Team 5Team Members: Asheem Sher - 09020241007 Gaurav Arora - 09020241008 Manoj Gupta - 09020241016 Namit Sharma - 09020241021 Aniket Sharma - 09020241023 Sidharth Kapil - 09020241029 Tejas Godbole - 09020241031 Parixit Pandey - 0920241041 Harshan Sethi - 09020241060

The Indian film industry produces around 1,050 films and sells around 4 billion movie tickets, each year. In 2008, the size of the Indian film industry was estimated to be USD 2.58 billion. While the domestic box office collections contributed as much as 60%, the home entertainment contributed a mere 6% to the total revenues, which is significantly lower as compared to developed countries.Source: E&Y, Apr-2009

Indian film industry expected to grow at CAGR of 11.2% over next 5 years [compared to over 15% CAGR growth before economic downturn] Current size of Indian film industry estimated around Rs 109.2 billion in 2008 which is expected to grow at a CAGR of 12.2% to reach Rs168.6 billion by 2013.Source: (E&Y, Apr-09)

Distribution Channel

The producer completes the movie. Process of Buying Rights: The producer decides the number of movie of reels that would be allocated to the distributor. Rights contain: Purchase of reels Purchase of Publicity material

Based on previous success record of the producer, the movie post completion is demanded by distributors. The producer estimates the demand for his movie and accordingly sends the movie to be printed in Adlabs, Mumbai for creation of movie reels. Movie reels are forwarded to distributor at the cost decided by producer.

Step by Step Analysis

Movie transfer from distributor to exhibitor begins on Tuesday/Wednesday evening for a show on Friday in cinemas halls. The reels are transferred by road, air or rail on the basis of the distance of transfer. For distribution of films to eastern zone, the reels are sent on Tuesday evening. The distributors are not exhibited the film before the sale of the film, hence his buying is totally based on producer s reputation in the market. E.g. Due to this process, Failure Chandni Chowk to China & Success Bheja Fry

Step by Step Analysis

The distributors that approach the producer are from various zones of the country classified in to zonal areas, namely North, east, south & west. Post the collection of movie reels by distributor, the distributor decides the exhibitor through whom movie will be shown. The formats of movie presenting like printing of posters, advertising, promotion, show timings, no. of shows are provided by producer. However used by exhibitor & distributor.6 Sheet (big banner), 2 sheet (small banner)

Step by Step Analysis

Shuttling: This is the method used by distributors in which distributors rotate the given film roles within cinema halls. The basic idea behind this concept is that printing of one role for one cinema is not cost efficient for the distributor. The cinema hall owners have a schedule given to them by distributors stating the upcoming movies in next 6 months. Hence, an exhibitor can decide and convey the time period for which he would like to present the movie in his hall.

Information FlowProducer Distributor Exhibitor

Intermediary

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1. MUMBAI (Bombay circuit comprising part of Maharashtra, Gujarat & Goa) Yash Raj Film Distributors, headed by Mr. Rajesh Malhotra. 2. DELHI (Delhi-U.P. circuit) Yash Raj P. P. Associates Private Limited 3. JALANDHAR (East Punjab circuit) Yash Raj Puri & Co. Pvt. Ltd. 4. JAIPUR (Rajasthan circuit) Yash Raj Jai Pictures Private Limited 5. AMRAVATI (C.P. circuit) Yash Raj Films Private Limited through Khajanchi Film Exchange 6. INDORE (C.I. circuit) Yash Raj Films Private Limited

7. BANGALORE (Mysore circuit) Yash Raj Pal Films Distributors (Bangalore) Pvt. Ltd. 8. SECUNDERABAD (Nizam circuit) Yash Raj Vandana Films Distributors Private Limited 9. CALCUTTA (Bengal circuit) Yash Raj Kushagra Arts Private Limited 10. CHENNAI (Tamil Nadu circuit) Yash Raj Films Private Limited 11. ANDHRA PRADESH (Andhra circuit) Yash Raj Films Private Limited 12. COCHIN (Kerala circuit) Yash Raj Films Private Limited

Step 1 Research potential distributors. Identify the movie's genre and the audience it appeals to most. Find distributors that have released similar titles. Step 2 Talk with distributors to determine if there is interest on both sides. Once you have selected the company to distribute the film, ask them to draft a generic distribution agreement for you to amend. Step 3 Consider the territory that the agreement covers. Use one distributor for the zones

Step 4 Discuss whether the distribution agreement covers theatrical screenings only or include DVD distribution, as well as the length of the terms. It is to the filmmakers advantage to have a short term--less than 5 years--with automatic extensions. Step 5 Include the amount of publicity and media the distribution company is obligated to perform on behalf of the film. This figure includes number of print materials and advertisements to be created to publicize the film, interviews, articles and reviews. Step 6 Agree upon the distribution fees. Filmmakers can either agree to a 50/50 split of the profits after the distributor recoups the costs of distributing and marketing the film.

Source: Ra i Enterprise, Mumbai

The document begins with following text: Agreement made and entered into as of AGREEMENT DATE by and between DISTRIBUTION COMPANY, ("Distributor") at ADDRESS OF DISTRIBUTION COMPANY, and PRODUCTION COMPANY, ("Producer"). In consideration of their respective covenants, warranties and representations, together with other good and valuable consideration, Distributor and Producer hereby agree on following: PICTURE - PRODUCTION FORMAT (I.E. 35MM/16MM/DIGITAL) RIGHTS GRANTED Advertising Editing Title Territories Dispute clause Warranties

Producer to Distributors:

Producer

Distributors

Conventionally, the distributor has been transferring money on the transfer of the reel. This is like a sale purchase. The distributor purchases the movie at the price decided by the producer. The revenue generation for producer ends post sale to distributor.

The revenue earned by the distributor is by way of presenting the movie through cinema halls.

DistributorsDown payment Plus weekly revenue:

Exhibitors

In this case the exhibitor needs to pay a down payment to the distributor at the time of transfer of film. Post this exhibitor pays the distributor a percentage of the sales or the box office collection. E.g. for Yash Raj films, Yash Raj Distributors Co. carry on the distribution. Their model is of 5Lac down payment + 40% revenue collection. However, they came in news at the time when they increased their costs to 10lac down payment + 50% revenue collection. This led to elimination of profits for exhibitors, thus dispute. This was done for Tashan movie

Only Weekly collection: The exhibitor in this model only presents a percentage of revenue collections to the distributor. In this case, scaling model of pricing is used.

E.g. Mangala Talkies, Deccan, Pune uses a model in which the 50% of the first week collection goes to the distributor. In the next week, scaling takes place and 40% of the box office collection goes to distributor followed by 35% of box office collection. The nature of hall, multiplex or single screen also decides the revenue model.

The Market: What has changed

Actors Certain actors in the industry charge distribution rights as a part of their fee charged from the producer. Few are like:Shahrukh Khan: Fee + Distribution rights of USA & UK Amir Khan: Has his own distribution company; does distribution only for his films Akshay Kumar: Fee + Distribution rights of Canada & UK

With more demand of films there is a rise in the number of foreign distributors entering India.Fox Century distributors in India closed foreign film distribution & now have started with distribution of Indian films worldwide Warner Bros has tie up with kyazoonga.com, an online store for book tickets so as to eliminate the any sort of discrepancy which might occur at the exhibitor s end during the time of collection

Foreign direct investment (FDI) of 100% is permitted in all film-related Activities such as film financing, production, distribution, exhibition and marketing

Distributor

Distributor

West Zone

East Zone

North Zone

South Zone

Mumbai

Other Maharashtra

Gujrat

Adlabs, Wadala

PVR, Juhu

Cinemax, SION