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Why Bollywood is on strike

By Syed Firdaus Ashraf
April 03, 2009 15:36 IST
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This Friday's release 8x10 Tasveer may be the last release in theatres for a while now. Movie producers and multiplex owners have not reached a solution regarding revenue-sharing yet, and so the strike starts on schedule, on April 4.

In case you're wondering why you won't get to watch new movies in theatres, we try to give you the answers:

What is the reason for the strike?

Producers want a 50:50 revenue share from multiplex owners.

Multiplex owners, on the other hand, say that they will agree to that kind of revenue sharing only if the film does well at the box office. If it flops, the concerned producer must bear the losses to a larger extent. So the revenue sharing could become 45:55 or even 40:60.

What is the producers' argument?

They claim that they are the ones taking the risk in making films. They do the spending from the cost of production to the cost of marketing where as multiplex owners just have to showcase their films. So why should they have to take the entire brunt of the films' failure? In Western countries, producers and multiplex owners have a 50:50 revenue sharing plan.

What is the multiplex owners' argument?

Multiplex owners claim that the situation in the West cannot be applied here. Multiplexes are a relatively new phenomenon here, and yet to stabilise themselves in India. They need time to get the returns on their huge investments.

But if a certain film does well, they are ready for an equal revenue sharring plan.

How did the problem surface?

According to multiplex owners, the problem started in 2006, just before the release of Aamir Khan-Kajol film, Fanaa. The film's producer Yash Raj Films negotiated a 40:60 deal with some multiplex owners, which the latter were forced to comply with.

Producers claim that multiplex owners formed a cartel and arm-twisted them individually. So they have formed a cartel to counter them.

Okay, so producers want equal revenue sharing. Do they have any more complaints against the multiplex owners?

Yes, they have quite a few complaints.

Producers claim that multiplexes earn a lot of money from parking and cafeteria as well, where as they don't profit from that. Secondly, the multiplex owners delay payments. Thirdly, multiplexes don't screen movies as per the timings mentioned in the newspapers. Movies are removed from theatres arbitrarily.
How do multiplex owners defend themselves against these complaints?

Multiplex owners claim that the parking lots are owned by the malls which house the theatres, and not by them.

As far as the profits from the cafeteria are concerned, it's no business of the producers, they say. They claim that producers earn money from corporate ads screened before the film starts and during the interval, and they don't get a cut from this.

Multiplex owners defend themselves against delayed payments by stating that the collections are always sent via e-mail to the concerned producers. They remain quiet on the actual transfer of profits.

On the last count, these owners claim that newspapers may print the wrong timings, so they cannot be held responsible. But they have the right to withdraw a film if there are only five people sitting in the theatre.

Why can't producers boycott multiplexes and just release their movies in single screen theatres?

Unfortunately for producers, 65 percent of the revenue collected from films come from multiplex theatres. At present, there are 240 multiplexes with 849 screens in India, with a capacity of 2, 27,084 seats per show. The tickets cost more vis a vis single screen theatres, resulting in a big profit margin for producers and distributors.

Moreover, the business has changed in the last five years. These days, the maximum revenue comes in the first two weeks of the film's release, unlike in olden days when movies would run for weeks and weeks, and thus, become profitable.

Multiplexes are important for producers, and vice versa. Neither can exist without the other.

So where does this leave us?

Well, if the strike isn't called off by next Friday, there's plenty to watch on television.

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Syed Firdaus Ashraf