Shared de-risk model is critical for movie business


    MUMBAI: Indian cinema has witnessed some dramatic transformation in the last one decade. Newer forms of film production, distribution, exhibition, technological progress etc have given rise to various business models.

    But there are very few or negligible elements that help mitigate the risk of movies. Even if any one particular sector in the film value chain develops a successful model to de-risk itself, it will in all probability be a model which will pass this risk to another sector, thus leading to a complicated process.

    Various methods such as pre-sale of a film and its various rights, film completion bonds, tactical release strategies can help de-risk. But first and foremost the factor that should be in place to develop a de-risk model is low cost of production, technicians and actors.

    Producer – director Ramesh Sippy says, "If for Chandni Chowk To China we had stuck to the original budget of Rs 40 crores, the film would not have been a failure. But due to unavoidable circumstances our budget kept rising."

    Fox Star CEO Vijay Singh added, "It is necessary to de-risk not just financially but also through marketing and distribution. We dubbed Slumdog Millionaire in Hindi and released only Hindi version in tier II cities to reach out to more people and de-risk." For Hindi film acquisition, as a policy Fox Star will not acquire movies without seeing them and for co-production it will work on developing the script, budgets and cash flow.

    Apart from Fox Star another company that follows a model sans short-change is Vistaar Religare. "We are an equity fund that shares risk with a producer or distributor at every stage of the film. It is essential to share risk," said Vistar Religare Film Fun chairman and managing director Sheetal Talwar.

    On the exhibition front, building smaller capacity cinema halls also helps de-risking to a great extent. But apart from production, distribution, marketing and exhibition, piracy still remains another big factor to be tackled in order to de-risk the industry.

    "A quality product manufactured at a correct price and marketed well to get audiences/ consumers to capture revenues is the safest and simplest way to de-risk," said Moser Baer Entertainment CEO Hairsh Dayani.

    Also, along with this, it is essential for the film industry to develop a business model for all the stake holders and not just for producers.