'Excessive production expenses and high payments to stars may make the industry unsustainable in the long run'
Policies and politics, views and vignettes, of governments, parties and individual politicians are not the only fodder for the cables that are routinely sent to Washington by the diplomats of the United States. Their fine-tuned eyes and ears scan much more. One example is Bollywood — the Mumbai-centred Hindi film industry — which they have looked at as thoroughly and professionally as any other issue that matters to U.S. interests. After detailed discussions with film industry experts and reviewing the often modest revenues and low profitability levels of the industry, diplomats concluded that the impact of Bollywood, which is “touted as one of the largest film industries in the world, is more cultural than economic.”
Two detailed cables sent on February 11, 2010 (248355 and 248356: unclassified) from the U.S. Consulate in Mumbai, accessed by The Hindu through WikiLeaks, documented the unsustainable levels of compensation that are routinely paid to Bollywood stars, briefly discussed the underworld connections involved, outlined the emerging global aspirations of Indian film companies and analysed the failure of some Hollywood-Bollywood joint productions. The cables also spotlighted how the Indian film world was divided on what Hollywood can bring to their table.
Though Hindi films are produced in large numbers every year, according to G.K. Desai, a film producer, only one in every 10 productions turned out to be successful. In the assessment of Siddharth Roy Kapur, the CEO of UTV Motion Pictures, the situation was even worse. He said that “only five percent of Hindi movies released in 2009 made a profit.”
The diplomats were told by industry sources that despite such sustained losses, people continued to make films “because of the attraction and glamour” the field offered.
The cable noted that, according to Aashish Singh, vice-president of Yash Raj Films (YRF) Studios, a production company based in Mumbai, one of the reasons for the “little fortune” in Hindi films was the high production costs. Actors, Mr. Kapur pointed out, command fees that amount to as high as 50 per cent of the total budget for a film. Unless the compensation levels get realistic and production costs come down by some 40 per cent, the business will not be sustainable in the long term, Akshaye Widhani, vice-president of YRF held. However, many of them were aware that such reductions will not happen easily. This prompted Mr. Widhani to admit that till “one of the major production studios fails or declares bankruptcy,” actors may not get realistic with their compensation packages.
If lack of lines of credit was a problem till 2000, in more recent times it was the oversupply of money that affected film production in India, noted the cable. According to Jehil Thakkar, Head of Media and Entertainment for KPMG, until 2000 the industry did not have access to legitimate commercial financing. “As a consequence, films were financed by ad hoc collections of investors, many of whom were from the construction and trade industries, who charged interest rates as high as 60-100 percent. The industry also welcomed funds from gangsters and politicians, looking for ways to launder their ill-gotten gains.”
The U.S. diplomat was told that the situation had changed after the government made it possible for the industry to access formal credit, but the multiple avenues and sources of financing that opened up also caused problems.
Industry professionals complained that “there is too much money and too many people chasing [a] limited amount of talent.” This, in turn, created “a ‘price bubble' and ‘unrealistic expectations'.”
Citing Mr. Thakkar, the cable noted that India had just 12 screens per million people while the U.S. had 117 screens per million. This gap, it observed, indicated the room for growth that was available. Officials at Anil Ambani's Reliance Big Pictures — which is described by one of the cables as “the most aggressive Indian player in Hollywood” — thought that the best way to go forward is to corporatise the Indian film industry and go global. However, Jawahar Sharma, COO, was candid enough to admit that their own global ventures had less to do with any strategic considerations.
Joint productions
Hollywood studios, which are “amongst the highest revenue earners in the world,” were attracted by the growth potential of the Indian film industry and made forays into Bollywood. Unfortunately, the cable documented, all the joint Hollywood-Bollywood productions released thus far have failed at the box office, signalling that “a successful entry into Bollywood is not easy.”
According to the film professionals who are quoted, one of the difficulties faced by Hollywood film-makers is Bollywood's attitude. Mr. Kapur told the diplomat that Indian film production studios viewed “Hollywood as a competitor.”
“It is difficult to convince the large Indian film companies to partner with Hollywood,” said Blaise Fernandes, managing director of Warner Brothers India.
This was partly due to the fact that even well known companies like YRF Studios thought Hollywood studios had little to offer them other than finance. As a result, “they [the Indian film companies] would seek collaboration to de-risk the film project by jointly investing in its production, or to re-make Hollywood movies in Hindi,” noted the cable, citing Indian producers. However, a few others held a different opinion. Hollywood, they observed, had a range of things to offer including its script libraries, valuable production talent, and an international marketing and distribution network.
One cable (248355), after reviewing the opinions and information that were collected, concluded that “U.S. studios have to still find a good working model for partnering with Bollywood.” However, it was optimistic that U.S. companies can still “achieve success in this unpredictable market where even the best Bollywood studios and stars have been known to falter.” In order to get there, the cable advised, the U.S. studios “have to diversify the production pipeline to include a mix of small, medium and big-budget films by renowned and new talent for mainstream and world cinema audiences.”
(This article is a part of the series "The India Cables" based on the US diplomatic cables accessed by The Hindu via Wikileaks.)
Keywords: cable248355, cable248356, The India Cables, cablegate, WikiLeaks, U.S. diplomatic cables, Bollywood studios, Hindi filmdom, Yash Raj Films, Reliance Big Pictures, UTV Motion Pictures
Tollywood - Telugu Movies
It has nothing to do with Punjabi music, it is South Indian. Bollywood is hardly a player in South India. Tamil, Telugu, Malayalam and Kannada have their own regional movie centers and by % they make better movies than bollywood.
I'm interested in Bollywood but I'm also intrigued by Tollywood. I saw a small documentary which mentioned that the Tollywood industry was very small. My first contact with Indians and Pakistanis was in Vancouver BC. There I was first introduced to Punjabi music. Maybe Tollywood would be more economically viable and Bollywood as it's smaller. I'm American but I've traveled a lot in my life, while being exposed to developing markets, thus I'm a bit more open-minded with movies and other media. One thing is for certain, the world will start to be more influenced by the advanced developing markets of India, Brazil and China. Just recently I was in Brazil teaching English and was shocked by the show Caminho das Índias, which was a drama series produced in Brazil and all based on Indian traditions but the actors spoke Portuguese of course. However, they did incorporate some Hindi lingo. I thought this was quite creative on the part of the Brazilians. So, yes, India is already slowing influencing the creativity of productions worldwide.
Click on the link, and check it out. http://caminhodasindias.globo.com/
I don't see much of a market for Bollywood films in turn, in the American market. As Bollywood films are cultural, they reflect the culture of India and not that of America. India is more of an orientalist culture. Americans can't relate to a bunch of non-western looking people singing, especially if their physical appearance doesn't reflect the pro-Western ideal. The musical days of Hollywood are long over. Also, these films are generally overly romanticized and the effects in Bollywood action films are horrible. Also, there is a diversity problem in all Bollywood films that would be considered very offensive to many in American audiences. Bottom line, they're aren't enough Indian-Americans in the U.S. that would appreciate watching such movies, thus sustaining growth for Bollywood films in the U.S. market. Vis versa, Hollywood films don't reflect the ideal of Indians while the same underlying issues apply for pro-Orientalist audiences. The U.S. is a racist nation and India is also a racist nation. Racism and representation is the elephant in the room in this entire debate but insiders in both Hollywood and Bollywood are afraid to call it as they see it. Just as in China, India isn't a melting pot, thus their films reflect that cultural reality. Hollywood is based in a nation that's considered a melting pot for some, but at the very least, a salad bowl for others.
@ Ramesh: Yes, please note that in terms of PPP, viewership and diversity, Indian movies are more widely seen, have higher viewership and more influence because people who view Hindi movies (at least) do not have the benefit of knowing a utilitarian language such as English. Note that given the size of the Indian economy, Indian film industry has proved to be the over-achiever of things, given the economic situation - if you look at the UK, for example, Hollywood movies do not gross quite as much as they gross in the US, it's common for Hindi movies to outgross Hollywood movies in London. A bulk of their American media's money is made domestically - and that has an economic explanation.Once Indian currency is pegged closer to the USD, the quality of life increases (as will the cost of production), as Indians become richer, the value of the industry, based on international valuation, will easily catch up to Hollywood. That means, it's all about how much an average Indian is earning. Believe me when I say this, if Indians on the average earn USD 40,000, their movies will be worth billions. You are failing to see price mechanism in this. Hollywood movies, on the average, cost between 8-15 USD - Indian movies cost about 1-4 USD in the cinema... do the math. In India, they cost about 1 USD. Please note that there was a time when an average Hindi movie made about 100,000 - 1 million USD, that figure has somehow inflated to 10-15 million USD in India alone - that said, wait and it'll catch up in value. Hollywood, like Bollywood, suffers a lack of creativity - I have no idea what you saw in the Potter films, the last good series made in Hollywood was the Lord of the Rings trilogy... all else, stuff like Spiderman or Wolfman or Xmen or Harry Potter are comic books stuff. I don't see that being any different to some Dabbangg or 3 idiots, to be honest. They have no value beyond entertainment. I am sorry, I don't see any superiority in the West... not anymore. They are ahead because there is more wealth there, you look at Harvard, the best ranked university, and then look at the fact that the annual endowment at Harvard is greater than an economy in a small African country - if you look even closely, you realise - money co-relates with value, hence it's a logical conclusion that economic imperatives influence industry, whether movie or otherwise, the richer your consumer, the more he/she will pay. Harvard is the best because they have the most money! No institution has every been the best without the monetary factor playing in.That's economics 101. On the quality of Indian movies, well, the least said the better, I didn't like 1 movie post 1970s-80s. The last movie I enjoyed was Golmaal/Chupke Chupke/Angoor. Good economics do not necessarily mean good artistry. On creativity and artistic value, I cede that Indian movies are no better.
Thank you for bringing out the statistic 'Only five percent of Bollywood movies released in a year make a profit'. This will stay with me. For all those millions of Indians who are 'proud' of our cinema industry - here is the bottomline. Not only are the movies miserable escapist fantasies that people from other countries (and those with half a brain in our own country)laugh at , we don't even make financial successes out of it.
i wonder if wikileaks has declassified all the classified documents of the world.even our desi film industry couldnot save itself form its wrath.The American studios will never be able to make any inroads here because they can never understand the pulse and heartbeat of this nation.
Glad Hollywood can't mix with Bollywood. God Forbid more ventures like that rubbish "Bride and Prejudice" - completey highlighted our plastic bollywood stars like Aishwarya Rai. To be frank - SK, Salman, Hrithik all pretty pointless and pathetic - to see Indian talent at its best look no further than Om Puri and others.
We Indians are very good at faulting others when the outcome is not in our favor. US economy may have failed and I agree they made wrong judgements but their reports were not wrong, it was the stupid leaders that acted against the reports. Any since this topic is about movies, their movie industry runs like any other corporate entity and the failure rate is not as bad as in India. Give me a break - 5% success rate? I fault the actors who are irresponsible and just like to make millions before the glory on their face fades off. As an entertainment industry professional and having worked in various hollywood studios, I know how Hollywood is well organized. Their Actors do get huge amount in compensation but not 50% of the movie budget. Instead they would get % of profits. Unlike in Bollywood, it is economically reasonable if the actors compensation is below 25%, so the rest of the cost goes towards movie production cost (towards technical expenditure) and the producers can give us good quality movies. Actors should be compensated based on the success of the movie and then I agree they deserve the millions. I know it takes another 20 years for this to happen or as the report indicates a major crisis in the movie production houses. We Indians have the talent and the market to cash the talent but we do not know how to organize ourselves and see a little beyond today and now. The only hope and a progressive mindset I see is in Mr Amir Khan and I hope all the other actors follow his footsteps and help Bollywood make good movies and help us watch good movies not just masala mashups.
- Sri
Its an American POV on how to grow Hollywood which is failing miserably. They are not able to penetrate the Asian market and losing the plot repeatedly. But Indian film industry is entering all Asian and middle eastern market easily. We are so non-systematic that they don't ever understand us. They don't understand how we can be so undisciplined.
The reason why bollywood continues to make movies unabatedly is because of the deep rooted confidence among the filmmakers that there will be no dearth of movie goers in this country.Right from its nascency in the Raj Kapoor era to today's raunchy era of Shiela and Munni, movies have captured the popular and fanciful imagination of people in this country.It has been infused in our culture to such an extent that even if we are unaware of things relevant to us we care to keep ourselves abreast of everything in our so called loveable star's life.We are 1.21 billion in number and this is a huge market which the filmmakers know can ensure good return on investment even if not supreme returns.Even a flop movie in this country recovers more than is spent on it.And regarding the sustainability of this industry I can bet my money that it will continue to proliferate and thrive in the future.
Nothing in India can be sustained.. thats true.. but that sustainablity has a tenure which is pretty long in India than any other countries.
Bolloywood movies are the worst movies one could see. There is no story only fantasy and dreams. The majority of the Indian masses are illiterate and they just want to spend time looking at these unattainable dreams and forget their reality. That is why these movies works in India and if they ( bollywood production houses) brag about international scrrenings, the movies are seen mainly by Indians ( 99 %) settled abroad. These are not for global audience.
Everyone who is in the industry makes money and the biggest losers are the indian audience by paying their hard earned to watch these worthless movies.
@Raj: Really , Bollywood is bigger than Hollywood? In terms of the crappy movies made? Yes.But in terms of total capital involved? Nowhere close. If our movies make 200cr as gross collections , we think thats amazing. Movies like Harry Potter etc. have made more than TWICE of that just on their opening day.
Ii really dont think that the expert option of American diplomats is a matter of concern at all, because their version is very biased (very similar to their stand on international affairs). The way that these 'expert opinions' work, i believe, is that they talk to one person and form an opinion about the whole point of discussion (the film industry in this matter), so everything is at the mercy of that single person's opinion. Which is not very true. India as a nation is very complex and so is its film industry, to understand it, you have to be really inside it for years together. Similarly, when somebody from America says we are going to be next superpower, it should not be taken seriously and start blowing trumpets.
Perhaps the Diplomat failed to realsie that the Headquarters of Bollywood is not Mumbai, but Dubai. The Bhailog in Dubai finance Bollywood,select actors and actresses, selects singers etc etc.One of the top actors is in the record boasting about his Dubai connections
While 'The Hindu' has made a valuable contribution by publishing (publishing only, not discovering) the WikiLeaks cables, it should be remembered that these are cables sent by low to mid level government officials in the grand scheme of things. It is not really important what they think about each and every thing they see. The box of money cable, yes. This Bollywood cable, no. I am sure the sender of this cable was castigated by his boss for this almost useless information, 'The Hindu' should have also ignored it instead.
The industry will sustain so long as it provides the way to make black money white and the Indians have the largest share of black money in the world.
What the US diplomats failed to see ofcourse was that much of the finance comes from 'easy money'. Financed by crime (including corruption) and, ultimately, inflation. Nothing could be more sustainable in India?
Bollywood is a self-sustaining industry - it's very mature now, I doubt the Americans even understand the nature of this industry. Here we have the world's largest film industry, which is actually growing over the years. Quite frankly, I doubt the Americans on any issue that requires judgment - because after the WMD in Iraq, Afghanistan through Pakistan, Libya through NATO - I really think they lack in judgment. Look at the American economy - trillions in debt and an ever-deepening budget in the negative. No economic expertise shows there, if one really looks for it. Take it with a pinch of salt, Americans are never right outside America. India-China have unique growth paradigms - to each his own.
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