Talks Between Producers, Multiplexes Fail; Films Coming Soon To A Single Screen Cinema Near You

imageNegotiations this afternoon failed to resolve the month-long impasse in India’s Hindi film industry, where Bollywood producers and multiplex chains are locked in a tussle over sharing revenues. The standoff has affected both sides badly, with multiplex occupancies down to a trickle and more than 15 films awaiting release. “There has been no resolution,” said filmmaker Mukesh Bhatt, who chairs the United Film Producers and Distributors Association. Films awaiting release include those from big banners such as Yash Raj Films, Vishesh Films, Studio18, UTV and Eros.

There is however, good news for filmgoers who have found little reason to go to the cinemas since last month. Producers will now go ahead and release their films in single-screen cinemas. “We have decided to go ahead and release our films in good old single-screen cinemas. We have conducted a detailed study over this and we will finalize our strategy in a week’s time,” Bhatt told contentSutra. When asked if this means viewers will get to watch new releases in three weeks’ time, Bhatt said: “We hope so”.

The impasse was created when producers started demanding a fixed revenue share deal from multiplexes in place of a varying system of splitting box office returns. Currently, the producer gets 45-48% of revenues in the first week of a film’s release, and their share goes down progressively over the subsequent weeks. By the fourth week, the producer gets only 30% of revenues, according to this Business Standard story. Producers have been demanding a flat 50% share in place of the current system and suspended all releases and marketing activities till this demand was met on 4 April. Since then, occupancies in multiplexes have been down to 10%.

However, multiplexes are estimated to account for some 60-70% of total box office collections. When asked how producers can cope with the drop in collections, Bhatt said: “That’s a blunder we made. We created this system. Now we are working on alternative strategies to distribute our films.”

Unlike Multiplexes, single-creen cinemas work on a rental basis. Producers pay a fixed rent to the cinema owner to exhibit their films. “With single screen cinemas, we can effectively get a 75-80% share of collections,” Bhatt explained. In absolute terms, however, the collections will be lower, as multiplexes, which provide a better viewing experience and ambience, are able to get a much higher ticket rate from viewers than single screen cinemas.