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The Analyst Magazine:
The Indian Film Industry: Bollywood Inc., Take One
 
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The Indian film industry has been undergoing a metamorphosis through increasing corporatization, professionalism, and transparency in business dealings.

The Indian film industry is one of the largest film industries in the world, producing over a thousand films a year. In spite of this, the profitability of the Indian film industry paints a depressing picture. In 2002, the industry recorded a loss of Rs. 300 cr on gross revenues of Rs. 3,900 cr. In 2003, the registered revenues were Rs. 4,500 cr, a growth rate of approximately 15% and a growth rate of 20% is projected for the year 2004.

Filmmaking in India is a complex business, where usually 80% of the profits come from 20% of the business. The Indian movie business deals with different players at different points of the value chain. This process dilutes the initial idea and lays down unnecessary hurdles that increase costs. Filmmaking in India is largely an independent affair, though there are a few family run businesses. These filmmakers usually work on a single film or project at a time by obtaining finances at high rates of interest from private financers and pooling in various other resources. The uncertainty in filmmaking comes from the filmmaker's inability to gauge the customer's expectations. In addition to this, the highly fragmented structure of the industry has an adverse impact. The industry had been devoid of corporate best practices for most part of its history. But now, the industry has been gearing up to change and is trying to embrace the corporate way of functioning. The industry is now in the process of writing a new script that will help reduce the risks and uncertainty on one hand and integrate and strengthen the value chain on the other.

Filmmaking consists of production activities (pre and post production work), marketing, exhibition and distribution (both domestic and overseas). Its sources of revenue are domestic theatrical sales, sale of music rights, overseas rights and television and video rights. Some emerging sources of revenue are in-film advertising, corporate sponsorship and merchandising.

 
 

 

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