Stars play the most significant role in the making and success of a film, in the Mumbai movie word, writes Parthasarathi Banerjee in ‘Film-making in Mumbai: Institutional solution to entrepreneurship in creativity,’ an essay included in ‘Culture, Society and Development in India,’ edited by Manoj Kumar Sanyal and Arunabha Ghosh (www.orientblackswan.com).

“Compared to other production personnel, stars’ shares in total production costs stand out disproportionately large… A star can bring in very large revenue or nearly nothing.”

Unlike what prevails in Hollywood, the star in the ‘Mumbai model’ (MM) is an investor, says Banerjee. “A star in MM is more like a platform than a brand shared across products. Several producers can join in film-making in many ways and operate at a lower transaction cost without affecting mass distribution of a film.”

The essay cites studies that suggest that because expenses on the star, determined by factors peculiar to the film industry, are treated as sunk cost, market concentration or market power may not decrease even if there is an increase in the size of the market.

Well, how do stars manage risks? By determining the number of appearances they should make in a period, or the genre of films they should act in, or the emotions they should show and elicit, the author informs.

The networked world of production in MM offers a few other modes of risk-taking and sharing, he adds. “In the simplest instance, asset holders join in different film productions in several ways during the same period. A star often works on three or four films simultaneously in one or a number of studios.”

Reducing time to produce a film is another form of such insurance, notes Banerjee. “Typically, a Telugu film from Hyderabad would take three to six months to produce. In Tamil films from Chennai, the production time varies from four to twelve months. In Ramoji Film City near Hyderabad, one can enter with money and exit in the shortest possible time with a film; it has been serving as an outsourcing centre for Hollywood as well.”

In the high-risk, high-return business of film-making, bankruptcies consequent to successive ‘flops’ are not uncommon, the author observes. “In fact, a large number of actors, singers or other associates, believing that they had access to information on the quality of the film being produced, ex ante, invested in such syndicated finances to discover, ex post, that their funds disappeared, rendering them bankrupt.”

Repeated losses can be definite dampeners; but then the situation gets salvaged by the whole bunch of ‘average quality films’ that manage to ‘just break even.’ And, as in any fantasy land, ‘the occasional blockbusters make good the losses and restore faith in the system of networked funding.’

Towards the conclusion of the essay, the author says that unlike Silicon Valley, where the market enters later through initial public offers, the MM offers non-incorporated modes of earning of profits. “This is unique, and we can explore whether such a mode of reaping Knightian profit could be generalised for other creative activities.”

Entertaining study.

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