A middle-aged, middle-class couple—Jeetender and Priyamvada—become pregnant. They already have two sons—Nakul, 25, and Gullar, a high school student. Though confused and apprehensive, Priyamvada, a homemaker, gives into her maternal instinct and decides against aborting the baby. Jeetender, a railway official and a doting husband, stands by his wife’s decision and breaks the news to the rest of the family. All hell is let loose. As Gullar’s school-mates make fun of him and Nakul’s relationship with his girlfriend turns rocky, they start resenting their parents. Priyamvada’s mother-in-law’s taunts turn more acerbic, blaming her for the ‘misadventure’. The family becomes the butt of jokes among relatives, friends, and neighbours. But the public ridicule eventually brings the family together with the sons and the mother-inlaw standing by Jeetender and Priyamvada and all’s well again.
Badhaai Ho, a heart-warming tale of extraordinary circumstances that ordinary folk find themselves in, could well have been the plot of a so-called art film or ‘parallel cinema’ in the 1980s: A film that received critical ac - claim but little commercial success. Think of the 1983 film Jaane Bhi Do Yaaro directed by Kundan Shah. A dark social satire starring Naseeruddin Shah and Ravi Baswani, it told the story of the corrupt nexus between politicians, real estate developers, and the media. The film fared poorly at the box office when it released. But with subsequent airing on television in the years that followed, it grew on people and is now a cult film.
Fortuitously, the 2018 comedy-drama, Badhaai Ho, didn’t have to wait as long as Jaane Bhi Do Yaaro to be recognised by the masses. Not only did the film, directed by Amit Sharma and produced by Junglee Pictures and Chrome Pictures, receive critical acclaim, it also went on to become one of the most profitable films in 2018. Made with a budget of ₹22 crore, it raked in close to ₹137 crore at the box office in India. That in itself gives the film a staggering return on investment (RoI) of close to 522%. With other sources of revenue such as the sale of cable, satellite, digital broadcast, and music rights thrown in, Badhaai Ho is estimated to have fetched a revenue of ₹221 crore. How’s that for commercial success?
In India, the 1990s and the early 2000s were characterised by masala movies. These stories would have an ensemble cast of top stars, would very often narrate the tales of Indians residing abroad (mostly in the U.S. or the U.K.), and contain the usual tropes—song, dance, romance, action, family drama, and some humour (often slapstick).
But much has changed in Bollywood, as the Hindi film industry is popularly called, in the last few years. It has been a revolutionary period marked by the emergence of a new wave of bold storytellers, directors, and actors who aren’t afraid to experiment with different kinds of content. The focus has been on bringing to life real and relatable stories, often set in India’s smaller towns and cities, which tug at the heartstrings of cinephiles, who have embraced this kind of neo-Indian cinema. Very often, these films aren’t head - lined by Bollywood’s megastars, but that hasn’t denied them commercial success.
In the process, a new set of actors are becoming stars in their own right. Ayushmann Khurrana, who played Nakul in Badhaai Ho, is arguably one of the most successful actors of 2018. His other release last year, Andhadhun, a dark comedy crime thriller directed by Sriram Raghavan, made around ₹73 crore at the box office, or an RoI of 263%. Andhadhun, which also stars acclaimed actor Tabu, is based on French short film L’Accordeur and is the story of a pianist pretending to be blind who becomes embroiled in a murder. Or take Rajkummar Rao, whose horror-comedy Stree was the most profitable film of 2018, earning close to ₹130 crore at the box office or an RoI of 548%. Stree, which also stars Shraddha Kapoor and Pankaj Tripathi in pivotal roles, is a satire on the state of women empowerment in the country. It narrates the story of a small town, Chanderi, where the menfolk are scared of stepping out alone at night, lest they be stripped and kidnapped by a female ghost. On the flip side, three of 2018’s much touted big-budget films, headlined by arguably the three biggest names in the industry— Shah Rukh Khan, Salman Khan and Aamir Khan—failed to impress audiences. Shah Rukh’s Zero, Salman’s Race 3, and Aamir’s Thugs of Hindostan proved to be damp squibs.
Sneha Rajani, deputy president and head of motion pictures at Sony Pictures Networks India (SPN), says the shift in tastes of audiences is something she has noticed since 2015, when SPN co-produced Piku with Rising Sun Films, which is promoted by the movie’s director Shoojit Sircar and Ronnie Lahiri. Starring Deepika Padukone, Amitabh Bachchan, and Irrfan Khan, Piku explored the relationship between a daughter and her ageing grumpy father obsessed with his bowel movements. The film yielded better returns than Salman Khan-starrer Prem Ratan Dhan Payo, which also released in the same year.
“If one digs deeper, one will find that the exposure that the audience has to a variety of content out there from across the world is the reason for the shift in preferences,” Rajani says. “It has broadened people’s acceptance of different topics and subjects and they are willing to accept good stories over superficial performances.”
Priti Shahani, president of Junglee Pictures, a part of Bennett Coleman & Co. Ltd, says her production house wants to tell different stories about the times we live in. That, she says, is the preferred way for Junglee to make a mark for itself, being a relatively new production house, which started operations in 2014. In the last four-and a-half years, Junglee has six releases to its credit, and apart from Badhaai Ho, its other films like Dil Dhadakne Do (co-produced with Excel Entertainment in 2015), Talvar (2015), Raazi (co-produced with Dharma Productions in 2018), and Bareilly Ki Barfi (co-produced with B.R. Films in 2017) have done well commercially and critically. “The colour of the money is the same irrespective of the production house you look at.
But as a new entrant in this business, we wanted to create a brand that would make us stand out,” says Shahani. “We thought it could be difficult to attract talent in the initial stages, so we were conscious of telling stories that could hold their own.” The economics of making movies where content takes precedence over glitz and glamour checks out at present also due to the rise of the multiplexes, says Ajit Andhare, chief operating officer of Viacom18 Motion Pictures. “For the last four-five decades, our films tended to be monochromatic because the kind of audience that came to single screen theatres was also homogenous,” says Andhare. “When the multiplexes came, it became possible to segment customers according to their tastes and cater to them with different stories that would appeal to them.”
According to a report titled ‘Re-imagining India’s M&E Sector’ by industry lobby Federation of Indian Chambers of Commerce and Industry (FICCI) and consulting firm EY, the number of multiplex screens in the country has increased progressively since 2009, even as the total number of screens has declined, owing to several standalone theatres shutting down. India had 9,530 screens at the end of 2017, of which 2,750 were in multiplexes. In 2009, there were only 925 multiplex screens in India. The share of single-screen cinemas to the overall number of screens in the country has fallen to 71% from 91% in 2009.
Eros executive chairman and group chief executive officer Kishore Lulla says his company is following a deliberate strategy to focus on films with the potential for a high RoI.
Small Is Beautiful
For several Bollywood producers, small is increasingly becoming beautiful. So much so that even some traditional production companies like Eros International have decided to refrain from making so called big budget films and stick to films made with reasonable budgets, which stand a chance of earning a high RoI. Eros has a film library with over 2,000 titles and has made 30 of the top 100 highest grossers in the last 10 years. Eros, which is listed on the New York Stock Exchange, saw a sharp 30% year-on-year dip in revenue to ₹1,010 crore in FY18 due to the shift in strategy. However, its earnings profile in the same period improved sharply: Its Ebitda (earnings before interest, tax, depreciation, and amortisation) margin rose to 36.4% (`368 crore) from 26.1% a year earlier, while net profit margin rose to 22.7% (₹229 crore) from 17.8% in FY17. Eros executive chairman and group chief executive officer Kishore Lulla says his company is following a deliberate strategy to focus on films with the potential for a high RoI and not necessarily higher box office collections.
“Big budget films are much riskier, especially since the stars that headline such projects command very high fees,” says Lulla. “We have analysed a lot of data and come to the decision that it is better for us to do movies that have a good script and connect with the audiences. We don’t want to just prove to the world that we can do big movies.”
Balaji Telefilms—the Ekta Kapoor-led media and entertainment company, which produces content across screens, including television, digital, and theatrical—is also keen to produce a select few films in a year with a “modest ticket size”, which aid in building the company’s reputation as a quality producer and help it earn some money, says Sunil Lulla, group CEO of Balaji Telefilms. Balaji’s recent releases such as Veere Di Wedding, a 2018 film about four women, their friendship and individual issues, went on to become a hit and earned around ₹80 crore at the India box office. In 2017, Balaji produced Lipstick Under My Burkha, one of the most profitable films of that year. Made on a shoestring budget of ₹7 crore, the film earned an RoI of 158%.
Ajit Andhare of Viacom18 Motion Pictures says revenue sources like OTT have helped reduce moviemakers’ dependence on box office collections.
In fact, most producers say a high RoI is more important than being part of the much-touted ₹200-300 crore club, which of late has been seen as the benchmark for commercial success in Bollywood. “These clubs are immaterial to me. They don’t cross my mind as a parameter. RoI is definitely most important,” says Rajani. “If a film earns ₹200 crore organically because it deserves it, I will happily accept that, but it is not even a box to be checked when we evaluate a script.” But not everyone feels the same way. Apoorva Mehta, CEO of Dharma Productions, helmed by Bollywood director-producer Karan Johar, says ₹200-300 crore movies are still important as they give a production house “identity”. “The experience of putting up something larger than life and seeing the big numbers is something else,” Mehta says. “Nobody remembers the small films you make. But everyone remembers that one blockbuster.” But even large production houses like Dharma are now venturing into making films with relatively smaller budgets, in addition to the big-budget blockbusters they are famous for.
Raazi is a case in point. The film, inspired by the real life story of an Indian spy (played by Alia Bhatt) who voluntarily married into a high-ranking Pakistani army family, was very successful. Made on a budget of ₹35-40 crore, the film earned over ₹190 crore across the globe. The success of women-oriented movies like Raazi and Veere Di Wedding featuring Kareena Kapoor Khan, Sonam Kapoor Ahuja, Swara Bhaskar, and Shikha Talsania signifies a sea change in the mindset of moviemakers and audiences: Bollywood movies do not need an alpha male character to anchor them any more.
Digital Enabler While cable and satellite rights and music rights have traditionally been significant sources of revenue for films, the emergence of digital over-the-top (OTT) video streaming platforms has come as an added boon for producers. In addition to pumping in some serious investment to generate their own original content, OTT platforms such as Netflix, Amazon Prime, Hotstar, Zee5, Eros Now, and SonyLIV, are also shelling out top dollar to acquire films and showcase them to young viewers, who may not have enough leisure to catch every new release in the theatres. This new stream of income for producers has made the business of moviemaking far less risky than before. For good movies, OTT widens the bottom line and brings some consolation for backers of box office duds. Andhare says it is possible for films to earn 30-70% of their life - time revenue from non-theatrical sources at present, thereby reducing dependence on box office collections. But a lot depends on the point in time at which the producer decides to monetise the film through this new channel. “There is a subtle balance that needs to be maintained between de-risking a film and maximising revenue from it. That is the skill needed in this business,” says Andhare, who has produced/co-produced recent blockbusters such as Andhadhun, Padmaavat, Toilet: Ek Prem Katha, and Drishyam .
Not only are OTT platforms helping theatrical movies make more money, they are also proving to be a fertile ground for original content that production houses are venturing into. The idea is to own the intellectual property and keep the consumer hooked across mediums, and if the audience is shifting to these digital platforms, then producers need to keep pace with the demand, says Shahani.
For Eros, its OTT platform Eros Now is a logical extension of its film production business. It understands the entertainment business, which also gives it a connect with most of the Bollywood talent, that it may want to cast in its original films and web series. Not only is all future content released from the house of Eros reserved exclusively for Eros Now, it has already aired web originals such as Side Hero (featuring Kunal Roy Kapoor) and Smoke (starring Jim Sarbh, Mandira Bedi, Tom Alter, and Amit Sial). Eros plans to produce up to 20 flagship web originals and 30 smaller ones over the next few years, says Kishore Lulla.
Similarly, Dharma is also venturing into producing content for video-streaming platforms through a new digital arm called Dharmatic Entertainment. Junglee, too, is producing content for a digital platform and is developing a crime-thriller web series, Dus Assi.
The Blockbuster Dead?
Not quite. The highest grossing Indian film franchise of all time is Baahubali. The Indian epic action film was released in two parts—one in 2015 and the other in 2017— and collectively earned more than ₹2,000 crore. Directed by S.S. Rajamouli and featuring southern superstar Prabhas, the film was shot in Tamil and Telugu, and also dubbed in Hindi and Malayalam. In order to market the film better to a Hindi-speaking audience, the film was presented to them by Dharma.
That the industry has place for both small budget flicks and blockbusters is proven by the success of Padmaavat and Simmba—two of the most successful films in 2018 starring Ranveer Singh. Padmaavat—a period drama directed by Sanjay Leela Bhansali that boasts lavish sets, royal costumes, and stunning visual effects—was one of the most expensive films ever made in India with a reported budget of around ₹215 crore. The film became a super hit by earning ₹585 crore worldwide. Released towards the end of 2018, Simmba, a comedy-drama about a corrupt cop who grows a conscience and avenges a close one’s rape and murder, had earned ₹234 crore at the domestic box office at the time of writing this story and was still running in theatres. It was made with a budget of ₹80 crore.
Mehta believes at a time when Hindi films are battling growing fondness for regional Indian cinema, global cinema, new sports leagues, and web series, filmmakers need to ensure that the experience in the movie hall is inviting enough for the audiences to take the time out to visit multiplexes with their families and bear the ticket price, which these days is anything but cheap. “We are hoping that films like Baahubali, Brahmastra, and Takht (the latter two are being produced by Dharma and slated for release in 2019 and 2020 respectively) will transport people into a magical world with special effects, grandeur, high production value, and extraordinary content, thereby allowing you to enjoy an experience that can’t be replicated at home,” Mehta says.
Simmba’s director Rohit Shetty, known for his large-scale potboilers in which cars are blown up many metres high and baddies are beaten up in slow motion, has a quirky take on the change in Bollywood.
In a recent interview to a newspaper, he said: “Now, massy films have become parallel cinema. There are fewer people making movies of this scale.” But if Simmba’s success tells us anything, it is that it is too early to hold a requiem mass for blockbusters.
(The story was originally published in Fortune India’s special collector’s edition - Business of Entertainment.)