The great number circus

By Screen Weekly -

December 6, 2013 - 1:54 AM IST

Besides entertainment, films are now largely about striking gold at the box-office. The whole number game is getting bigger by the day. Screen unravels Bollywood's obsession with numbers.

The race to join the `100 and 200' crore club is getting bigger by the day. Words like blockbuster, record breaking collections, highest grossing film among others are being bandied about every weekend. Ahead of every mega-budget film release with an A-lister is a question - Will this film make it to the `100-crore club'?

The varying figures given by trade analysts and production houses are only adding to the confusion, raising doubts about its authenticity. Krrish 3 is one such film that found itself in the centre of a storm recently; when reports alleged that the film's box-office figures were inflated. The big question now is: How are these box-office, numbers arrived at?

The distribution chain

The great number circus

According to a leading production house, figures given out by distribution head of any production house are obtained from the exhibitors. Since it's all computer generated, there's no under-the -table business anymore. But in most cases, figures given by the production houses are slightly on a higher side. Says Shyam Shroff, director, Shringar Films, "I call these collections as super-built up collections. I usually cut 20 per cent to know the actual collections and call them the carpet collections."

Exhibitor and distributor Akshaye Rathi of Rathi Group of Cinemas says, "There's a degree of research and speculation, and most of the figures are a combination of the two. Some trade analysts do their ground level research, call up distributors, take the figures, verify and then publish it."

Here's how the entire process works: The distributors give the collections after getting them from the theatres in their territory. In all, there are 13 territories; sometimes, one distributor distributes a film among two-three territories. In smaller territories like West Bengal or Tamil Nadu, there could be 70 theatres, while the Mumbai territory may comprise of 500 cinemas. Every distributor gets daily collections based on the shows being screened, from all the cinemas in his territory. The producers then get figures from the distributors of these 13 territories.

Net, matters!

Understanding the gross and net figures is the next step. Girish Johar, head, distribution and acquisition, Sahara Motion Pictures says, "In India, traditionally, we're concerned only about net box-office figures because the producers and distributors believe that we shouldn't mention gross figures, as a portion of it goes to the government as entertainment tax." Rathi simplifies it even further, "A movie ticket which costs Rs. 250, includes service charge and entertainment tax which is the gross price. Net collections are derived after deducting service charge and entertainment tax from the overall collections, which is later divided among the distributor and exhibitor, depending on the ratio that has been decided during the deal." He also adds that the entertainment tax differs from state to state. For instance, states like Rajasthan and Himachal Pradesh do not charge entertainment tax, whereas Maharashtra has levied 45 per cent entertainment tax. In areas like Chattisgarh, the tickets that cost up to Rs. 50 are tax free, and the ones that cost over and above that, charge 20 per cent tax.

Dividing the moolah

When the producer sells a film to the distributor, he already earns a particular amount; hence the net collections are shared by the exhibitor and distributor. After the multiplex VS producers standoff in 2009, mutual understanding was reached with each party getting 50 per cent in the first week and the percentage going down every week. Shroff says, "First week, the ratio of the distributor-exhibitor share is 50:50, 42.5:57.5 in the second week, 37.5: 62.5 in the third week and so on. The reason for this is that the business keeps decreasing week by week, but the cost of the multiplex or the theater is the same." So, if a film has made Rs. 200 crore net, then on an average, 45 per cent will go to the distributor, and 55 per cent will be the exhibitor's share of the total net collections.

But there's a term called 'overflow'. "Over and above the distributor's share will go to the producer. For instance, if a producer sold a particular film in one territory, say for Rs. 1 crore, he may give the distributor a minimum guarantee of that amount. After a week, if the sum total of the net box-office collection of the film in that distributor's territory equals Rs. 1 crore, then he breaks even. If he made Rs. 1.20 crore, then he'll keep Rs. 20 lakhs as his profit. But, if he earns Rs. 1.5 crore, then that's called commission mode, since he earned Rs. 30 lakhs more after his share of profit. That amount shall be shared by the producer and distributor again," explains Johar. But many big studios retain the distribution rights of their film. For instance, Disney UTV retained the distribution right for Barfi! for all the territories. In such cases where the production house distributes the film, the entire net collection, after the exhibitor's deduction, goes to them. Disney UTV even retained the distribution rights for Chennai Express for most territories.

However, there are exceptions. Some territories in which distributors have a better reach than the studios, the film is sold to the distributor for those few territories. A source from a leading studio says, "In some states like Uttar Pradesh or Madhya Pradesh, where we think the collections may not be very good, we sell the film to the sub-distributors and make our profit. Later, it depends on them as to how they want to sell it to the exhibitors." Something of this sort may also happen if the production house feels that selling the distribution rights would be more profitable than retaining it. For instance, Teri Meri Kahaani was co-produced by Eros International, who later decided not to retain the distribution of the film. They were getting a decent amount from a distributor, which seemed a profitable deal than taking the risk of self-distribution. Though Teri Meri Kahaani was declared a flop at the box-office, the production house made a profit of about Rs. 20 crore from the film.

While more often than not, the producer doesn't suffer losses if he sells the film at a high price, there are exceptions. The revenue system differs from model-to-model. According to Rathi, Vidhu Vinod Chopra didn't sell 3 Idiots for a fixed price; instead, he gave it to Reliance Entertainment on a commission basis. So, if 3 Idiots had tanked at the box-office, Chopra would have suffered a loss.

All said and done, despite several figures being floated around, it's almost impossible to say exactly how much profit a producer or a distributor make from a film; it depends on the deals made between each of them, which on most counts is discreet, so it's almost impossible to achieve accuracy when it comes to these numbers. Thus, as much as one tries to decode them, it shall continue to remain a big puzzle even as the rat race gets bigger with time.

Screen India