budget of Rs 20 crores it closed its theatrical run at Rs 107 crores. This masterpiece is jointly produced by The Route, Think Studios, and Passion Studios. Many large and mid-budget films are now following this joint production template. This highly emotional action thriller is a case study in moviemaking. Impactful performances, master-class direction, great screenplay and editing with jaw-dropping twists and turns, real dialogues and photography that make the visual experience so intimate. Since being released on Netflix in July 2024 and with an IMDb rating of 8.5, it has become the most-watched Indian film of 2024. Content is King. Whether it is the true, relatable and inspirational story of ‘12^th Fail’ or the real survival and rescue thriller Manjummel Boys. It is the biggest Malayalam hit film ever without marquee names like Mohanlal or Mammootty. The Marathi classic ‘Tumbad’ became a cult film on OTT and is drawing large audiences on its theatrical re-release.

The assembly line productions of Akshay Kumar films- wrapped up in 40 days- no longer work at the BO. One of the greatest duds from the house of YashRaj Films is ‘Pruthviraj Chauhan’ where this star is said to have charged a whopping Rs 60 crores. Many shows were cancelled due to zero attendance. The film fans went hoping to see a glimpse of Samrat Pruthviraj; all they got was Akshay Kumar in every frame. The audience has become unforgiving; social media can influence the fate of a movie on the first weekend itself.

The Soft Power of Indian Cinema is immense. But again, it’s all about the quality of content and the entertainment quotient. Stories with human appeal and emotional connect, catchy music or well mounted large screen spectacles. RRR rode high at the Japanese Box office on all counts. In China, Aamir Khan’s ‘Dangal’ and ‘Secret Superstar’ minted Rs 1400 crores and Rs 810 crores—mind-boggling numbers. Strong storylines created social, cultural & emotional phenomena.

It’s time for Bollywood (and the Indian film industry) to acknowledge their self-inflicted problems. It’s time for them to recognize that good films are created out of collaborative teamwork – where writers, editors, cinematographers, music directors, production designers, and VFX specialists – all play a significant role. They must be recognized and rewarded for their creative contributions. It’s also time to acknowledge that audiences today will flock to the cinema halls in large numbers only if they feel that both their money and time is well spent.