Top Bollywood production house Yash Raj Films (YRF) is releasing an unprecedented five films in 2008 across genres (thriller, comedy, romance and animation), starring some of the top actors and directors. The number is still small compared to UTV Motion Pictures’ 18-20 films slated for release this year or The Indian Film Company’s 12-13 films. But the very fact that YRF is scaling up its production of movies is indicative of the changes sweeping across Bollywood. Between the three of them, they will produce some of the most awaited releases of the year like Aditya Chopra’s Rab Ne Bana Di Jodi starring Shah Rukh Khan, Rakesh Omprakash Mehra’s Dilli 6, Akshay Kumar in Singh is Kinng and the Aamir Khan-starrer Ghajini.
“YRF has scaled up its operations recently and the studio model that was embarked upon a couple of years ago is firmly in place. YRF takes prides in being part of every step of the value chain of a film from its conception to its delivery,” says Sanjeev Kohli, director and CEO, Yash Raj Films.
The seeds of corporatisation that were sown a couple of years ago are finally bearing fruit and most of the top players (read Reliance Entertainment, UTV, Eros International and TIFC) now want to be on all sides of the spectrum: Production, distribution and exhibition. Having said that, there are no set rules of corporatisation in the film industry and most of the players admit that “Bollywood is not all there yet”.
Some corporates, including the Singhanias and the Birlas have learnt it the hard way. For instance, according to analysts after producing Sanjay Leela Bhansali’s Black, Aditya Birla Group’s Applause Entertainment lost its way somewhat and is now reorganising its strategy to move forward.
But still, there’s ample reason for big corporates to knock on Bollywood’s doors and walk in.
Consider this: The Indian film industry, with over 3 billion admissions per annum, is the largest in the world. The industry, which is currently worth $2.9 billion as per estimates, is slated to grow at a CAGR of 16 per cent.
Says Rajesh Sawhney, president, Reliance Entertainment,“Investors are looking for vision, strategy and execution capabilities and typically a big corporate can provide all three.” Ask Sawhney whether Bollywood is corporatised and he quips, “There has been corporatisation on the exhibition front with the explosion of multiplexes. There has been corporatisation on the production front with financing now coming from corporates but we need to concentrate more on content, invest more in marketing and distribution. As I keep saying, if content is king, distribution is God.”
One of the biggest changes that has happened is the way movies are being made, according to Siddharth Roy Kapur, director, UTV Motion Pictures. “Now, filmmakers and producers are making movies much more efficiently and in a much shorter span.” Sandeep Bhargava, chief adviser of the AIM-listed The Indian Film Company, says, “Three to four corporates are ruling the industry. There’s no balance between revenues and cost of production, which includes cost of talent. I see a correction coming.”

Key drivers
Bollywood is getting to be a more professional industry, but is it on course to touch $5 billion by 2011 as some estimates suggest? “Yes, very much,” says Shailendra Singh, joint MD, Percept Holdings, “The opening of the film industry to foreign investment coupled with the granting of industry status to this segment has had a favourable impact, leading to many global production units entering the country, including Walt Disney, Warner Group, Viacom and Sony Pictures Entertainment.” Other factors driving the industry, according to experts, are the rise of consumer spend on entertainment, the boom of multiplexes, now beginning to impact tier-II and III cities as well, digitisation, increase in Hollywood film releases in India and improved models of financing. Production houses are being forced to embrace corporatisation, says Singh, thanks to systematic and continuous growth.

Challenges remain
While the method of working has changed, certain factors key to corporatisation haven’t in many cases. Experts point at the lack of discipline and accountability. “You can’t be a family-run company masquerading as a corporate,” says an insider. “It’s a totally relationship-driven industry,” admits Kishore Lulla, chairman & CEO, Eros International. “The mindset hasn’t changed. If we have been successful, it’s because we have a 30-year experience in the business. We are a corporate but we have a relationship with everyone in India.”
There are other challenges to conquer, points out Singh of Percept. “Original concepts, an ever increasing talent fee, transparency in box-office revenues, IP regulation and piracy are all issues that still need to be addressed on a consistent basis.”

Stars charging the moon
But the biggest concern is the shortage of skilled, experienced manpower. “There is a severe crunch in creative talent, leading to escalation in prices,” says Sawhney. “The imbalance in the supply-demand equation is driving prices up for the few bankable stars,” points out Kapur. “It is a known fact that the industry is currently in a state of exaggerated pricing. This makes our task—the marketing and distribution guys—even more daunting and painstaking. Recoveries need to match pricing, taking the bar higher and driving us to chase the top dollar in every conceivable revenue stream,” remarks Tanuj Garg, an expert in international markets, and currently head of UK and Europe at Studio 18.

The right mix
Most players also admit that small budget commercial films like Bheja Fry and Page 3 are here to stay. So, if UTV is producing four big-ticket films, it’s also producing six small-to-medium budget films. Ditto with Indian Film Company. “It makes sense to experiment across genres and budgets. It derisks the business,” says an analyst. Because despite the winds of change blowing and flow of corporate finance, a number of investors, including private equity and venture capitalists, are still wary of Bollywood.
As Mishra of UFO Moviez puts it, “Corporatisation is not a destination, it’s an evolving journey and Bollywood is on its way. With professionals foraying into the business, corporatisation is not an option but need of the hour.”