Big actors take a major chunk of Bollywood profits, but will recent flops prompt content and revenue correction?
- From Ranveer Singh’s Jayeshbhai Jordaar to Ranbir Kapoor’s Shamshera, recent Bollywood movies have been bombing at the box office.
- Bollywood producers currently pay a fixed income and around a 55-60% cut of profits to big actors such as Aamir Khan, Akshay Kumar, Shah Rukh Khan, etc.
- Apart from theatrical collection, a big chunk of Bollywood’s revenue also comes from digital streaming rights and satellite before the movie is released, which is being recast.
- Business Insider India speaks to analysts to find out if consecutive film flops will affect the revenue model and the acquisition of movies by streaming platforms.
AdvertisementBollywood’s recent big-budget releases like Lal Singh Chaddha, Shamshera, Prithviraj Chauhan and Ek Villain Returns have disappointed the audience, but the industry has always had its table profits to fall back on.
Table profits refers to the large chunk of revenue that Bollywood makes from the sale of digital streaming, satellite broadcast rights and merchandise before the movie is even released in the theatres.
However, after consecutive flops, Bollywood’s movies might lose their lustre with bidders, hurting table profits. Experts believe that streaming platforms and TV channels might get choosy with the movies they acquire and cut back on spending hefty monies.
Sharing how the approach might change, Gautam Jain, partner at Ormax Media said, “There would be stronger linkages with box office performance now. Even the smaller films which don't feature big stars or directors, who are trying to look for the direct-to-streaming route, are being asked to go the theatrical route and then come back to streaming.”
Elara Capital’s senior VP - research analyst, Karan Taurani told Business Insider India that currently around 90-95% of Bollywood movies are pre-sold with a few clauses.
“If the collection number surpasses a certain threshold, producers will be paid more. If it goes down below a certain threshold, OTT platforms will pay less to producers.”
After a string of big budget flops, producers might have to prove themselves at the box office first.
“The OTT platforms are paying hefty money for these films. Now, with content not doing well, they will become stringent in terms of the budgets that they invest in. They will have to become selective and approach in some other way,” Taurani told Business Insider India.
Are big Bollywood stars losing their shine?
A Bollywood movie with established stars could be counted on to be a sure-fire hit at the box office. Not any more. Films with the likes of Aamir Khan, Akshay Kumar and Salman Khan seem to be losing their attraction, pushing producers to reconsider their fee structure.
The recent releases headlined by big names have disappointed the critics and the audience to such an extent that even the production costs couldn’t be recovered.
“Every recent film has seen a loss of anywhere close to 40-50% of their cost of production, not being able to recover (the costs) because theatricals have been a blowback,” Taurani said.
Despite losses at the box office, big stars take home 55-60% of profits and a fixed income, analysts say.
“Higher talent fees are going to stay for some time. But yes, not many studios will be willing, or producers will be willing to go ahead with those high fees now, given the fate of the last few films at the box office,” Jain told Business Insider India.
This is likely to push the industry toward greater adoption of a revenue-linked model of payment for actors, Taurani said. “Already most of the actors have a fixed fee plus a revenue share, I think the fixed fee component might come down, wherein they will want to go for more web-share models.”
However, renowned actors haven’t lost all the lustre as evidenced by the hefty ancillary revenues their movies have been drawing from streaming platforms and satellite channels.
To illustrate, the Aamir Khan-starrer Lal Singh Chaddha, as per Elara Capital, was made in the range of ₹200-250 crore and has garnered only about ₹70-80 crore in theatres, but it is believed to be in the black after its table profits.
“Perception [of big actor films] might be negative, but the kind of money their films draw on non-theatrical platforms is huge. Akshay Kumar, Salman Khan or Aamir Khan, most of these big actor films non-theatrically draw a huge amount of money. Aamir Khan's non-theatrical movie is already a plus film, they already have that kind of money on the table,” film critic Bharti Dubey said.
However, with poor box office collections, Dubey said that correction is bound to happen. “Whether it is production, whether it is actors, correction is the need of the hour,” Dubey told Business Insider India.
Source: Elara Capital
|Movie Releases||Release Date||Opening Day||Lifetime earning, as of August 09|
|Shamshera||July 22, 2022||₹10.25 Crore||₹45 crore|
|Vikrant Rona||July 28, 2022||₹44 crore||₹110 crore|
|Ek Villain Returns||July 29, 2022||₹7.95 Crore||₹38 crore|
|Lal Singh Chaddha||August 11, 2022||₹10 crore||~₹70-80 crore (as of August 22)|
AdvertisementWhen Bollywood songs skip a beat
Earlier, Bollywood songs were also a huge attraction for music streaming platforms. Now, they are falling flat too, further affecting the industry’s annual revenue collection.
“Music is one section that has taken a beating in the last few years because music has not been doing well. People are not paying attention to music. It used to be a huge chunk of revenue earlier, which is not there at the moment and that needs to be revived,” said Dubey.
Analysts believe the tables could still turn for Bollywood. The industry has pinned its hopes on forthcoming releases like Brahmastra, Circus, Ram Sethu and Thank God to work a turnaround but a recovery looked difficult, said Jain.
Dubey believes that 2023 would be the year of recovery for Bollywood.
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