 "Connecting biz with films")
Film industry experts say that getting institutional funding has been a difficult feat, even in the best of the times. “While it may seem like a bleak picture, the fact remains that finally business models are moving in the right direction. As an industry, we need to get our act together, change the perception of being a very volatile and unpredictable industry and prove the merit of rewards for institutional investors,” said Vijay Singh, chief executive, Fox Star Studios.
Only a handful of funds have been set up to invest in films. Most such funds are either inactive or take up very few projects. Some of the funds are the Third Eye Cinema Fund (2014), Vistaar Religare (2008) and Dar MentorCap (2012).
Ajit Andhare, chief operating officer, Viacom18 Motion Pictures, believes that funding is not the issue, thanks to corporatisation. Most of the big films are produced or co-produced by MNC studios. “The issue is returns on the funding. For anyone to invest money in a venture, the Return On Investment (RoI) is the main criteria. This is where the problem starts because the RoI is mitigated by two things — revenue and cost. On the revenue side, we area heavily taxed industry — almost 30 per cent (of box office collection) goes towards entertainment tax. On the cost side, most of the money spent is not being redirected into the industry, but is being used for getting a bigger car or plusher flat,” he said.
Sameer Gupta, founder of Cinema Capital Advisory, the management company which set up Cinema Capital Venture Fund (CCVF), said traditional valuation methods will not work in the film industry. “You cannot ask a home grown production house like Dharma or YRF to look at their balance sheets and come at a valuation since there are a lot of intangibles to consider.”
The industry agrees that to attract funding from private equities and venture capitals, the perception needs to change. This, say experts, can be done by making the script (and not the talent) the centre of the project, thereby appropriating costs accordingly, bringing more transparency in transactions and expanding monetisation opportunities. However, a major hurdle for the theatrical revenue stream continues to be the low screen density.
India has around six screens per million people, compared with 126 screens per million in the US and 23 screens per million in China. Experts believe that while the top multiplexes command a value proposition, they cannot be expected to drive screen volume growth in the country. Therefore, two areas can be considered for screen growth — retrofitting existing single screens and tapping into territories that are without any movie screen.
Director Rakeysh Omprakash Mehra suggests a family film-going centred approach where low-budget films can be screened in a ‘haat-like’ structure. “My ambition is to see 10,000 such screens in the next three to five years. The reason most people shy away from the exhibition business is that it takes a lot of investment. But this model can focus on more economic investments and look at the traditional family outing experience for which ‘haats’ are famous in tier-II and semi-rural/rural territories,” he said.
Girish Menon, director – deal advisory, KPMG India said there is a direct correlation between the number of screens and the revenues. “Retrofitting single screens is a good option in the short term. If we look at retrofitting 75 per cent of the single screens (around 6,000 in total), we are looking at around 10,000 screens in the country, which is a good start. This has started happening in the South which is more enthusiastic film viewing audience, but needs to pick up pace,” he said.
Experts say that a more pressing reason to increase the screen count and the overall cinema-going experience is to make sure that the industry can capture the audience and monetise content before the audience accesses it through illegal means.
SCREEN COUNT
- INDIA
has 6 screens per million people
- CHINA
has 23 screens per million people
- US
has 126 screens per million people