 "Jyoti Deshpande")
At Rs 1,457 crore in revenues and 69 film releases in 2013-14, the NYSE-listed Eros International is India's largest film studio. After a stormy panel discussion on the challenges facing the Indian film industry, Vanita Kohli-Khandekar caught up with Chief Executive Officer Jyoti Deshpande, at Ficci-Frames 2015. Edited excerpts:
Why is the film industry having a tough time? Satellite prices have fallen, talent costs are going up.
The industry is going through a wake-up call; much of the problem is self-created. Today, we are analysing talent costs, saying they have gone up, but they have risen because of the competitive bidding when the big studios entered (in 2008). So many films have remained unsold and some big hits have gone for single-digit numbers. This, however, is not a question of an equitable distribution of the pie; it is to grow the pie. We need more screens, need to expand the market, change the mix of films we make by mixing Hindi with the regional cinemas, the genres and the stars. If we want only the three Khans to deliver growth, that will not happen. Two years ago, when we did Ramleela, it was an outrageous budget (estimatedly Rs 70 crore) for a Ranveer Singh-Deepika Padukone starrer. But the idea was to give younger stars a bigger budget.
What is the issue with TV rights? Why are prices falling?
Let us say for a Rs 60-crore movie, 20-25 per cent or Rs 15-20 crore came from TV rights. If the cost goes to Rs 100 crore, we can't expect TV to proportionately fill the gap. TV prices (for film rights) had gone up so rapidly over two-three years. We sold the TV rights to Om Shanti Om at Rs 17 crore (2007) and RA One at Rs 35 crore (2011). But Happy New Year (2014) went for Rs 35 crore. The TV market was overheated. So, this is a positive pressure because it is a corrective. The prices for TV rights are also now being linked to performance. Talent is also saying link my fee to the box-office. This is more true for middle of the road films.
Is your model changing from pure trading to something else?
When we came in 2006, we were in a land grab phase. We gave advances for two-three years for films to create a slate. Now, we are a content company. We are trying to change the mix to more movies, where we are involved from script and story narration onwards. The top 20 Hollywood films are franchise films. (Last month) We set up Trinity Pictures to change the mix of acquired versus self-generated (currently 90:10 of the total Eros releases). David Maisel (Marvel Studios) is on board to help us figure this out. How do you build a franchise, develop characters. At Trinity, we have signed on 50 writers, we are signing on directors, only to develop concepts. We may make only 20 per cent of what we develop, but we will own the IP (intellectual property). The idea is if we are releasing 20 big-budget films, at least 25 per cent should be self-generated. We are making Bajirao Mastani, a full-on Indian film by Sanjay Bhansali, or Bajrangi Bhaijaan and we also did Badlapur and NH10. Ten years ago, we were a $5-million earnings before interest, taxes, depreciation, and amortisation (Ebitda) company. This financial year, we will be a $100-million Ebitda company. The journey is to become a $1-billion Ebitda firm.
This industry is fragmented even now. TV firms have much more negotiating power.
Currently, everybody (YRF, Dharma and all the studios) are doing their own thing. I think large-scale consolidation is bound to happen. TV firms will become film companies and vice versa. Our competitive advantage is that we have a catalogue. So, we are looking at our own movie channel, two-three quarters away. The TV market has improved because of digitisation and more transparency. We now think of ourselves as a content company; there is a lot of annuity income we can get across TV and mobile.
