As a species, we are obsessed
with numbers. The more staggering the numbers, the more we like them, which
results in more conversations built around them.
Be it Sports, entertainment, politics
, economics or any other walk of life, there is a tendency to zero in on a
single statistic ( or a handful) as a representative barometer of success or
failure. Let me elaborate via examples.
In Test Cricket, a batsman is
judged to be good if he has a good average ( and centuries) . In T20 cricket, a
batsman is usually judged to be good if he has a higher strike rate ( or more
sixes) . Our economy is said to be doing good, if the GDP growth rate is high. And
in a similar manner, a hindi movie is judged commercially successful if it hits
the “100 crore” mark.
All the above instances suffer
from the same fallacy, that of missing the “ bigger picture”. A Test batsman is more than just his average
suggests, a T20 batsman is more than what his strike rate tells us. It is very
important to also judge a batsman on the context of how he made his runs, where
he made them and under what situation.
By the same logic, there is lot
more to the success of a hindi movie than a “ 100 crore” gross at the box
office. Not all movies that hit the 100 Cr. mark are successful, and neither
are all those which fail unsuccessful. Unfortunately, most of us are attuned to
concentrating on the box office gross to determine success, and the media has
played a significant role in creating and reinforcing the importance of the box
office gross. I’ll be examining various other facets and statistics which play
a critical role, as important as the box office gross and sometimes, even more
important.
- Television Broadcast Rights : Increasingly, more and more movies get their TV rights sold before the theatrical release. With the proliferation of a number of GECs ( General Entertainment Channels), producers are being paid humungous amounts for exclusive satellite rights of their movies. According to an Economic Times article[1], Multi Screen Media ( which owns Sony and its sister channels) spent close to 21 Crores to acquire the satellite rights of 3 Idiots . To put that in perspective, 3 Idiots was approximately made on a budget of 45 cr, which means the movie got back around 46% of its budget even before it was released in a single theatre. This stands true in Hollywood too - the average gross from television rights comes to around 8-10% of the movie’s total gross, which is quite a significant portion.
- Audio Rights :With the increasing availability of audio files on a myriad number of websites and also on YouTube, one w ould imagine that Audio rights would hardly determine a movie’s commercial success. However, there are several instances where Audio rights have made a sizeable contribution to a movie’s revenues. The disastrous superhero movie Ra-One from SRK, earned close to 15 crores just from selling its audio rights. This translates to roughly 11% of the movie’s total budget of 132 Crores[2], which is not bad at all!
- BluRay, DVD and Video Sales – Yes, Loads of people still buy original content despite how piracy has grown. The Hollywood industry has adapted these media in such a way that buying content gives them a better experience of the movie than just watching it, with inclusion of extras, interviews, uncut scenes and what not. Also, there sufficient evidence to prove that a movie can still go on and become successful through video sales, even after its theatrical run is over. The best example for this would be “ The Shawshank Redemption” which was a box office disaster when it released , but went on to attain massive recognition later on, resulting in unprecedented sales creating records in USA and most of Europe. The popularity of the movie has only grown over the years, and Warner Bros. still make a substantial amount of money through it. The movie in fact, is considered as the biggest “home – viewing” hit ever in the US. Closer home, in India, Andaz Apna Apna replicated something similar, failing at the box office, but achieving a cult status over the years, which ensures revenues for the makers of the movie in various forms.
- Merchandising – Merchandising has not been a big thing in Indian cinema and has had limited appeal. This is changing, albeit pretty slowly. Both Ra-One and Krrish, were movies which made substantial investments and are said to have reaped revenues worth few crores from merchandise sales. In Hollywood, Merchandising is huge, no, make that HUGE. There have also been rare occasions where movie production houses make sequels and elongate franchises, with the primary aim to keep the merchandise business thriving. Pixar’s "Cars” was perhaps the least liked movie among all their productions, but still Pixar chose to go ahead and make “ Cars 2” ( which was also not very well received by fans) . The reason – “Cars” is perhaps the highest merchandising earning single film of all time, the movie led to merchandise sales close $10 Billion ( yes, that’s BILLION)[3] from 2006-2012. Even with a modest 10% royalty – it translates to almost a Billion dollars in revenue, which is more than twice the movie’s box office gross of $463 Million. This also explains the high number of different car types we see in the sequel compared to its first outing. One can only imagine how much merchandising gross was earned from movie franchises like The Star Wars, Harry Potter Series, Toy Story, Shrek and the likes. Animated and Fantasy movies in particular are heavily exploited as a commercial property and turned into merchandise magnets , netting in lots of dollars for the studios.
- Distributor Gross – Distributor earnings show something of a huge variation depending on the movie. A movie from a leading star like a Salman , SRK etc. would get the producer a better share of the ticket earnings ( 60:40 would be a ballpark figure, with 40 for the distributor). This is one fact which is always hidden when we read box office figures of 100 crores and 150 crores being touted. As a thumb rule, the producer earns back only 50% of the ticket sales which is why a movie made on a budget of 70 crores wouldn’t be an “ actual hit” if it earned 100 crores at the box office.
The ones mentioned above are only
a handful of ancillary revenue streams for movies and there are new ones being
used all the time. Some more sources of revenue which are increasingly gaining
acceptance are Product Placement, Video Game Tie Ups, Comics, Books, YouTube,
special edition consumer hardware and what not.
So, the next time you hear a Rohit
Shetty movie making “100 crore” , keep your eyes open. There’s lot more to the business of movies than just the box office
gross.
