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By Hammad Zaidi | June 5, 2012

One of my core missions with this column is to bring you emerging trends throughout the world of international distribution, especially when those trends trigger major shifts in how the film industry works. That’s why I’m excited to bring you this 108th edition of “Going Bionic.”  Today we’re going to discuss Hollywood’s move to invest in India’s Bollywood, which is a vast departure from how Hollywood viewed the value of Bollywood films over the past several decades. India’s three to four hour, sexless, singing and dancing cinematic marathons never grabbed the American studios attention, much less their financial interest. However, that has all changed, because currently, investing in a star-driven, “high-budgeted” Bollywood film is far safer than investing in a similarly budgeted “mid-range” Hollywood film. Shocking? Yes. True? Definitely. Don’t worry, this move is an addition, not a subtraction; meaning the studios are opening their eyes to global possibilities, not closing their eyes to American filmmakers. So, without further ado, here is how the west is influencing the east….

Bollywood Budgets Are Ballooning
Years ago, most Bollywood films had budgets under $1 million dollars. When I mean the budgets were south of one million, I mean far south. Then, Indian films grew a faithful core audience worldwide – an audience that did not, and still does not include the United States. However, India’s ridiculously large fan base does include the Far East, Middle-East, UK, Canada and Indonesia. Furthermore, since India houses 1.2 billion people, their homegrown fan base is at least equal to their worldwide one. Thus, the support for Indian films across the planet allowed Bollywood to make larger films, even without capturing American audiences.

Once Hollywood opened their eyes to Bollywood’s fan base, the floodgates opened up and Hollywood started investing in Bollywood. Suddenly, egos, fees, demands and budgets all skyrocketed as the budgets swelled to over $20 million dollars per picture.  While twenty million may not be $300 million like the budget for John Carter (2012), it’s definitely a sharp increase from what levels the Indian industry had been used two. To put it into perspective, just imagine the American studios spending $750 million to $1,500,000,000 on their tent pole productions, and having the multiplying on budget levels happen virtually overnight. That’s what Bollywood is going through at this very moment.

Side Note:

India and Bollywood does not need Hollywood’s money, but rather Hollywood wants the slam-dunk investment that Bollywood is currently offering.

Bollywood Actors Now Earn Hollywood Fees
Due to the sharp increase in budgets, many of India’s top actors are now demanding $8,000,000-$10,000,000 + per film. Considering that many of Hollywood’s A-listers are fetching far less money than they used to, India’s top level stars are worth the same, if not more, than many of Hollywood’s elite.

Bollywood Television Values Trump Hollywood Television Values
With the explosion of cable channels in the USA, the value of content has sharply decreased. Network license fees for movies made for television would be in the millions film, and it wasn’t uncommon for pay cable stations like HBO and Showtime to pay healthy seven figures for films they wanted. However, that dream has turned into a nightmare.  These days, getting a six-figure license fee is a dream, because most license fees are five figure and four figure deals (yes, as in $9999 or less).

Conversely, Bollywood’s top productions are demanding up to $10,000,000 for their television rights, which is 50% or more of their highest budgets. Think about that, you make a $20,000,000 film and your film’s TV pre-sale brings in 50% of your budget – before you release the film.

No wonder Hollywood is fueling Bollywood with cash. American studios can spend $20,000,000 making their own lower budgeted film, spend another $37,000,000 to advertise it, and then hope it rakes in $150,000,000 or more so it can break even. Or, they can simply invest $20,000,000 into a Bollywood film, and have half of its budget recouped through TV sales before the film is even finished. The decision is a “no-brainer.”

While I doubt American studios will abandon making $20,000,000 films altogether, their investment in Bollywood clearly shows their growing concern for the mid-range American production as a viable, or smart investment. Who knows, in ten years, Hollywood may be reduced to $500,000,000 studio films and $500,000 indie films. Should that ever happen, I hope each and every one of you get to write and direct at least one half a billion dollar budgeted monstrosity.

Thank you again for lending me your eyes, and I look forward to borrowing them again next Tuesday. Until then, have a great week!

I can be followed on Twitter @Lonelyseal.

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  1. Amit says:

    This is a great piece! We at the Chicago South Asian Film Festival have been observing and exploring this trend as well.

  2. shamim Zaidi says:

    Hammad, you did an excellent job writing this.

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