17 May, 2019
The media and entertainment industry in India enjoyed a stellar performance in 2018, with the film segment expanding by 12.2% to reach an annual revenue of INR 174.5 billion. Of this amount, the domestic film revenues crossed INR 100 billion with Net Box Office Collections for Hindi films at INR 32.5 billion – the highest ever.
The number of Hollywood films released in India fell from 105 in 2017 to 98 in 2018. Hollywood films (consolidated with Indian language dubbed versions) reached Net Box Office Collections of INR 9.21 billion. Thirteen Hindi films reached the INR 100 crore mark in 2018, the highest number the industry has ever seen. Multiplexes added to the total screen count to reach 9,601; however, the number of single screens declined.[1]
A major reason for this exponential growth is digitisation and the infusion of over-the-top (OTT) platforms (applications and services that are accessible over the internet and ride-on operator networks offering internet access services), and overseas theatricals as revenue earners in the industry.
Specifically, the digital revolution has created a tectonic shift in content consumption in India. In keeping with the global digitisation trend, OTT platforms invested heavily in acquiring exclusive rights to cinematographic films, which in doing so, pioneered a digital-only film market in India in 2018.[2] OTT platforms, such as Netflix, are presently not regulated by any precise regulatory framework, primarily due to the nature of OTT platforms, which cannot be attributed to the jurisdiction of the existing regulatory structures, such as under the Cable Television Networks (Regulation) Act, 1985 or the Cinematograph Act, 1952.
The Ministry of Information and Broadcasting has also stated that it does not have the power to censor any content online and that they are “not pursuing the creation of a regulatory framework” that would allow them to take on such powers. [3] As a result, OTT players and digital platforms are able to capitalise on this creative freedom, and offer premium, largely uncensored content, targeted specifically to the preferences of particular demographics. Similarly, viewers are free to choose what they would like to watch in terms of content, at any given time. In this era where convenience is key, this freedom of choice coupled with the availability of a wide range of online content, has contributed to the higher viewing figures for digital films.
Indeed, there is a large shift in consumer behaviour from mass produced content to specific content defined to audience segments, particularly in the film industry. In the past two years, the story and screenplay of the film has played a significant role in marketing the film to wider audiences, in addition to addressing important social causes. For example, films such as Lipstick Under My Burkha, Stree, Badhaai Ho, and My Dear Zindagi not only featured a stellar cast, but also imbued fresh and powerful content that kick-started conversations around issues of contemporary relevance. The heightened sophistication of movie-goers, along with the penetration of the market with technological advancements such as smartphones and high-speed internet, has given way to the changing preferences of the Indian audience in terms of content. So much so, that in 2019, a movie like Uri – The Surgical Strike was able to reach the INR 100 crore mark within two weeks of its release in January.[4] This changing trend in viewer preferences in filmed entertainment has been a driver for more innovative thinking in terms of content and contemporary issues, expenditure and execution, backed by digital connectivity helping such movies reach a larger audience.
Another stark contrast to the traditional modes of filmmaking in recent years is focused on expenditure and execution of ideas to produce the finished content. Historically, films in India were released by large production companies, with an enormous budget and starring the crème-de-la-crème of the acting pool.
However, in the recent times, the trend has shifted to releasing movies with a small budget (approx. INR 20 crores), with fresh and hard-hitting content and without an ensemble star cast. In fact, of the 13 movies that hit the INR 100 crore mark in 2018, five were small-budget movies, in contrast to the single small budget film which hit this mark in 2016.
According to industry reports, the contribution of big star cast movies to the box office collections of the top-25 movies dropped to 23% in 2018, compared with 50% in 2015.[5] Once again, smaller budgets and a smaller cast allows filmmakers to take creative liberties with the content and premise of the films, as well as introduce fresh talent in the market. In addition to boosting the industry’s growth, such an approach also takes in the dynamics of society and consumer sophistication.
Further, the trend in the industry has been moving in favour of private and independent producers, from a predominantly production-house dominated industry, which has put content-centric parallel or independent cinema on a par with commercial cinema. The beginnings of this shift may be traced back to Khosla Ka Ghosla, which despite a small budget and lack of a star cast, save for Anupam Kher, was amongst the top profitable 50 best movies of 100 years of Indian Cinema named by Forbes Magazine. Since then, films such as Wednesday, Vicky Donorand Lunch Box, have also played with interesting content without an ensemble cast.
In an independent producer’s film, the budgets tend to be smaller, with the scripts being locked in forthwith, and the production of the film requiring a shorter period. This implies that the industry is able to produce more films per year, driving up the industry’s profitability.[6] The fame of the Indian independent film industry has garnered appreciation worldwide, and the US-based non-profit arts organisation, Film Independent has identified the Indian film industry as a promising space to identify filmmakers and projects, and build creative partnerships and provide technical know-how and guidance to such filmmakers.[7]
While the film industry has grown manifold in India, it is still riddled with the plague of piracy, especially in this digital age. In order to combat the same, the Cinematograph (Amendment) Bill, 2019 (Bill) was introduced in the Rajya Sabha on February 12, 2019 to amend the Cinematograph Act, 1952 (Act). It will hopefully receive Parliamentary assent in due course.
The Government took into account the losses faced by the film industry due to rampant increase in piracy and, in particular, the release on the internet of pirated versions of the films, which in turn causes loss to the Government Exchequer. The proposed Section 6AA prohibits a person from using an audio-visual recording device in a place to knowingly make or transmit a copy of a film or a part thereof, without written authorisation from the producer of the film. The provision also makes illegal the attempt and abetment of the abovementioned actions.
This new provision will act as a deterrent to all from unauthorised copying of any part of a film, especially in theatres. Section 7(1A) proposes that the contravention of Section 6AA is punishable with imprisonment for a term which may extend to three years, or with a fine that may extend to INR 10,00,000, or both.
The Indian film industry has undergone a major change from the producer of masala entertainment to the mouthpiece of social commentary it is today. From adopting new technologies and starting conversations around various issues of vital societal importance, the Indian film industry has reached new heights.
However, that is not to say that the industry is completely devoid of challenges. From addressing instances of sexual harassment unveiled through the Indian #MeToo movement, following the same #MeToo movement in Hollywood, to building an effective anti-piracy law enforcement mechanism, the industry must work with all stakeholders including legal authorities to take the Indian film industry to greater heights.
For further information, please contact:
Bharat Vasani, Partner, Cyril Amarchand Mangaldas
bharat.vasani@cyrilshroff.com
[1] Ernst and Young for FICCI Frames, E&Y Report: A Billion Screens of Opportunity, at pp. 76-80.
[2] Id.
[3] Aroon Deep, I&B Ministry: We Are Not Considering Censorship of Hotstar and Netflix, December 13, 2016, available at https://www.medianama.com/2016/12/223-ib-ministry-not-considering-censorship-hotstar-netflix/.
[4] ‘Uri: The Surgical Strike’ Powers Through, Joins Rs 100-Crore Club, Economic Times, (January 22, 2019), available at https://economictimes.indiatimes.com/magazines/panache/uri-the-surgical-strike-powers-through-joins-rs-100-crore-club/articleshow/67639147.cms.
[5] Supra note 1.
[6] SavitaRaaj Hiremath, Changing Phase Of Indian Cinema From Commercial To Content Driven Movies, BusinessWorld, (March 31, 2019) available at http://www.businessworld.in/article/Changing-Phase-Of-Indian-Cinema-From-Commercial-To-Content-Driven-Movies/31-03-2019-168523/.
[7] Namrata Joshi, ‘Indian and American filmmakers will have lots to share’ The Hindu, (March 15, 2019), available at https://www.thehindu.com/entertainment/movies/indian-and-american-filmmakers-will-have-lots-to-share/article26544715.ece.
