BEHINDWOODS COLUMN

Screening of a Movie (Exhibition)

Consider this scenario. The producer has completed the film production, declared the release date and also have sold the movie area-wise. There is still work to do for the producer. They include preparing and delivering photo cards for the screening theaters, posters printing, arranging press shows for the reporters and print advertisement among many others. To take a film to the masses and let the public be aware of the movie, Television advertisement and interviews have to be arranged which attract a lot of expense. Films, which are not marketed this way, find it hard to be recognized by the public. Thus in present times, it is imperative to spend a fortune for advertisement.

Take Unnaipol Oruvan for instance. Well ahead of the release, the information flow started slowly in the form of audio release. It moved on to a broader coverage in visual and print media. The awareness gathered momentum when the small clippings of ten seconds duration started to appear in satellite television channels. The resulted expectation of all this was evident with the opening created in the advance booking of the movie.

Post release, the movie was doing well with positive reviews. Despite this, further to encourage the film’s business, hero Kamal Haasan continuously has been taking part in multiple TV interviews and discussion forums and was discussing about the movie. This has resulted in further crowd in box office. Aggressive marketing like this is very important in this modern era. If a big budget movie with hero like Kamal Haasan needs this kind of efforts in marketing, you could imagine how vital marketing is for small films. These activities are very important for a producer to do to reach his movie to the target public. This can be compared to the arrangements and facilities prepared by the bride’s parents during wedding to make her comfortable and lead a hassle-free life in her in-laws’ home.

To pull out cases of marketing excellence for small budget movies, I would like to cite the examples of two cases of recent release. First is Subramaniapuram. Much ahead of release, stand alone, attractive print advertisements were continually released in print media (read newspapers). Later, a song, totally irrelevant with the film’s genre, was circulated to key satellite channels. This created buzz about the film and resulted in tremendous expectation. Same expectation was created amidst the distributors who would purchase the film. Result? The entire movie was sold out through Minimum Guarantee!

The other movie Silanthi was a micro-budget movie, released with Digital technology. The film was produced in a shoestring budget of INR 45.00 Lakhs. Huge publicity was necessarily created from the production house by releasing almost half nude stills of the heroine. If this is not enough, grapevines of hero misbehaving with the heroine during the shoots were leaked deliberately. Huge anticipation was on among the fans and this small budget film enjoyed good opening and collected as much as INR 1.00 crore in the box offices across the state. Interestingly, Silanthi’s producer is a media person. Perhaps that is how he is aware how important publicity is for a film.

Releasing in Theaters

A distributor, who has bought a film, once the release date is declared for the film, must start to book the theaters vigorously. If it is a considerable film, theaters with capacity to absorb expected viewers have to be booked in advance. By and large, theater bookings are based on a film’s business and expected collection. However, in Chennai and major cities, they have to be booked with advance payment only.

In Chennai and other major cities, almost all theaters operate on rent basis. When a film of Rajini and Kamal is released (forgive me for pulling out examples of these two icons repeatedly; they are the benchmark in Tamil industry), the distributor expects massive opening. In this case, he must book largest possible theaters big enough to accommodate all fans in the first week itself, or book more than one screen in the same complex. This is the technique to reap the maximum collection in the first week itself, the rent for theaters thus booked must be paid in advance. Typically rent of two weeks is paid as advance. Most theaters would receive the advance in two splits. One with receipt and the other part is without receipt and this unaccounted money is called as amount ‘B’. Usually the amount ‘B’ is paid as advance.

It is fundamental to carefully choose good theaters for the movie to run successfully. Theaters, which are starved of decent facilities, or theaters with ill repute of screening porn movies would not pull masses due to their aversion of public towards them. Even some good movies would generate mediocre collection in few theaters due to this limitation.

‘Dasavatharam’ was released at Woodlands and also at Satyam cinemas at the same time. At woodlands, the movie collected less than Satyam cinemas. Also the movie was run a period shorter than that of Satyam. A successful movie, when compared, should run for more days in a theater where entry fee (ticket and parking costs) is relatively less. But it has run for more days in the nearby Satyam cinemas instead? At Satyam, though the entry fee and parking rates are higher, the management provides digital technology, good ambience, air conditioner, good sound and visual experience. People are willing to spend extra money for quality viewing experience. Thus good theaters are needed for good movies to reap good collection.

Rental Process

As we have discussed already, in Chennai and other big cities, the theaters operate on rental basis. It does not matter whether it is a single screen or multiplex, the theaters operate on rental basis. The rent differs from one theater to another based on factors like locality, capacity and facilities. In Chennai, a moderate theater with AC and DTS can fetch around a lakh rupees as weekly rent. Rent can be split and charged (rent for screening the noon show only). Theaters like Devi have charged INR 2.5 Lakhs as weekly rent. We have paid this amount for ‘Uyirile Kalandhadhu’, which we released in Devibala. The quirky thing to notice in this trade is, the theater owners would deduct the rent for second week when they hand over the first week collection to the distributors. The term this as  ‘Protection Money’, explaining that the producer or distributor need not struggle to pay off the second week rent, perhaps the collection in that week is not good enough. It is indeed a protection for the theater owners; not for the distributors! However, now in many theatres in Chennai and other big cities, movies have started to release in percentage basis.

Minimum Guarantee (M.G)

Just like the distributors buy the film from producers in M.G, theater owners would screen the movies, albeit the big ones, via M.G route. For example, a distributor has bought a movie’s rights for 80 Lakhs for Chengelpet area, where release centers are about 50 theaters.  (Release centers are theaters that screen only new movies) For Chengelpet area, a big movie with a mass hero may even be released from 18 to 25 theaters at the same time. Before the release, every theater owner, based on his past experience on the same hero’s films or similar gauge, would estimate and arrive at a prospective collection amount for the movie and makes an agreement with the distributor.

For this instance, M.G for this movie, which would be released in fifteen` theaters, is rupees 5 Lakhs per theater. The distributor gets 5 lakhs X 15 Theaters = 75 Lakhs against his distribution cost of 80 Lakhs. Literally he is releasing the film with INR 5.0 Lakh investment. Add a few lakh expenses with this for advertisement and posters, the capital invested by the distributor may look very meager. Is distribution really this cheap? While it looks as if it is, the fact is it is not.

It is impossible to release a movie with a puny investment like 5 lakhs. For big actors’ films, business talks get initiated almost immediately after the film hits the shooting floor. The buying spree and race intensifies if that actors’ previous movie has been a hit. In a competitive scenario like this, distributors even pay few lakhs to the producer as advance, when the movie has only just started shooting. This way, for a movie right which costs a crore rupees, they pay few lakhs in advance, part amount just ahead of audio release and rest of the amount will be paid ahead of the movie release date, after which they own the copy of the movie.  Production phase of big budget films like these would be generally longer, in some cases exceeding even a year. When you account the capital locked and the interest amount for the same factored from the distributor’s side, one can appreciate the investment required for releasing a film.

When an actor’s movie becomes super hit, his next film’s producer hits the jackpot. It was the time Vijay’s ‘Ghilli’ was running full houses. Well ahead of ‘Ghilli’, producer-director Madhesh has completed puja for the film ‘Madhura’ with Vijay and one of my distributor friends was interested in Madhura’s Chengelpet rights. He was bowled over with the price demanded and abandoned the idea. He was not alone. Many other distributors were not coming forward to buy ‘Madhura’ as the asking price was stratastopic. Precisely at this juncture, ‘Ghilli’ released.

The humongous success of ‘Ghilli’ has fetched a massive selling price for the same ‘Madhura’, which was detested by the same distributors. Hold your breath! ‘Matura’s Chengelpet rights alone were sold for around one crore rupees. Make a guess the price originally demanded by Madhesh? 75 Lakhs! Again, this is Cinema Industry for you!

Coming back to the M.G between theater owners and distributors, in our case the M.G agreement was made for 5 Lakh rupees for a theater, is divided in percentage between the theater owners and distributors, generally as below.

In the above process, the theater owners would only show the collection data through ticket sales to the distributors until the collection crosses the M.G amount of 5Lakhs. Only the collection beyond the M.G amount is shared between them as per the table above. All these statistics and rules are applicable only when the speculated collection takes place! Even if the film does not collect the M.G amount of 5 Lakhs, distributors remain unaffected because the loss due to low collections would not be borne by them based on M.G agreement.

Please do not jump the gun that distributors make good profits always. The M.G process we have discussed so far is applicable only for big movies with big stars and directors, for which the distributors pay big prices too. Case of other movies is different altogether. Nowadays, the M.G sharing is done per se since there is tax exemption for movies with pure Tamil titles. Previously, the split was done in two modes and the agreement was done in accordance.

Share in Gross income (or) Share in Net income.

As you may be aware, Gross income is with tax and the net is post tax deduction. Distributor favors gross split as it is beneficial to him. Whereas, theater owners have double profit in net income sharing. He could reduce the tax amount from the ticket sales and the rest only is put on the table for sharing. But how is it bringing his home double profit? More on theater owners’ tax dodging practices later.