Saturday, February 17, 2007

reinventing bollywood (edited version)

By Jason Overdorf (Business 2.0 March 2007)

A REBEL MOVIE PRODUCER IN INDIA LOOKS TO HOLLYWOOD FOR INSPIRATION--NOT JUST FOR HIS FILMS, BUT ALSO FOR HIS BUSINESS MODEL.

RONNIE SCREWVALA WALKED THE RED CARPET AT THE glitzy Dubai International Film Festival in December with Oliver Stone and Richard Gere. Westerners might have wondered who he was and why he deserved the company of two Hollywood luminaries, but anyone familiar with the Indian film industry would have understood. Screwvala, one of the leading movie producers in India, is bringing Hollywood-style filmmaking to the subcontinent. And U.S. moviemakers, desperate for new opportunities, want a piece of the action.

India's teeming film industry, known as Bollywood, is extraordinarily prolific. Indian filmmakers churn out 1,000 movies each year. Yet the industry grossed just $1.5 billion in 2005, and only a handful of movies made it to first-run theaters overseas. Compare that with Hollywood, which pumped out 563 movies that year and made more than $18 billion at the box office, including $9.6 billion from international distribution.

Why isn't Bollywood making more money? That question is the driving force behind Screwvala's company, UTV Software Communications. "Broadcasting [in multiple channels] started here in 1992, and it's already a $4 billion business," says the 49-year-old entrepreneur. "Yet this 100-year-old industry is still less than $2 billion. We have to grow." His solution is to revolutionize Bollywood--blow up the business model and replace it with traditional studio rules.

It's a huge job. Bollywood has always been a haphazard affair. Half a dozen prominent families controlled it, but they weren't very businesslike. Movies started shooting with no scripts and little money. Stars disappeared midshoot for weeks at a time to vacation, go home, or work on another movie. Theater owners underreported ticket sales to avoid sharing revenue with producers. It was nearly impossible to figure out whether a movie had made money and, if so, how much.

In addition, Indian story lines did not appeal to many outside the country. To the Western eye, Bollywood movies were chaotic, a surreal combination of Sylvester Stallone and Busby Berkeley musicals. In a typical plot, the hero sang, danced, fought bad guys, got the girl, found his long lost brother, and wept on his mother's deathbed--for at least three hours.

Screwvala broke into Bollywood in the late '90s, teaming up with anyone willing to work by his rules. UTV has produced a dozen movies with all the earmarks of professional filmmaking: budgets, marketing and distribution plans, real preproduction, and three-month shoots. The company distributes them worldwide and milks Hollywood-style ancillary revenue, from product placement to soundtrack rights and video-on-demand. Screwvala has also cut the running times and dumped the disorganized and stale story lines. His hit Rang de Basanti (The Colors of Spring) tells the story of India's disaffected urban youth; it also made more than $2 million in the United States. "We're breaking the mold," Screwvala says, comparing his experience to the days when Star Wars and other independent films paved the way for new genres in Hollywood.

Screwvala likes pioneering. The former game show host started his business career walking around Mumbai, asking apartment dwellers to try a newfangled gadget called a remote control. He got Indians to give up their single-channel, government-run television and brought cable to the country in the 1980s. He used the money from that to get into television production, making a steady stream of animated cartoons that attracted U.S. producers looking to outsource their own animation.

But all the while, he had movies on the brain. "Indians have always been voracious movie viewers," he says. "That's in our DNA. But we're as strong in commerce as we are in creative. It seemed to me that there was a huge opportunity here."

He was right. Now U.S. filmmakers, their revenue streams threatened by videogames, the Internet, and video-on-demand, knock on his door. This year, along with his Indian films, he's partnering with Sony Pictures and Fox Searchlight on movies starring Chris Rock and Will Smith, as well as an adaptation of Jhumpa Lahiri's novel The Namesake. News Corp. and Disney bought stakes in UTV last year.

And Screwvala's plan is starting to bear fruit. In 2005, UTV took in $52 million--$32 million of it from movies--and turned a modest profit. That made it the second-largest producer in India, counting box office and ancillary revenue, a meteoric rise for an industry newcomer. And its "new" business practices are spurring changes at competing studios. Contracts, budgets, and balance sheets are more common. So are shooting schedules, bigger marketing budgets, and the exploitation of ancillary revenue. According to PricewaterhouseCoopers, Indian films will generate $2.3 billion by 2010

UTV has many other ventures, including 15 straight-to-DVD movies, an animated feature co-produced with a U.S. company, and a U.S. television series. But Screwvala has yet to reach his ultimate goal. "We have a good relationship with Disney," he says. "I'm hoping it can help us get some of our films into Wal-Mart." Spoken like a true Hollywood producer, albeit with a distinct colonial accent.

UNECONOMIES OF SCALE

Indians crank out nearly twice as many movies as U.S. producers but reap less than 10 percent of the revenue.

[This article contains a table. Please see hardcopy of magazine or PDF.]

[Table]

2005 films released

Revenue

Bollywood

1,041

$1.5 billion

Hollywood

563

$18 billion


Sources: Box Office Mojo; MPAA; PricewaterhouseCoopers


3 STEPS TO SUCCESS

Find a fragmented industry

Enforce standards and discipline

Grow the market via exports


4 comments:

Anonymous said...

Why should Indian film appeal to Western eyes, who don't understand Indian culture? Moreover, comparing in dollar terms doesn't isn't right. What matter is eyeballs, and Indian films as a whole get more eyeballs over the world than so called Hollywood films.

niti bhan said...

Since I couldn't find an email link, here is a comment and a message to pass on:

1. Lovely writing, particularly the rajasthan one about the Marwari horse. I was in Ranthambhore recently at Aditya Singh's resort The Ranthambhore Bagh, and except for the horses its all just as you describe.

2. Say hi to Shailaja from me. She'll know who I am :) Tell here I'm in SFO now and my website is my full name.

Jason Overdorf said...

Anon:

You make a good point that there's no reason (besides earning extra money) for Bollywood to strive to appeal to Western eyes. This is a highly edited version of the article I submitted, so the nuances of what I wrote are not quite right. I think the main point on this is that Screwvala has sought to make the films he produces more marketable abroad--and thus increase his profits--by making them shorter and diverging from the old formulas.

RE the money comparison: You're right up to a point. The straight dollars to dollars comparison obscures the fact that these amounts are worth much more in India than they are abroad (a crorepati--an extremely rich man here--has only around $250,000 which is middle class in the States). That said, I think most producers would disagree that what matters is eyeballs. They're in the business to make the bucks, after all.

Anonymous said...

Rang De Basanti means Paint It Yellow.