THE CHANGING SCENARIO OF SUPPLY CHAIN MANAGEMENT IN BOLLYWOOD: DIGITAL CINEMA
INDEX TITILE PAGE ABSTRACT LITERATURE REVIEW OBJECTIVES METHODOLOGY INTRODUCTION FINDINGS AND DISCUSSIONS LESSONGS FROM BOLLYWOOD CONCLUSION REFERENCES
ABSTRACT
The purpose of this project is to introduce the Supply Chain and its Management for the much loved Movie Industry in India. The
scope of the project is limited to what happens after the finished product (movie) has been readied i.e. once the actual production is over. Film distribution is the process of making a movie available for viewing by an audience. This is normally the task of a professional film distributor, who would determine the marketing strategy for the film, the media by which a film is to be exhibited or made available for viewing, and who may set the release date and other matters. The film may be exhibited directly to the public either through a movie theater or television, or personal home viewing (including DVD-Video or Blu-ray Disc, video-ondemand, download, television programs through broadcast syndication etc.
LITERATURE REVIEW Ever since the turn of the Nineteenth century, celluloid film has been regarded as the soul of the movie industry. It has been used
as the medium for recording, storing and projecting images. For more than 100 years this medium of entertainment has given us its capability of producing screen images of great beauty and expressive power. However, the supply chain management of distributing and exhibiting a motion picture has changed a little since the Lumiere brothers presented the first motion picture to an audience in 1895. Now, a new system could displace film as the medium of choice for film studios and cinemas completely. The “new system” is the result of the trends and issues that are affecting the movie industry globally. An example of the issues is the considerations for new revenues for the theatres. In the US, theatres are generally open from noon onward. When open, on average, only 11% of the seats are filled. India has roughly 11,000 screens out of which around 800 screens are multiplex screens. However, the revenue share is highly skewed in favour of multiplexes which generate around 50% of overall theatrical revenues.: Of the 11,394 screens in the country, 800-odd are part of multiplex chains. They sell tickets at anywhere between Rs 120-150 against the all-India average of Rs 30-50. Overall, theatre revenues accounted for 76 per cent (or Rs 9,700 crore) of the Rs 12,600 crore that Indian films made in 2008. Multiplexes bring in 55-60 per cent of a film’s theatre revenues, while the remainder comes from the 10,500-odd single screens. Hence, the producers-distributors want a bigger share of revenueshare pie from the multiplexes now. Now, it’s a known fact the Mumbai territory brings in the highest amount of revenues for industry. But in Maharasthra, due to Government waiver, multiplex chains save all of the 45% entertainment tax — which goes into their pockets only. From the rest of 55% money, the revenues used to be split in the ratio of 48% for first week, 40% for second week and less than 35% for third week.[These ratios are valid all across India, not just for Maharashtra]. The reason for
the standoff was that producers-distributors now wanted 50-50 revenue share for all the weeks. In an analysis done on 18th April 2009, IndianTelevision tried to gauge the financial impact of a long running standoff on both the parties. It estimated a loss of Rs. 850-900 million for the industry in case the strike lasted for over a month. Well.. the losses should turn out to be biggger now. In a further analysis on 30th May 2009, they tried to analyse both parties’ stands, jotting down pros and cons of their currents stands and ramifications of any potential reconciliation efforts. From the movie industry front, folks were more or less united with Aamir Khan even going upto the extent of asking his fans to avoid his own movie “Raakh”, which was being released in single screen theatres. But now, finally, the issue has been settled. “The final agreement with multiplex owners will give producers a 50% share of box office takings in the first week, 42.5% in the second and 37.5% in the third, with the final week yielding 30%. The settlement also allows for a 2.5% swing either way in the event the films make above Rs17.5 crore or less than Rs10 crore. In case of the latter, the films are released with at least 500 prints. “(source: Mint) Some people have been left over voicing over three other equally important concerns of the industry. First of these issues is Accounts settlement. Ideally, the producer should get his share of money within a week or two of the ticket sales, but multiplex chains usually take 2-3 months sometimes taking upto 7-8 months for settlements. So, even though as the Indian Media and Entertainment industry tries to scale up to global standards, the business practices still confirm to Unorganized sector behaviour. The other issue is control over release strategy of movies. Since each print usually costs Rs. 60,000 to the distributor, Distributors
usually want to release movies only in select locations so as to maximize their revenues. Another issue that has been affecting the industry for years is the piracy. Some of this piracy involves high-quality bootleg copies of major films, but the majority of the theft of is made by very lowtech means. Better anti-piracy technology as well as earlier worldwide theatrical releases would greatly reduce this loss, estimated to exceed two billion American dollars per year. Among other current and future trends predicted for the motion picture industry competition from Netflix, HDTV, pay per view (PPV), DVD, Video Stores More screens, fewer numbers of seats per screen More prints per film More expensive motion pictures Digital postproduction 3D-Stereoscopic Images Industry Awareness of need for better quality control All of these have been the contributing factors to develop a new system for the industry. The “new system” is known variously as Digital Cinema (D-Cinema). This system is slowly replacing the conventional 35mm film and projectors with computers workstations and high-resolution electronic video projectors. The D-Cinema system will ultimately influence and changed the management of the supply chain within the movie industry. One could agree that, by distributing digital files it would theoretically yield great benefits in terms of image clarity and quality, lower cost, greater security, and more flexibility in the cinema. Changing the Supply Chain Management of the Movie Industry. Digital Cinema in its purest form is the process of mastering a motion picture in digital form, distributing the digital files to theatres by the means of digital fixed media (DVD), satellite, or over broadband connections, and displaying the motion picture using a digital projector. The Digital Cinema system appears to offer the movie industry it’s significant benefits on reduction for distribution cost Increase revenues for exhibitors Improve audience satisfaction.
OBJECTIVE
Project involves analyzing: The role of various stakeholders in Movies Supply chain. How movies get distributed to different cinema halls. How new technologies and innovative methods are helping Distributors in supply chain management. Channel Conflicts present in Bollywood supply chain management Piracy as the biggest hurdle to the film industry
METHODOLOGY Secondary Research: Data was collected through research papers, case studies on Bollywood movies like Bahubaali and articles on supply chain in film industry. Industry analysis was carried out to understand the market as whole before deciding the scope of research. We addressed questions regarding who buys and distributes the rights of a film and how are they bought. Under industry analysis, various topics were explored, such as: Emerging technologies Channel conflict in film industry, Cycle of movie distribution Uncertainty and contractual hazard in film industry
Piracy in film industry
INTRODUCTION Before indulging into the discussion of supply chain management in film industry, here are some facts and figures about its current state: • • • • •
$138 billion Estimated size of Indian Bollywood Industry World 1st Number of films produced in a year. 2.6 Billion number of tickets sold in a year. 1200 Single Screen. 11000 Multiplex Screen Cinema Hall Distribution In India
Supply Chain Management for movies Entities responsible for the management of movie’s release are: • Producer: Who invest money in Film? • Distributor: Who buy rights from producer to distribute prints to the exhibitors? Can buy rights for: Few territories All territories • Exhibitors: Who show movies to customer i.e. Cinema Halls • Customers: People like us who watch movies
Flow Chart
FINDINGS AND DISCUSSION
1.Change in Technology Traditionally, the movie industry relied upon physical film prints on celluloid film that were copied and distributed to theaters. These prints can cost anywhere from a few thousand US dollars and up for each print, not to mention the cost of distribution, collection, and storage.
Celluloid
Film
Digital Hard Drives More recently, the industry migrated to digital distribution of movies on computer hard drives. A typical movie can consume from 80 to 300 or more gigabytes depending upon if the content is a 3D movie, 4K to 16K (Ultra High Definition) or an IMAX film. While distribution of hard drives makes for a more compact delivery method, essentially the same issues exist as with the distribution of cellulose film. Physical distribution of any media format requires, quite obviously, time for shipping—the implication is that either movies must be distributed early enough to allow arrival at distant locations or that the movie can’t open on the same day at all locations. Secondly, since the physical media can only be
produced in finite numbers, the audience excitement surrounding opening day will have died down by the time copies of a film arrive in second tier theaters or theaters in outlying areas. This has a direct impact on the gross monetary intake the film can potentially generate.
2.Piracy in Film Industry One major problem in Indian film industry is of piracy. It's prevalent all over the world, but in India, a film-crazy nation, it takes on a whole new persona of its own. In India, the Hindi and the Tamil movie industry have hegemony over the rest when it comes to numbers. The fact that these industries also churn out a massive number of movies every year, most of which are targeted to lower middle class income groups, or as the producers like to call it, the masses, make the piracy scene even more intriguing. India does not make too many films that are visual extravaganzas as people would prefer to check them out later as soon as a cam print is released. This way, they save a whole lot of money. But with the rise of the multiplex culture in the country and a growing young earning class, most of the urban youth now has access to most films. About 4-5 years ago, the scene was different. Only the metros would get access to the blockbusters while tier-II and tier-III towns would usually have to wait three or six months before they could get any chances to screen the films. And this resulted in a higher demand for pirated copies. The main reason was that back then they used physical prints while today the theaters mainly use digital prints which cost about 1/5 th of their reel counterparts. So, yes, it is true that the frequency of camcorder piracy in India has gone down. There has been a 16%
drop in the entire Asia Pacific region from last year. In India, as opposed to 44 cases of camcorder piracy, there were 40 this year. One of the major breakthroughs this year was the arrest and subsequent shutdown of piracy teams like Yamraaj and NickkkDoN, both from Indore. Earlier they were mostly pirating Indian films, but now, with the arrival of multiplexes, they are pirating Hollywood films too. Who is camcorder piracy movement hurting the most? It's mainly the two extreme ends of the movie budget spectrum that are hurting the most. Small-time Bollywood filmmakers Some known names in the regional cinema business They are struggling against it because unlike studios behind mainstream Bollywood titles, they are not exactly in a position to dictate terms with the distributors. On the other end, Hollywood films, for which India is one of the biggest international markets, also lose big money due to camcorder piracy. But they lose more money when they actually release blu-ray prints, because that's when the torrent sites come into play, almost annihilating the home-video business for these films. But that's a whole other story. For now, the biggest winner in India (if the fight against camcorder piracy is won) will be regional cinema studios and small time indie filmmakers—because unlike mainstream Bollywood or international studios, they have much to lose from pirates SOLUTION: In Order to sole the dual problem of Shipping and Piracy, a new technology has come called Satellite Content Delivery.
Satellite Content Delivery
Satellite distribution has an inherent benefit over other electronic delivery methods of being a “send once, receive by many” system, called multi-casting. Satellite also provides ubiquitous coverage— as long as line of sight to the geostationary satellites above the earth’s equator is visible, coverage is available. Just like direct to home (DTH) satellite television, the content is uplinked to the satellite and multicast to the intended receivers. This eliminates the variances in quality and availability of terrestrial bandwidth such as DSL, cable or fiber for theaters in different areas, ensuring a single, uniform system for reliable and timely delivery of the content. When combined as part of a comprehensive solution, such as the Enterprise Package Delivery (EPD) system, satellite distribution is ideal for the delivery of multi-gigabyte movie content.
EPD (Enterprise Package Delivery) A content distribution service, which provides a reliable, means of transferring digital packages as files from a sender to a virtually limitless number of receivers simultaneously. The EPD sender accepts content from a provider, manages the multicast groups,
initiates the file transfer, and controls the transfer operation. Each EPD receiver joins the multicast group, receives the file sent by the sender, notifies the local receiver application of arriving content, and typically provides reception status to the sender. The EPD sender can be programmed to deliver content at scheduled times, scheduled data rates, and to selected groups, individual receivers, or all receivers. The EPD system ensures that each receiver, in this case the theaters, receives all of the movie content and is able to store the content in a secure server. In order to ensure delivery, the EPD system for theaters relies on acknowledgments which are sent back via the satellite return channel. Content is stored securely in encrypted files on a local server until it is ready for viewing, plus movies can be automatically purged after a predefined period of time—thereby eliminating the possibility of piracy. Various methods to protect the content are available including key distribution via the satellite link to unlock the content for single or multiple screenings. On occasion last minute changes dictate the editing of a film, for example, due to a ratings body a film may be rejected for certain audiences. Satellite with EPD can drastically reduce the costs associated with these last minute changes and can even preempt transmissions already in progress. Although the size of any given movie content file is enormous, the multicast capability of the satellite makes it very economical to deliver. Coupled with the ability to distribute this content on offpeak hours (e.g. at night) when utilization of the satellite bandwidth may be lower and thus less expensive, satellite becomes an unbeatable value proposition for distribution.
Innovative Solution Of movie Distribution VOD VOD is the prime thorn in the side of movie theaters, which
view on-demand as a means for distributors to bypass big screens altogether. While this has yet to involve any giant releases, small and mid-range films have increasingly proven that debuting on VOD shortly ahead of a theatrical release, or day-and-date on VOD and in theaters simultaneously, is a profitable strategy. Bit Torrent Bit Torrent has long been the bane of the movie industry, as the peer-to-peer file-sharing platform has been ground zero for online piracy. However, Bit Torrent is now also making inroads into legitimate distribution via Bit Torrent Bundles, a service that allows artists and companies to create DIY online-distribution campaigns that reach a global audience.
3. Channel Conflict Lack of clarity over when the movie will be released on the nontheatrical media may lead to conflicts and tensions between distributors / exhibitors and the producers.
Cycle of Movie Distribution
Now the trend has changed and most of movies got released on non theatrical media( TV , Online ) within 2 to 3 months . Eg. Bajrangi bhaijaan and Bahubali Real situation examples of Channel Conflicts: Conflict over Baahubali stalled release of Prithviraj, Dileep movies: September 2015 was supposed to be a big month for Malayalam cinema with Prithviraj’s ‘Ennu Ninde Moideen’, Jeethu Joseph’s Dileep starrer ‘Life of Josutty’ and Asif Ali’s ‘Kohinoor’ slated for release. But none of the movies were released in theatres across the state following a conflict between the Kerala Distributor’s Association and Film Exhibitor’s Association. The friction between the associations became a full-blown battle in July when the Film Exhibitor’s Federation headed by Liberty Basheer decided to not allow the release of Telugu movie Baahubali till the case on piracy of 'Premam' movie was solved. This resulted in Baahubali getting released only in 100 odd theatres, though distributors had planned to release the movie in around 200 theatres. Terming the Film Exhibitor’s Federation’s move to stall the movie’s wide release Baahubali’s distributors in Kerala protested against this. Liberty Basheer meanwhile had been demanding that some movies should first be exclusively screened in theatres owned by members of the Federation. The war of words resulted in the Film Exhibitor’s Federation imposing a ban on Century Films. As a mark of protest against the ban, Distributor’s Association decided to boycott members of the Film Exhibitor’s Federation, and stall release of new movies in their theatres. A dispute in Bollywood over revenue: movie producers and distributors have been refusing to release movies to big theater chains until they get a guarantee of 50 percent of the
revenue from ticket sales on all movies for the first four weeks of their run Multiplex vs Distributors: In early 2009, a dispute arose between multiple Bollywood film producers/distributors and multiplex owners, with the former stopping the release of several of their films till their demands were met. The dispute hinged on the producers’ demands for a greater share in the revenue collections made by the multiplexes. The multiplex owners on the other hand claimed that the producers’ and their lobbyists were ganging up against them unfairly, stirring apparent antitrust issues.
LESSONS FROM BOLLYWOOD Suddenly, Bollywood is not just all about entertainment. More and more business schools are incorporating popular cinema in their syllabi. It is a more interesting way of looking at management issues such as leadership and recruitment The taste of students is changing and visuals have a greater impact in today’s times and Not surprisingly, the idea is being welcomed by both management experts and students. Clearly, what’s triggered the B-Schools’ interest in cinema is the wide spectrum of
subjects that Bollywood today deals with. Directors stress that their subjects are well researched and often reflect real-life situations. 'Lagaan' is a case study in reputed management institutions across the world. When Bhuvan, played by Aamir Khan, in Lagaan spots a spinning talent in the handicapped and so-called untouchable Kachra and recruits him in the playing eleven, it may have been just another dramatic scene for an average cine-goer but it was a lesson worth teaching at a management school. The way Bhuvan goes about recruiting his team members is a perfect corporate lesson. He identifies hidden talents when others see none, and that’s precisely what companies expect from their recruitment managers. The message, however, is not the only reason a film is studied. Krrish is the subject of a case study at IIM, Indore, because of the way the film was packaged and marketed. In fact, Krrish became the first movie to be studied internationally, with the Harvard Business School and the University of Hong Kong collaborating with IIM, Indore, on a case study. IIM, Indore, has already incorporated the film in its curriculum. The use of Bollywood films as case studies may be new in India but in the US, films such as The Lion King and Jurassic Park have for long been a part of management studies
CONCLUSION Satellite distribution, coupled with EPD systems, provides the ideal solution for studios and theaters to cut costs, reduce piracy, and generate addition revenues. Industry wide Agreement on Timelines for Monetization from New Media : Industry as a whole will benefit by agreeing on a minimum amount of time before which producers will not start
monetization return on movies through online , TV and satellite and home video sources .
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