The existing revenue sharing module
As per the existing revenue sharing module, all the movies are graded by multiplex into categories. Typically, a big budget movie is deemed as CAT A movie (eg: Chandni Chowk to China, OSO, Jodha Akbar), a medium budget movie is deemed as CAT B (Billu) small budget CAT C (eg: Dev.D, Raaz 2) and so on. Depending on the category that the movies fall into, the revenue to be shared is fixed. Typically, for a CAT A movie, the producer get a greater pie than what a CAT C movie producer would get. So, in effect, even if a Raaz 2 or a Dev.D rakes in the moolah, the producers’ share is lesser than what a multiplex owner gets. And this fact is infuriating the producers to no bounds.
The proposed module
To maintain a balance of the revenues earned, the producers’ body proposed a revised module. According to it, the producers and multiplexes would get an equal revenue sharing of 50% each. Their logic being that since the multiplex also earns through popcorns, ‘samosas’ (F&B that are exorbitantly priced), it’s not fair that that the actual movie earnings is at a lower level to the makers of the movie. Hence, they are demanding an equal share of the revenue. Also, according to the producers, the international practice is also of equal revenue sharing between the producers and exhibitors.
However, The Multiplex Owners (MO) justify the variable revenue model by citing the high infrastructure costs due to which the break-even period is pretty long. Therefore, they argue that it’s fair to apportion a greater share of the revenue. Additionally, because of the multi screen concept, it has helped in carpet-bombing during a new release. Carpet bombing basically means that when a big budget movie (like Singh Is King) releases, they release with over 800 prints simultaneously due to which they are able to attract the maximum eyeballs in the opening weekend which is usually unaffected by Word of Mouth (WOM). And by the time a negative WOM is generated (if any) the distributors have already got their money and are busy counting the profits. This way even a strictly ok movie becomes a huge hit in spite of being panned critically. Secondly, due to the better sound systems, ambience, comfortable seats and clean washrooms, they have brought the families back to theatres, which are the main target audience of most of the blockbusters.
As a result, the multiplexes are not willing to accept the revised module and want the revenue share to depend on a performance basis as it is done internationally. They say profits should be shared greater, if the film does well, subject to a maximum percentage, and less, if the film flops, subject to a minimum percentage and not the same for every film as proposed.
A look at its sporadic history
Yash Raj Films initiated the battle of the aces. The banner always had a problem with the multiplex owners on revenue sharing issue since Dhoom 2. The latter was released a good one week after it’s release at all single screen theatres. Gauging the losses incurred due to this act on the part of the YRF’s, the multiplexes had to bow down to the Yash camp’s diktats. Same thing happened during the release of Aamir Khan-Kajol starrer Fanaah. The hype of the film was so huge, the multiplex owners decided to agree to the terms laid down by the Chopras on the 50:50 format or else the loss could be huge. But when Tashan released, the multiplex owners were adamant on their stance and put their foot down on the revenue sharing module. And it paid off! The Yash Raj Films had to agree to their terms as Tashan was badly hit by its release on single screen theatres only. Trade analysts opine that if the film had had a proper multiplex release, the money equations could have been very different. Since then the news of a possible collision between the two worlds, Producers and Multiplexes, was abuzz in the industry.
The Present
With the start of 2009, the issue blew to massive proportions. Many a times the producers and the multiplexes, held meetings to resolve the issue. Talking about the problem, Siddarth Kapoor, CEO, UTV Motion Pictures, said, “I don't think it is about UTV films, it is about the industry in general. The production, distribution and the exhibition sectors need to really start working together much more closely.” Kapoor added. “The producers and distributors are only asking for a fair share. They are asking for 50% of the share after taxes, which is a standard across the world and there is no reason why we should not be following that in India as well,” he said. The multiplexes tried to sort the issue by getting hold of an idea of median threshold. CEO Fame Adlabs Shavan Shroff said, "We have suggested a median threshold that we will pay for every film, be it big actors or small, we have suggested to them a yardstick. If a particular movie crosses a certain threshold, we are willing to pay more."
But all ‘talks’ went futile as none of the side were interested in agreeing to each other’s terms. And so, the producers’ forum decided to get tough with their multiplex counterparts. They announced that if the matter doesn’t get solved till April 4, no film would be released at any multiplexes thereafter. And with none of the parties volunteering to stoop down, the boycott couldn’t be averted. Today, the multiplexes are incurring a daily loss of Rs. 3 crores while the producers are playing the waiting game.
However, their moves to outwit each other are getting increasingly exciting these days. To show their solidarity towards the makers of 8X10 Tasveer, the producers’ body decided to let the film release and postponed their boycott date. What happened to the film is immaterial to what it proved to the multiplexes that they stand united not
But contrary to their belief that they have sent out the right signal to the multiplexes by getting the heavy-weight Khans to rally behind them, the multiplexes have now decided to go on an indefinite strike from May 1 themselves!
If You Liked The Posts Say It In comments !!!
