Kollywood Box Office Analysis

[Rajkumar_mj]

Let us use this thread to post the Kollywood Box Office analysis.....

[nilavupriyan]

aalaalukku onnu solvanga!

nerdugaru worlds top 10 collectionla chandramuki 10th umbaru

unicorn gilli is next to chandramuhimban

raja rasigan perarasu collected morethan lord of the ringsnu solluvaru

mothathula kuttaya kolapa poranga!

[Rajkumar_mj]

Source : Kamalhassanyahoogroup.com
Author :Kannanswamy


Kollywood Producers Vs Distributors Vs Exhibitors


Background:
Background: There are primarily 7 distribution areas in TN –
1. Madras
2. NSC (North Arcot, South Arcot, Chingleput, Pondy)
3. Kovai (Kovai city, Erode, Tirupur etc)
4. Salem (Salem city, Namakkal, Krishnagiri etc)
5. Trichy and Tanjore (Covers all towns in Trichy surroundings upto Madurai)
6. Madurai and Ramanathapuram (Covers all towns in Madurai surroudings upto Nellai)
7. Tirunelveli and Kanyakumari

Distributors typically pick up one area each from the above. Sometimes, one distributor will pick up multiple areas. NSC area is the biggest in terms of potential revenue that could be generated by way of ticket sales. Kovai area is usually the first area that gets picked up and based on that only the other areas sell. This has been the traditional way of distributors and producers. There has been occasions where movies were sold direct to theatres.

In Tamil Nadu there is no offical recording of ticket sales or money generated through the sales. Only the distributor/exhibitor would know the exact figure. Theatres in the cities (Madras, Kovai, Trichy) will disclose the actual number of tickets sold and money collected. While in all other areas, there is no proper record of DCR (Daily Collection Receipt)is kept. The exhibitors will cheat distributors, who in turn will cheat producers on the exact numbers and they all cheat the Government on the tax to be paid. Only very few producers (AVM, Oscar Films etc) have a handle on approximate numbers due to their extensive network.

[Rajkumar_mj]

Classification

There are different ways to sell a movie –
1. Outright
2. Commission Basis
3. Direct to theatres - Outright
3A. Direct to theatres - Minimum Guarantee

 Selling a movie "outright" means distributor will own the rights for screening it for a year/3 years/5 years as agreed and all proceeds from the screening will be kept by the distributor and not shared with the producer. The distributor assumes all the risk in this case.
 Commission basis refers to where distributors pay the producer a minimum amount and the revenue is shared between the producer and distributor on a %age basis which varies weekly (atleast for the first 4-6 weeks). In this case, the risk still lies with the producer.
 Direct to theatres - Outright means producer sells the movie to individual theatres directly for X amount and lets the exhibitor collect all the revenue from the movie.

 3A. Direct to theatres - Minimum Guarantee (MG) means producer collects a minimum amount or MG amount from the exhibitor and they proceed to share the money on a %age basis, which varies weekly. This is similar to commission basis but differs in that the money collected through MG is usually far higher than money collected through commission basis. By going the MG route, the risk gets transferred to the Exhibitor in this case.

Where the movie is sold to the distributor say, Outright, the risk is fully transferred to the distributor. The first thing, the distributor does is to sell the movie to theatres in order to 1. Collect money, 2. Share the risk. Distributor will collect, based on movie, a MG from the exhibitors and agree on sharing the revenue from ticket sales based on %age basis where the first 2-3 weeks the exhibitor gets 70% and distributor gets 30% of gross sales. The basis is for the exhibitor to cover the money paid as MG first. The %age will get to 60 – 40%, 50 – 50% as the weeks roll by. Once the MG is covered, then the split is usually 50 – 50 and the 50% money is paid to the distributor after the theatre rent is covered.

[Rajkumar_mj]

Case Study

Let me try to do the above with an example – Producer spends Rs.5 crores on a movie upto when the first copy is ready. Producer has managed to sell all areas ‘outright’ to the distributors for Rs. 9 crores. Usually, the onus of publicizing the movie through paper ads, TV ads, posters etc falls on the producer, lets say – Rs. 75 lakhs. Typically, the number of prints is decided based on the sale amount of the movie. In this example, let’s say the distributors demand 100 prints. The cost of each print is Rs. 65000 and so the total is Rs. 65 lakhs and this has to be borne by the producer. Now, the total cost to the producer and his profit is – Cost of movie upto first copy – Rs. 5 crores Cost of publicity – Rs. 75 lakhs Cost of prints – Rs. 65 lakhs

Total cost of movie – Rs. 6.4 crores Sale price – Rs. 9 crores Table profit for producer – Rs. 2.6 crores

Of course, producer sells the movie in other states, satellite rights, FMS (Foreign rights, I missed this from the list of distribution areas).


Based on the above, taking an example of a distributor in Trichy and Tanjore area. Supposing, he has paid Rs. 1 crore for this area and he has got 15 prints to exhibit. Distributor will set out to collect MG amount from theatres to cover his outlay of Rs. 1 crore. Obviously, Trichy being a bigger area the movie will typically be screened in 2 theatres. A typical MG amount from these theatres could be around Rs. 12 – 15 lakhs.

Let say, he has collected Rs. 15 Lakhs from theatre 1 and Rs. 12 lakhs from theatre 2. Now, the exhibitors are in the risk for the above amounts and will execute an agreement to share the proceeds on week 1 and 2 at 70 – 30% in favor of exhibitor. Again, this will vary based on the movie, star cast, time of release, pre-release publicity, ticket rates charged, number of shows screened etc. Of course, any amount collected and recorded is subject to Entertainment Tax of 15% (used to be 25% just a few months back).

The money is divided between distributor and exhibitor on the agreed %age after tax and theatre rent. The net amount the distributor makes is called ‘D-Share or distributor share’ in trade parlance. Once we go down to smaller towns the distributor will station his agent in the theatres to make sure the exhibitor does not cheat him. Of course, the distributor will know approx what the movie will collect but still exhibitors do manage to cheat distributors and the cheating moves up the chain.

In effect for the distributor to turn a profit has to make more than 1 crore net, while Theatre 1 has to make Rs. 15 lakhs net and Theatre 2 Rs. 12 lakhs net. Based on ticket prices and capacity of theatre, ideally for the theatres to cover their MG outlay, the movie has to collect atleast 60% of the MG money in the first 7 days to have any chance of recovering the money in its entirety.

The distributor will have to make his money within a period of 6 months from the release of the movie, lest the movie become a loss-making venture for him. Of course, the bulk of the money is made in the first 2 – 3 weeks as no movie has managed to garner large crowds after 3 – 4 weeks in the last few years. If the movie does not make money in the first 3 weeks, then the chances of the movie turning profitable for people down the food chain is very slim.

The distributors, if they lose money, turn to the producers for recourse either through getting some of their money back or making it up when the producer makes their next movie. The same applies for exhibitors who lose money…they turn to the distributors.

[Aandavan]

another excellent article by our kannan sir...

[Rajkumar_mj]

another excellent article by our kannan sir...

Yes He posted this during MX release.

[leosimha]

thank you thank you....keep on the good work...thanks a lot for Rajkumar_mj to start a new thread on this...

[joe]

Good article by Kannan

[Nerd]

aalaalukku onnu solvanga!

nerdugaru worlds top 10 collectionla chandramuki 10th umbaru

now that is a false accusation and totally unwarranted.

namballaam epdi.. 100 days oru screenla thaaNdina padatha all-time blockbusternu solrathillayA ??