Hyderabad
February 24, 2009

A lot of people keep telling that the telugu film industry has to take a cue from the Hindi film industry, tamil to an extent and ‘corporatize’ itself. There is a lot of buzz and misconceptions around this word. I’ve worked in all the three industries and have fair understanding of what it’s all about. In a nutshell, the Indian film industry is expected to emulate the “studio system” present in Hollywood and Asia to its own industries. Here, a few companies control most of the production and distribution resources of filmmaking. Typically, a “studio” is a company that has a production house, theatrical distribution arm, music division, home video label and TV sales department. The Big Five of Hollywood, i.e Warner, Fox, Universal, Paramount and Disney account for 95% of the boxoffice money in USA. The studio model is not only prevalent in Hollywood, but all over the world – especially Asian countries, where each country – has a separate language, filmmaking culture and industry of its own.

Japan: Toho, Japan’s largest studio and producers of the world-famous Godzilla movies have nearly 30% of the market share. The top 3 distributors of Japan – Toho, Shochiku and Toei combined have about 50% of the market share in Japan. Toho collaborated with Hollywood studios to produce and distribute the Godzilla movies globally.

Brazil: TV Globo, Brazil’s largest TV network got into the film business with ‘Globo Films’. Globo Films now controls over 60% of the market share locally, any year. Globo co-produced and successfully marketed worldwide, ‘City of God’ one of the most popular non-English language film worldwide.

France: Luc Besson, producer of Hollywood sits such as Revolver, The Fifth Element, District B-13 & the Transporter franchisee started his own studio called ‘Europa Corp’ back in France. The studio successfully replicated the Hollywood model in Europe. The company produced nearly 85 French movies till date, since its inception in 2000.

Korea: CJ Entertainment is a Korean company that started off in 1995, which replicated the same studio model locally. Today, they control over 30% of the market share, have released over a 100 films and have expanded into the exhibition business. CJ-GCV, their exhibition arm controls nearly 400 of Korea’s 1500 screens. CJ now has a presence in television, internet and movies making it another good example of a ‘movie studio’. Cinema Service is another Korea studio, which started in 1993. It produced over 30 movies by itself, and distributed nearly a 100 films. Cinema Service & CJ Entertainment are the two major studios of Korea. They own and control most of the country’s movie resources between themselves.

Hong Kong & China: Golden Harvest was Asia’s leading studios at one point and had a global presence. The formed in the 1970s produced over 200 movies over the years. They have also diversified into exhibition and have theatres in Hong Kong, Taiwan, Malaysia and Singapore. Harvest produced many of Bruce Lee and Jackie Chan’s hits. Their hit movies include Police Story, Teenage Mutant Ninja Turtles, Fists of Fury, Rumble in the Bronx and Game of Death. The company has stopped producing films by themselves in 2003, and is concentrating on film funding, distribution and the exhibition business. Golden Harvest is a company that successfully adapted the studio-model to Chinese languages films.

All these conglomerates have their own production, distribution arms. The “Part 1” of this article explains in brief of what really the studio system or ‘corporatization’ (as known in India) is. The second part would explain what the advantages of this process are and how we can get there.

In India, while there are many ‘corporates’, most of these companies just have well designed visiting cards, nice offices, good-looking executives and host glitzy press conferences. They just buy completed films from individual producers and re-sell them to sub-distributors. They’ve not corporatized the industry in the true sense. Yash Raj Films and UTV are the exceptions. They have their own active production, distribution arms, home video and music labels and truly synergize their resources. Big Pictures (formerly Adlabs), Studio 18, Eros have largely remained distributors and don’t have strong film production arms. They’re still evolving and in the process of getting there. But one thing all the corporates in Mumbai have consistently bought into the industry, is well-sourced money. These companies don’t rely on private financiers and have raised money for operations from legitimate sources such as banks and financial markets. With these huge monies already in their banks, they’re not forced to pre-sell their movie’s rights to distributors unlike an individual producer. Also the corporates have bought in science into the obscure function of movie marketing and have taken promotion to a new scale all together. But what really makes a company a studio and not a production house is the ‘library’ and the ‘slate’. These two words are really important and define the functioning of a studio.

The library: Library refers to huge catalog of movies previously produced by the company or the rights of which it acquired. For ex : Warner Bros owns the rights of 7500 movies and 38,000 television titles. Metro-Goldwyn-Mayer has a library of 1200 movies. The company licenses the movie to anybody who wishes to release the movie in any format (DVDs, online download or television) for any geographical territory. Channels like Sony Pix, HBO pay huge fees to Hollywood studios to buy those movies to be aired on TV. Likewise, home video labels in India pay royalty fees to the studios in LA to release the Hollywood titles in India. The library constantly generates huge revenues in cash, year after year for each studio. The rise of the newer mediums like Blu-ray discs, online downloads, mean more revenue for the studios. They re-sell the same content (the film) all over again to another set of content aggregators like portals and Blu-ray disc marketers. To produce newer films each year, these studios need not raise money from outside, but from their own reserves.

The Slate: The ‘slate’ refers a list of upcoming movies, which are under production, all distributed/produced by a single company. Unlike an individual producer, a studio does not release 1-2 films a year but 12-20 films annually. A studio doesn’t typically produce all the movies that it releases. It collaborates with individual producers by co-producing those films. For ex : EON Productions are the producers of the Bond franchisee but Sony Pictures is the studio that marketed it worldwide. Legendary Pictures are the producers of ‘300’ along with Warner Bros. For the year 2009, Warner Bros’ slate includes 22 films, including the much awaited Terminator Salvation and Watchmen.

This page on Variety.com, shows on which studio has a pact with which production house or producer. Any studio at any point of time has 12-15 producers consistently working to churn out films for them :

http://www.variety.com/index.asp?layout=chart_pass&charttype=chart_factspacts2005winter&dept=Film

The advantage of a slate is that, the studio is not betting all its money on a single film. It has de-risked its portfolio by having different movies of different genres on its list. Even if the odd summer blockbuster fails, the company on the whole will be in profits if its other smaller productions do well. By having so many films in hand, the studio will bring ‘economies of scale’ into effect. It can buy advertising space in bulk, get better deals from theatre owners as they’re constantly pumping them with movies and have lesser overhead costs per movie.

A huge library of movies and a consistent stream of movies (the slate) are the defining functions of a studio. To monetize these films studios have their own theatrical distribution network and home video labels to release the films.

(END of PART 1)

Other articles by Allu Sirish:
Small budget Telugu films
Movie Marketing or the lack of it in telugu cinema

About Allu Sirish: Sirish Allu is a 21 year old blogger from Hyderabad, India. He has completed Bachelors in Mass Media (Journalism) in R.D National College, Mumbai. He is a hardcore movie buff. Sirish Allu has been associated in the production of Geeta Arts films like Jalsa and Ghijini (Aamir Khan). Sirish Allu is the co-producer of Aamir Khan's Ghajini. You can visit Allu Sirish blogs at http://www.allusirish.in/