JUMP CUT
A REVIEW OF CONTEMPORARY MEDIA

copyright 2012, Jump Cut: A Review of Contemporary Media
Jump Cut
, No. 54, fall 2012

Digital pleasure palaces:
Bollywood seduces the
global Indian at the multiplex

by Manjunath Pendakur

This is one of the latest shopping malls in Bengaluru, a fast growing and sprawling city of nearly 10 million people, known for its Information Technology industry. What is special about this mall is that it houses the first multiplex cinema fully owned by Cinepolis, a Mexico-based transnational corporation, that boasts of a partnership with the beverage giant Coca Cola.[1] The growth of malls and multiplexes in India has been phenomenal. In the 20th Century, there were no indoor shopping malls in the entire country. Only 3 new malls were built in 2001, but in 2005 that number went up to 100 (Zakaria, 2006, p. 37). By 2010, 223 glistening malls arose with 785 cinema screens embedded in them (Adesaria, 2010).

The movie industry in the country started to refer to these venues as places where the “classes” go and the single screen theaters as venues for the “masses.” The malls and multiplexes are the latest symbols of a neoliberal India where the masses and the classes are being redefined. Why is this happening now and how are these multiplex cinemas and its audiences affecting India’s mammoth film industry? I shall explore these key questions in this case study by not only looking at the political economy of the film industry but also shifts in the cultural arena. Scholars and students, who are mostly familiar with text/aesthetic/auteur analysis of Indian films, may find this essay useful in better understanding them.

Class and caste

In order to better understand the film audiences and the recent trends and developments in the industry, we have to delve into class and caste in India. Because Indian culture revolves around caste issues, it can be bewildering to the outsiders to understand the intricate ways in which caste weaves into a person’s life. Class as a category is about property ownership and some people overcome the odds against them and climb up the class ladder. Caste, however, sets up social stratification and hierarchy. A person is born into a caste and they may convert to other religions to get rid of their caste identity, but people remember a family’s caste history.

Class and caste often intersect in India. While generalizations are difficult because of vast differences from region to region, India is a society that is stratified by class and caste. In certain parts of the country, lower castes have broken through the barriers to attain economic and political power (for example, the Nadars of Tamilnadu and Lingayats of Karnataka). Each community or members of a caste have developed their own cultural practices. There are hundreds of castes and, for the most part, these caste categorizations do not necessarily match up with what people do these days. In other words, with modernization and urbanization caste divisions are somewhat diffused, if not completely evaporated.

Caste is a powerful identity marker. One may rise above their class position by acquiring wealth. It is, however, much harder to erase a family’s identity and history. Muslims, Christians, and other minority religious groups are not part of the Hindu caste system. Hindus set aside a whole lot of people as ‘untouchables’ who are, for all practical purposes, outside the caste system. Indian government outlawed untouchability, however, the stigma is difficult to erase. The former untouchables, who go by the name ‘dalit,’ constitute about 16% of the total population. They have mobilized under the multiparty political system and are seeking justice and equity legally and politically.

Caste creeps in quickly at critical moments in a person’s life, for example, in birth, death and marriage. Indian popular cinema deals with these tricky issues related to caste differences and offers a progressive, egalitarian vision of society. However, a century of “preaching” through cinema for eradicating caste has not had much of an effect on caste and class divisions as they continue to persist in contemporary India.

We know that India’s population has grown to about 1.2 billion people. India’s Census in 2011 covered 35 States/Union Territories, 640 districts, 5,924 sub-districts, 7,935 Towns and 640,867 Villages (http://censusindia.gov.in/). According to Census data, more than 50% of India's current population is below the age of 25 and over 65% are below the age of 35. About 72.2% of the population lives in some 638,000 villages and the rest 27.8% in about 5,480 towns and urban agglomerations (http://www.indiaonlinepages.com/population/india-current-population.html).

When we compare these data to the 2001 Census, we see that nearly 2,000 villages have disappeared from their count. This is the tip of the iceberg of migration of landless and poor people leaving for bigger towns and cities looking for opportunities. The neoliberal policies since the 1990s have led to an agrarian crisis never seen before. More than 200,000 farmers have committed suicide to escape from poverty and their inability to feed their families. Lack of government subsidies, crop failure due to climate change, corrupt bureauracy, and global competition driving down prices of agricultural commodities are the reasons for this calamity (http://www.upi.com/Business_News/Energy-Resources/2011/01/06/Crop-failure-impels-Indian-farmer-suicides/UPI-73001294344878/).

In rural areas, where more than 70% of the people still live, a family’s class position is directly related to their land ownership. Some landowners are involved in money lending and some are absentee landlords. Those who do not own any land have no choice but to sell their labor power to eke out a living. The land-owning class is divided into four groups—Rich, Middle, Small and Marginal/Tenant. Small peasants are also involved in selling some of their labor power to the other landowning classes, while the Marginal/Tenant farmers have only their labor power to sell (Vakulabharanam et al, 2010, p. 5). In some better developed states such as Karnataka where I grew up, factories in rural India produce various commodities for sale in the cities—rice, cooking oil, sugar, and plastic bags. Such places have workers who are not tied to land.

The middle class (urban and rural)—consisting of property owners of all sizes, traders, officials in the military and the state machinery, teachers, professors, high technology workers in the corporate sector—has grown to about 300 million people. They have disposable incomes that are attractive for new investments in leisure and other consumer industries. Skilled workers’ average annual salaries in the Information Technology sector are in the range of Rs. 400,000 ($8000) to Rs. 652,000 ($1300). A senior software engineer who works for companies such as Tata Consultancy, InfoSys, or Oracle may earn higher than Rs. 1.1 million a year ($22,000). While that is a lot of money in the hands of a small percentage of the workforce, their salaries are less than what is paid to comparable workers in Singapore and China. In contrast, in the city of Bengaluru, a domestic worker earns monthly a meager Rs. 800 ($16) to Rs. 1500 ($30) for 4-6 hours of work. That person usually goes to 4-5 houses to cook, clean, wash clothes, or do other household chores in order to earn more. Breakfast, lunch, or dinner is usually included. Some of them own scooter and have a cell phone, but owning a house or an apartment is enormously expensive in that city and beyond their reach. Such workers would usually come from outside the city and live with other family members. They are not the clientele for the malls and multiplexes, but they will see movies at a local, single screen theater.

The paradox of rich and poor has existed in India throughout the feudal period and the colonial period and it persists in the modern, democratic India. The wealthy in the country have done splendidly well under the neoliberal regime since 1991. Forbes magazine has reported that by 2008 there were 53 US dollar billionaires. They are like the robber barons that sit atop the pyramid of wealth in the country and, in collusion with the state, have plundered the natural resources for private profit. The accumulation of wealth in the rich’s hands is unimaginable for most people in the country, as they struggle for one decent meal a day. Mumbai, the epicenter of Bollywood film culture, is the locus of more than 6 million poor people who live in terrible conditions without clean water, sanitation and roads in their communities that are labeled “slums.”

Cinema-going experience

To cater to the new consuming classes, the very idea of integrating cinema theaters in malls is relatively new not only in India but also in other parts of the world (Rockstar, 2011). In the past, well to do Indians traveled to Singapore and Hong Kong to experience modern shopping malls. Now they go to Dubai. These massive shopping complexes showcase imported goods, designer clothes, gold ornaments and electronics.[2] The first multiplex cinema (16 screens) appeared in Toronto, Canada at the Eaton Center, a downtown mall back in the late 1970s and immediately after that multiplexes were being included in the malls of other U.S. cities. Chicago, for instance, had one such multiplex in the Water Tower shopping mall and other multiplexes developed in and around suburban areas.

India and China, with more than a billion inhabitants in each, have caught up with the likes of Japan and Singapore. One recent report about China in the Los Angles Times states,

“Over the last four years, the number of screens in China has doubled to more than 6,200, a figure that's projected to double again by 2015. Box-office receipts hit a record $1.5 billion last year, according to the State Administration of Radio, Film and Television” (Pierson, 2011).

The report further states,

“The cinema-building binge is powered in part by ideology. The Communist government is a major investor in film production, distribution and movie houses. Film is a way to strengthen state influence at home and export Chinese culture abroad.”

For nearly sixty years after China and India decolonized, news from those two Asian giants was framed in such way their complex societies, their histories, and their economic and political struggles fitted a preordained picture in the Western mind. For instance, the dominant images for India were snake charmers and the emaciated bodies of famine stricken children. The unprecedented economic growth in India, huge pool of scientific labor, spread of urban culture and consumerism changed the dominant media representations starting in the 1990s. Stories and images of China in the news media vary from a major ideological and financial threat to the West’s supremacy to an economic colossus that has incredible challenges with pollution, labor exploitation and human rights issues.
In addition to China and India, people in various parts of the developing world are witnessing urban multiplexes. While I am presenting a case study of India’s film industry and the various trends and internal battles, Jump Cut’s international readers may find it useful to compare the Indian example with their own countries.

Going out to see a movie in India is still a family affair. Parents, grandparents, uncles, aunts and children of all ages make a night out of seeing movies at large, cavernous halls that feature a single screen. This was also the experience of U.S. moviegoers in the 1930s and 1940s. Going out on a date to see a movie was not common until recently. Dating in middle class families, even in urban areas, is still frowned upon. I, however, saw young couples at multiplexes in major cities because the large city gives anonymity to one and all. Arranged marriage is still the norm irrespective of their class and caste. More common are groups of friends—men and women—going to see a movie as a social event. Families enjoy socializing during the intermission.

The single-screen cinema is also a reflection of the class structure because the ticket prices vary depending on how far the patron is sitting from the screen. Those who cannot afford the balcony seats, sit on the main floor. Women can choose to sit separately from men and they can enter from a separate entrance. That is not the case with multiplexes because they are located in urban or suburban settings and draw on a more affluent audience that is also generally college-educated. I saw couples sitting together to watch movies at multiplexes in Bengaluru and Mumbai. In both—single screen and multiplex theaters—the audience is lively. They come ready to respond to what is going on with their favorite stars on the screen. They whistle, clap and even act out their favorite lines and songs from that movie. Cell phones ring during the screening and people do texting also. Some people are annoyed by such behavior and choose not to go to movies in the theaters. Furthermore, to get to a multiplex they have to contend with traffic, noise, pollution and other problems of the big cities, and choose to stay home and watch television.[3]

To appeal to this diverse audience, the Indian producers and directors created a movie “package” with a long narrative, usually running to three hours, punctuated with songs, dances, and unbelievable fights. This form goes back to the early days of cinema and was perfected so to speak after the arrival of sound in the early 1930s.

Government censorship curtailed sexual representations to some extent, but producers and directors with political influence have managed the Censor Board to their own advantage. Others devise clever ploys to get around the rules to please the mass audience. Provocative images of women with lots of cleavage exposure, dance numbers that have bump and grind movements, and sexual innuendo in dialogue and song stand in for actual sex on the screen. Rain sequences and the wet sari scene are still common. Each Bollywood film may have what is known as an “item number,” a provocative song and dance performed by a woman, often surrounded by drunk men. In the last century, there was always a dance number in a nightclub, represented in the films as a den of illicit liquor, smuggling, and other antisocial behavior. These days, heroines perform such provocative dance numbers.

Directors go to extraordinary lengths and producers spend a sizeable portion of the film’s budget to create lavish sets (or go to foreign locations) and employ expensive dancers to fill the sets along with the principal actors. Such scenes are meticulously directed with a great deal of care and attention to color, costume, drama, and movement. These item numbers and other song and dance sequences are highly popular with the audiences. Some patrons see a movie multiple times, just to enjoy the music and dance numbers.

These “elements” that constitute ‘entertainment’ in a film are like the ingredients in a spicy Indian curry dish or ‘masala’. In fact, audiences in India refer to the local films as ‘masala movies’; however, in the last ten years the term “Bollywood” has gained currency as a label for this popular film form. It draws heavily from the Indian myths, epics, folk and other cultural traditions. The narrative is not linear, but stories within stories are woven into the plot structure. Melodrama is punctuated with comedy sequences and, in many a film, comedians have a parallel story line along with the heroic struggles of the male protagonist. Kissing is not a taboo any more, although it is generally avoided. The masala film form has persisted through the decades while Bollywood producers have made more genre specific films (horror, comedy, suspense thrillers) that have found an audience in the multiplex theaters. Most of them have song and dance numbers because the mass audience loves music and the film song serves to enhance the narrative as well.[4]

In general, malls and multiplexes have developed in the big cities and are beginning to expand into small cities. Single screen theaters are predominant in small cities at this time and also in district and county towns. As India’s capitalist development is uneven, not all areas of the country look the same. The economically backward states lag behind compared to some of the cities and towns that this essay deals with. As can be expected, private capital flows into areas where audiences have purchasing power to buy expensive tickets at the shiny multiplexes.

In 1991, the Indian government abandoned socialism that was the vision and direction set by the nationalist movement to create a more equitable and just society. Instead, the government embarked on the neoliberal path, a radical departure from the “command and control” economy that was led by state control of strategic industries and services to an economy that favored private ownership and control (Das, 2000, 2002). To accomplish this new goal to create a fundamentally different, but a capitalist economy the Central Government revamped some of the laws and created new ones. One such major change was the enactment of the Competition Act, 2002 that is aimed at facilitating a competitive regime for private capital as well as state-owned enterprises. The other action that has had a direct bearing on the film industry is allowing 100% foreign direct investment in all sectors of the fast growing entertainment business. These policies and the new regulatory regime to build a capitalist society are often billed in the media as India, Inc. or India Shining.

While not all of that has been completed yet and there is widespread concern and opposition to some of these policies and the high level of corruption among the political elite, the signs of ‘success’ of neoliberal policies have received wide media attention in the West.[5] By these accounts, India is poised to become the third largest economy in the world by 2040 (Zakaria, Newsweek, March 2006, p. 35). Michael Elliot of Time gushes with the following words,

“Fueled by high-octane growth, the world’s largest democracy is becoming a global power. Why the world will never be the same” (Time, June 26, 2006, p. 37).

Another article notes that India has the highest number of billionaires in Asia, “pushing Japan to the No. 2 spot for the first time in 20 years” while pointing to

“80% of Indians who live on less than $2 a day, making India the country with the world’s largest number of poor people” (Time, 2006, p. 18).

I argue that the structural changes in the film industry must be seen in the larger context of political economic change in India. Otherwise, the meaning of what people experience and whose experience we are talking about will be completely missed. I will also illustrate the impact of how the capitalist state structures the economy favoring one class versus another, and one group of capitalists versus the other, all in the name of serving the public at large. It is crucial to understand the role of the state as a mediator in this globalization process where various sectors of power compete to gain a privileged market position and higher profits.

Size and importance of the film industry

The particularities of how the film industry works in India strike the outsiders as disorganization and chaos. Major stars sign up for dozens of pictures at a time. As such, producers have to scramble to get dates to complete the film. In a star-driven industry, the producers are at the mercy of these ‘bankable’ names. Entire crews are taken abroad to beautiful locations in Switzerland or other areas of Europe, Australia, Canada, the United States, and South America in order to get every one in one place for extended periods of time to complete principal photography. There is stardom and celebrity status not just for those actors, but also music directors and composers get top billing because popular cinema is studded with songs and dance numbers.

Songs are recorded well in advance and releasing an album of those songs is celebrated with pomp and ceremony, just as a film’s opening is. Because the Indian moviegoers love music and songs in films and those songs get played on radio stations over and over again, the public is well aware of an upcoming film. Men and women who sing these songs for movies are accorded high status in the industry, just as rock stars do in Western culture.

Until 2000 banks did not loan money to the film industry. That changed soon after when the Indian Central Government recognized film and entertainment as an “industry.” Vertically integrated corporations were almost non-existent in production, distribution and exhibition. It was mostly a cash economy, dominated by family-owned businesses and the underworld, which made it nearly impossible to establish how much money was transacted and for what purpose (Pendakur, 2003, pp. 51-55).

None of the agencies of the Central Government provide systematic data on the size of investment, revenues, profits, taxes collected, number of films distributed, tickets sold, and films exported. The same sad state of affairs exists in the industry organizations in the country. The best we can get are estimates. In 2001, the Federation of Indian Chambers of Commerce and Industry estimated the Indian entertainment industry size to be around Rs. 96 billion ($1.95 billion) and projected a steep growth thereafter. Recent estimates suggest that the media and entertainment industry grew by 11 percent between 2009-10, from $12.9 billion to $14.4 billion and was supposed to grow by 13% in 2011 (India in Business, 2012). The film sector’s revenues totaled $1.9 billion in 2010 reflecting a decline from the previous year by 6.7%. All projections into the future are, however, rosy based on population growth and projected higher ticket prices. The film industry revenues are expected to reach $2.6 billion by 2014 (India in Business, 2012).

The Motion Picture Association of America’s branch in India commissioned a study by the accounting firm Price Waterhouse Coopers that provides another picture of the size of the film industry. The researchers studied Hindi language films and what they call “key regional language films” to come up with their estimates. In 2008, according to this study, the Indian film industry size is estimated at $2.5 billion and was expected to grow by 11.5 percent over the period of 2008-11. The domestic box office accounted for $1.8 billion with overseas box office, ancillary rights, and home video making up the balance (MPDAI, 2010, p. 10). By 2013, domestic box office was predicted to grow to $2.8 billion primarily due to the growth in average ticket prices. Whichever study is chosen for our purposes, it is clear that the revenues are growing and, as we shall see later, ticket prices are also rising.

An estimated 1.4 million workers are employed directly in the motion picture industry in various capacities at the hundreds of studios located in the principal cities of India. The industry creates other jobs related to the core businesses of production, distribution and exhibition. Those jobs amount to approximately 3 million (MPDAI, 2010, p. 4). Trade unions have been around a long time in this sector but they are weak.

More than 1000 feature films are produced in 23 languages, including English (CBFC, 2010). Such a diverse and complex industry was almost impenetrable to Hollywood until the 1990s (Pendakur, 2006, pp. 89-90). With India’s borders wide open for Hollywood imports, the number of films that the Hollywood Majors bring in has doubled as are their revenues.[6]

The 12,000 plus screens in the country reportedly sell a lot of tickets but no one can provide an accurate count. Variety reported in 2007 that 10 million tickets were sold every day (James, 2007, p. 8). I estimate ticket sales to be at least three to five times that number because the theater owners underreport sales in order to evade taxes. It is especially the case in small cities and rural towns where the theater owner and the distributor’s agent collude. They recirculate the tickets from the entrance back to the box office several times for the same show. A more recent report suggests a total of 3.5 billion tickets sold every year and was expected to rise to 4.5 billion by 2011 (Bhushan, 2008).

There are roughly 27 million Indians living outside India, and they love to watch movies on the big screen and acquire DVDs and music CDs. Only the Hindi language cinema has been able to tap into this worldwide audience. As a result, audiences from Nairobi, Kenya to Los Angeles, USA enjoy Hindi language films. More than half the films made in India are produced in the four southern states, and even some Hindi films are made in the south, but Tamil, Telugu, Kannada and Malayalam films do not play in theatres all over the country or worldwide. They may be shown at morning shows in cosmopolitan cities such as Mumbai or get a wider release in Bengaluru with its diverse film audience. Generally patrons for those films tend to be those specific linguistic communities. In fact, this holds to be true for Indian cinema the world over. Hindi films have had a global audience whereas regional language cinemas remain the domain of specific language groups or cinephiles.

Production sector

Around 2006-07, foreign investors were “flashing money everywhere,” according to Rohan Sippy, a third-generation filmmaker who has watched the industry’s financing structure change up close (Sippy, 2009). The current world-wide recession has tempered that enthusiasm to some degree. Intense competition and low barriers to entry characterize the production sector in Bollywood, unlike in Hollywood where six large, transnational corporations dominate practically all aspects of the industry (Paramount, Fox, Universal, Disney, Warner Bros, Columbia Pictures). Hundreds of producers come and go and they tend to be mostly family-owned operations. Big companies, owned by families—Yash Raj Films, Ramoji Film City, Navketan International, Rajshree Productions, and Mukta Arts, Adlabs, etc.—continue to flourish. However, joint ventures and partnerships with foreign companies are reshaping these companies.

With the overhaul of the regulatory regime in 1991, a number of critical changes are shaping up in the production sector. The government of India allowed 100% foreign direct investment in all sectors of the film business. In addition, major banks and other firms with investment money came forward to fund various Bollywood productions. Initial Public Offerings and new entrants with high net worth became involved in film production. The beginning phase of the construction of multiplexes in the late 1990s and their success certainly added confidence to the investors in film production. I will return to the growth and significance of multiplexes later.

One enthusiastic report pointed out that starting 2001, Hindi film production sector received an injection of Rs. 430 million, Rs. 556 million in 2002 (11 projects), and Rs. 1761 million (33 projects) in 2003 (http://www.indianfilmtrade.com/information/financing.php). The reporter further noted,

“This represents the first definitive (and meaningful due to number and quantum of films involved) shift in the growth of organized film financing for the Hindi film industry, a trend which is likely to sustain & grow over the coming years.”

By 2010, there were a number of venture capital companies in India that were supplying funds for Hindi film production. Notable among them were Cinema Capital Venture Fund and Vistaar Religare Film Fund, both domestically owned and registered companies, had a corpus of Rs. 3500 million (Jariwala, 2010, p. 2).

The initial euphoria of making high profits from the film business may be receding in the last two years. As the failure rate is high--around 85% of the films released flop in the theatrical markets--investors quickly learn that returns are seldom guaranteed. Box office failure for a film generally means negative impact on revenues in ancillary markets such as television rights, cable, satellite, DVD sell-through, and international markets. One major venture capital firm, Cinema Capital Venture Fund, headed by Samir Gupta, backed eight Hindi films. Their slate included, All the Best (2009), a multi-starrer with Ajay Devgan in the lead role. It is a mishmash of comedy, fantastic stunts, car chases, and romance. Gupta, however, says that the experience of funding film productions where costs cannot easily be controlled has given him and his venture capital industry certain reservations. He asserts that equity deals are not as preferable as debt and bridge financing (Chaudhary, 2011, p 8). or investing in prints and advertising where the equity or institutional investors are positioned at the top of the revenue stream.

There is a good deal of concern among institutional investors because they have also learned that the film business is not a transparent industry. One media consultant who did not want to be named pointed out,

“With funding available from unaccountable channels and top producers not needing institutional capital, investors will have to keep looking for ways where they can invest capital and generate returns” (Chaudhary, 2011, p. 8).

In sum, Bollywood film financing is not yet an organized industry although the government policy of opening the doors for foreign direct investment and encouraging bank and equity finance have had a visible impact on the flow of money into the business. With high levels of corruption in the country and a thriving underground economy, there is plenty of private, untaxed money that is flowing into the film industry.

Transnational corporations involved in production, distribution, and exhibition on the global level entered the production market by way of joint ventures with Indian capitalists. These corporations simply wanted a piece of the vast market in India where more than 95% of the box office goes to Indian language films. They had tasted success with Hollywood imports hitting the jackpot with the Indian audiences in 2007 and the euphoria spilled into making investments in production also. In 2007, for instance, Casino Royale (a Bond thriller) and Spider-Man 3 were hits with the Indian audiences. Sony Pictures opened Spider-Man 3 with 588 prints -- 261 in Hindi, 162 in English, 78 in Tamil, 81 in Telugu and 6 in Bhojpuri -- the maximum number of prints for any foreign movie until then. This strategy of dubbing films into local languages expanded the potential market for Hollywood cinema into rural towns (Valsan, 2007). According to Sony, it paid off in a big way by making Spider-Man 3 the most successful Hollywood film at the box office in the country’s history with a total of $17 million.

Sony Pictures Entertainment went further by producing Saawariya (Hindi, 2007). With the highly successful Sanjay Leela Bhansali directing it, Sony distributed it worldwide through its wholly owned subsidiary, Columbia Pictures. This is the first time that a Hollywood Major financed and distributed a film made for Indian audiences at home and abroad. The Walt Disney Company co-produced and released Roadside Romeo (2008), a full-length animated film with Yash Raj Films. Disney also bought the home video rights for Aamir Khan’s directorial debut Taare Zamin Par (2007) for release in the US. The following year, Disney proceeded to build a stronger presence in the Indian market by buying a strategic 32.1% equity stake in UTV Motion Pictures in Mumbai the Indian market by buying a strategic for about $230 million in 2008. At the time, it was considered the largest foreign investment in the Indian media and entertainment sector. This investment also gave Disney a 15% stake in UTV's broadcasting unit UTV Global Broadcasting Ltd. (UGBL), which operated the kids channel Hungama TV and the youth oriented Bindass TV, Bindass Movies and UTV World Movies.

Warner Bros released Chandni Chowk to China (2009), made in partnership with Ramesh Sippy, a major producer-director in Mumbai. Fox STAR Studios has a joint venture with Vipul Shah for a multiple film production deal. The box office results from Roadside Romeo and Saawariya, however, have not matched the enthusiasm shown by the Hollywood Majors (Bhatia, 2010).

Production costs soared in the new millennium. Available data indicate that in 2006, these films were hugely successful:

As many as six films grossed over Rs. 400 million each ($8 million), two of which went over the Rs. 600 million ($12 million) mark. Lage Raho Munna Bhai was a mega box office hit approaching the Rs. 700 million mark ($14 million) (Joshi, 2006, p. 74). In 2011, this trend has continued where films with big stars and high budgets ranging from Rs. 600 million ($12 million) to Rs. 1350 million ($27 million) performed exceedingly well. Body Guard, with another Superstar of Hindi Cinema, Salman Khan reportedly cost Rs. 600 million ($6 million) to make but grossed Rs. 2.2 billion ($44 million).

Even Delhi Belly, featuring Imran Khan, a new comer who is related to the Superstar Aamir Khan, was a huge success with urban audiences in multiplexes. It was budgeted at Rs. 250 million ($5 million) and reportedly grossed Rs. 895 million ($17.9 million). Ra.One featuring Shahrukh Khan, another Superstar of Hindi cinema, with its expensive special effects cost Rs. 1350 million ($27 million) and grossed Rs. 1920 million ($38.4 million) (http://www.novinovi.com/box-office-hits-bollywood-2011/).

Corporatizing the production sector and bringing ‘discipline’ to the way films are produced in India has not proceeded along the lines that were enthusiastically promoted by the champions of efficiency at university business schools and Central Government officials. As long as there is unaccounted money from all sectors of the Indian economy, especially land sales, construction, gold, diamonds, drugs, import and export trade, financiers will continue to come to the film industry where illegally made profits can be laundered.

Distribution and exhibition

Just as competition is the hallmark of production, distribution and exhibition markets are still highly competitive. No single company dominates distribution and exhibition. Unlike in the U.S.-Canada markets, where a small number of large vertically integrated corporations lord over the market, many family-owned companies are involved in distribution and exhibition. Entry barriers do not exist for newcomers with money capital from other sectors of the economy or from the parallel economy. There are national distributors for Hindi language cinema and regional ones for other language films. In the recent years, big Indian-owned corporations have entered this field and are changing the game.

Distributors want to gain as much screen time as possible in key markets where audiences for their films may exist. However, given that the country does not yet have sufficient number of theaters, competition to get screen time is fierce among distributors.

Distribution and exhibition patterns for Hindi cinema are changing somewhat but what remains is as follows. The country is divided into six zones, often called distribution territories. The seventh zone is the global market and more will be said on that market later in this paper. The six domestic territories are composed of:

These six domestic zones have been further fragmented into 14 territories in the last few years as costs of production went up and acquisition costs for distributors also rose (KPMG Report, 2010, p. 23). In each major territory, there are 15-20 distributors who vie for the films that they perceive to have the greatest success in the exhibition market. What drives the perception is the buzz created by the publicity and promotion surrounding a particular film, the team behind a film including the star cast, director, production company and music director. A Hindi film’s success or failure in the Mumbai territory usually determines the price a film can command in other territories in the country.

High acquisition costs should reduce competition and drive out independents. However, that is not the trend in India. While many large corporate entities have emerged—Big Cinemas, PVR Cinemas, UTV Motion Pictures, Eros International—they have not been able to monopolize control over the supply of films. Independents still have a lot of competitive edge in the distribution business because money supply is abundant into the film industry that promises ‘gold’ with high rates of return. The glamor of being involved in a highly visible, star-studded industry and the parallel economy are the other reasons for the continued existence of independents.

In each territory, distributors classify cities and towns as A, B, and C centers based on population data. In other words, big metropolitan cities with a population of one million and above—such as Bengaluru, Chennai, New Delhi, Mumbai, Kolkata—are given the status of ‘A’ centers. Nearly a hundred cities in the country have that honor. ‘B’ centers are cities that have 100,000 and above populations and ‘C’ centers are smaller towns that may have one or two single-screen cinema halls and serve a population below the 100,000 mark.

There are still parts of the country that have no theatres at all. Those who live in those areas may go to a town for work or trading purposes and also see a movie. Or a touring theater may come around during the off-monsoon season.

In 1997, there were a total of 12,772 theatres in the country, 8886 of which were permanent cinema halls, also called hardtops, and 3918 were touring cinemas (Pendakur, 2003, 21). There was a steady decline in the number of screens, although total population grew in that decade and surpassed the one billion mark. By 2006, the total number of screens in the country had reached a low point of 11,183, which meant 10.2 screens per million persons. By this measure, in comparison to other major film producing countries in the world—U.S., Japan, France, Germany, Italy, U.K., and Spain, India was at the bottom of the list (Chitrapu, 2008, p. 122.). In the last decade, multiplexes and digital cinemas appeared and became a new, competitive force and added a novel way in which movies are being shown in the country. More will be said on that later in this section.

Unlike the first run, second run, third run patterns of release in the US-Canada markets, the distributors in India release films first in the big metros, then in the district towns, and then followed by the small towns. In effect, it would take a few weeks or months before a print reaches a rural ‘C’ center, and seldom in a good condition. Cities such as Bengaluru and Chennai have hundreds of theatres with 800-1000 seats. Within the city, however, distributors do not treat all theatres equally. Theatres which are air conditioned and have digital sound technology and are located in upwardly mobile areas of the city may get a new film to play earlier than the others which are near bus stands and poverty stricken areas. This is akin to the first run and second run classification that we find in the US-Canada markets.

In small towns or C centers, the front rows are no more than a hard bench. When the sales are good, the theatre owner can pack more people in by adding more benches. Ticket prices vary widely depending on the city, town, village setting as well as the kind of technological environment (digital sound system, for instance) or comfort (push-back seats, air conditioning, etc.). In many theatres, women have separate entrances and feel safer to sit separately from men because of groping incidents. Well to do families, however, sit together in the balcony area. These practices are different in multiplexes as we will learn later.

Typically, a Hindi film producer sells the film to territorial distributors, often before the picture is completed. This way, the producer can get an advance towards the delivery of a certain number of prints at a certain time. In this method of production and distribution, the producer spreads the risk among a number of territorial distributors because they are in essence willing to place a hold on a film by taking a risk on the film. They are richly rewarded if the film is a box office hit.

The trade practices that are in vogue between the distributors and exhibitors are generally as follows: (a) minimum guarantee, (b) fixed rental, and (c) percentage deal.

In C centers, exhibitors prefer the fixed rental. They collect the box office revenue, take their cut and hand over the rest of the funds, if any, to the distributor (Gangavathi, 2006, 2007). If the picture bombs, then the distributor will owe money on the contract which would have to be settled. Distribution and exhibition industries are experiencing substantial changes with the arrival of multiplexes and digital cinemas to which we turn now.

Multiplexes: mass entertainment for the elite

Two competing scenarios are playing out in the Indian theatrical market these days—rapid growth of mall-based multiplexes and single screen theatres going through digital conversion. These new theaters not only have set the high standard for luxury viewing conditions but also compete vigorously for new films. With higher ticket prices than the single screen theaters, multiplex profits are higher and, as a result, their market power would grow. As we will see, a tug of war developed between the multiplexes and producer-distributor groups for sharing box office revenues.

As noted earlier, not only was there a severe shortage of theatres but also the total numbers were on the decline. The archaic regulations and bureaucratic stranglehold on exhibition and lack of foreign direct investment are often noted as the reasons. While the bureaucracy remains corrupt, new corporate entities have emerged to take advantage of the availability of venture capital and also the growing demand for entertainment from the burgeoning population of young people.

The expansion of the economy, especially in the cities and towns, has been remarkable. Government investments in infrastructure (mass transit, airports, sea ports) and doubling of salaries for government employees fueled job growth and consumer spending. That in turn has resulted in a housing boom all over the country. Western corporations’ outsourcing information technology work, Call Centers, and other back office labor contributed to overall growth in the service industries. Employees of these companies are the primary consumers at malls and multiplexes because of their higher purchasing power compared to domestic workers, farmers, and other low wage jobs. While the US economy and the Euro zone have experienced a series of economic crises after 2007 and recovery has been slow and painful, India escaped it all. Wages have risen sharply (so is inflation) and also spending on luxury goods, travel, and entertainment.

Shopping mall growth has been meteoric. More than a dozen cities including Delhi, Bengaluru, Pune, Mumbai, Kolkata, Hyderabad and Chennai are the sites for the development of attractive shopping malls with multiplexes embedded in them. Given the demand for leisure and entertainment in India, it made perfect economic sense to include high end multiplexes in these new shopping malls. The average ticket price in multiplexes in 2007 was in the range of Rs. 130 ($3) to Rs. 200 ($4); by 2010, the range shifted upwards to Rs. 180-280 on weekdays ($3.50-$5.25) and Rs. 280-Rs. 350 on weekends ($5.25-$7).

Six national chains of multiplexes emerged by 2010 with a substantial number of screens in their control:

These mall/multiplex builders have also partnered with global corporations such as

and national corporations such as

The forecasts of growth since the advent of malls and multiplexes in India have been largely proven accurate with further expansion planned in this decade by mall and multiplex builders.[8]

The revenues of these multiplex chains have also been growing according to their annual reports and media coverage, which spells further consolidation of the exhibition industry. In February 2010, Inox bought a majority stake in its rival chain, Fame India, for Rs. 664.8 million ($13 million), thereby making Inox India’s No. 2 multiplex chain. It was reported that the combined operation would result in 55 multiplexes with 204 screens in all (Nagaraju, 2010). Big Cinemas also increased its investment in Fame to 11%. Such horizontal integration was to be expected given the market and revenue growth as well as the fact that existing laws do not prohibit or even limit such industry concentration.

To further understand the operations of the multiplexes, we will take a look at two major competitors in the business—INOX Leisure Limited and PVR Cinemas, both of which have a strong presence in Bengaluru, known for its high technology industry jobs with a population of nearly 10 million. PVR Cinemas is certainly a trailblazer in the multiplex theatre business in India. Entering the industry in 1997,[9] the PVR multiplex circuit has grown to 33 cinemas with 142 screens, located in some of the fastest growing cities of India, which include Delhi, Faridabad, Gurgaon, Ghaziabad, Noida, Mumbai, Bengaluru, Hyderabad, Lucknow and Indore.

PVR introduced such innovations as Cinema Europa, Gold Class, and online ticket booking, all of which attract an elite class of viewers who are willing to pay high prices. Gold Class tickets cost Rs. 500 ($10) and Cinema Europa, depending on the time of day, may cost between Rs. 130-180 ($2.50-$3.50). At its largest operation to date, the PVR Cinemas in Bengaluru had 11 screens with a total of 2016 seats and were showing some 19 different films at different times of the day. The first exclusive Gold Class auditorium with plush, reclining seats, where young women dressed like airhostesses served food and drinks, became an attraction.

It is important to emphasize the great diversity of content available at the PVR multiplexes. Big budget Hindi films, regional language films in Telugu, Kannada and Tamil, and even small-budget films made by new directors are finding access to the market. Such successful Hollywood films as Blood Diamond (2006), Spiderman-3 (2007), Avatar (2009) vied for audiences with Hindi and Kannada films at PVR Cinemas in Bengaluru.[10] That is a remarkably positive development for Indian cinema because new talent finds many opportunities in such an environment.

Others were not far behind in what is a highly profitable business. INOX Leisure Limited, a subsidiary of Gujarat Flurochemicals, Ltd., entered the multiplex market around 2002 and grew by 2010 to 39 multiplexes with 147 screens in 26 cities (Inox Leisure, Ltd., Annual Report, 2010-11, p. 15). In this highly competitive atmosphere, some of these multiplex chains are attempting to provide what they call “pre-movie” and “post-movie” watching experience. Some of these swanky theaters also offer other entertainment facilities such as bowling alleys, karaoke centers, ice-skating rinks, kid zones, gaming zones, snooker tables, eating stalls, and book stores. The game changer is the variety of foods offered for sale compared to the experience at single screen theaters. One reporter wrote recently:

“Gone are the days when, while waiting in the lobby for the show to start, or during the interval, you were excited to get to the samosas, the pastries and cold drinks, and if you were lucky, some oily popcorn at the cinema canteen. The food in most up market multiplexes is as snobbish as the place that serves it, and young India is happy to be part of this snob club” (Shimpi, 2010).

During my several visits to India in the last 15 years, one critical change in how families spend their time is the visit to the mall. Families go to the mall to simply hang out, a sort of a community get together, and wander around. The multiplex is part of this comfortable space to eat, see a movie together, and eat some snacks. One regular visitor to the mall was quoted as having said,

“Multiplex has become a comfortable and perfect weekend hangout for my family, with movies, gaming zones, and a mall. My kids love movies, there is a gaming zone for me, and my wife indulges in shopping. Rather than traveling amid the traffic, it is better to get everything under one roof.” (Shimpi, 2010)

The multiplex operators are taking the concept of high-end cinema to a new level now by building uber-luxury theaters to go hand in hand with the construction of luxury real estate developments. These small theaters seat about 25 patrons and are rented to special gatherings of families or friends. At PVR’s Director’s Cut in Delhi, opened in 2011, patrons get 5-star comfort and also a chance to meet their favorite filmmakers. Ajay Bijli, the founder of PVR Cinemas, stated,

“While formalizing the concept for Director’s Cut, we constantly asked ourselves what we can offer to the affluent Indian who owns the best of gadgets and home theatres, so that they can come out for a unique movie-viewing experience” (Ambwani, 2011).

For instance, at the screening of Rockstar (2011), director Imtiaz Ali was present, to meet and answer questions from the audience after the film’s screening. This is what art movie houses or university film departments used to do in the US and Canada. As we can expect, ticket prices are higher at these luxury theaters but the food is the most important factor and the trickiest. The menus have to be innovative and also be easy to eat while watching a movie. Ashish Saksena of Big Cinemas pointed out this fact about serving food,

“One cannot serve curries or strong-smelling food to the consumer while they are watching a movie.”

In their Cine Diner and 180 Degrees, two new luxury theater brands, that are set to open in Mumbai, patrons will find round tables, sofas, full course dinners with a movie. Ticket price will be Rs. 500-800 ($10 to $16), not including food.

Following PVR’s success in this niche market, Big Cinemas, Cinepolis and Inox have announced plans to build luxury multiplexes with 25-48 seats and gourmet food offerings. As one analyst remarked, “Such formats work well in places with high economic disparity” and PVR’s founder Mr. Bijli agreed by saying,

“One-size-fits-all strategy cannot be used in a country with demographic disparity.”

In other words, with such a large number of rich as well as middle class people who love the movies, differentiating them into various types of luxury movie viewing experiences and letting them splurge makes perfect economic sense.

Urbanization and a growing middle class, the under-screened market in the country as well as growth in the number of films made are the crucial factors that attract investment into this sector. Allowing 100% foreign direct investment into the film industry also helped in attracting capital from outside the country. The first to enter India’s exhibition market is the Mexico-based Cinepolis that announced an ambitious plan to build theaters in 40 Indian cities:

“We will make India the country with our largest presence outside Mexico. We will open around 500 screens in the next seven years and for every screen, we will be spending around $700,000 (“Mexican multiplex chain Cinepolis forays into India,” Business of Cinema, 2011).

It is noteworthy that globally Cinepolis operates over 2000 screens with revenues of approximately $675 million a year. Its entry into the growing Indian market for theatrical film audiences will certainly heat up competition for product from within and outside India among the multiplex theater operators.

The mall, however, is the ideal tribute and a perfect symbol of the fast globalizing India. All the major international labels in clothing, watches, luggage, shoes, etc. could be found in a very comfortable, air-conditioned, cocoon like setting. As in an airport, there is a security checkpoint at each entrance to the mall. Uniformed, private security guards walk around the floors. There are no beggars, no traffic noise, no air pollution, no smelly sidewalks, and no “undesirable” crowds as we would find them on the streets outside. In other words, the air-conditioned mall offers a safe haven from the real India.

At the Forum Mall in Bengaluru, PVR Cinemas occupy an entire floor. As they don’t provide any seats for the patrons who are waiting to get into the theatre, many young couples sit on the steps to watch others walking by. The best part of the Forum Mall for me was the food court. Unlike the low-end food that is common in the malls of the USA, the Forum food court had specialized Indian, Chinese, and other restaurants.

To contrast the multiplex against a single-screen theater, I will turn to Mysore, considered a second-tier city. Mysore has a population of almost three million and was once home to a tribute-paying vassal king of the British Empire. It is also known for its tourist attractions and a relatively slow-paced life compared to Bengaluru. Mysore has grown in the last ten years. Some of the major information technology companies built their operations in that city as land prices were much lower than in Bengaluru and the city is filled with research centers and other educational institutions. For instance, InfoSys, one of India’s leading information technology companies established the InfoSysU campus, a $120 million corporate training facility. Every year 15,000 engineering graduates are selected from a national competition to learn the InfoSys way of doing business and go through a rigorous 12 month education program[11] (Schlosser, 2006). Those who succeed are automatically given a junior engineer position with InfoSys. Between 2001 and 2011, Mysore city’s population grew by 13.39 percent from 2.6 million people to 2.9 million, which constituted almost 5% of the population of the state of Karnataka. This growing city craves for movies and patronizes films in several languages.

Mysore has 17 hardtops, two of which are twins or two screen multiplexes. Two shopping malls have been built in the last four years with multiplexes. I interviewed Ajit Kumar and his son, Sanat, who are a theatre-owning family. They are pioneers in the business and their company’s history is emblematic of the changes facing the exhibition industry in the country. Ajit’s grandfather ran a tent theatre called, Olympia 80 years ago. One of their theatres in the city of Mysore is still named after that first theatre. At one point, Ajit’s father, Veerendra Kumar, controlled 11 theatres in Karnataka including partnerships in Davanagere, a ‘B’ center. The family built the Lido in Bengaluru in 1965, the first 70mm theatre in the entire country and followed it with the Lido in Mysore with 856 seats. Olympia had 584 seats and they built Shalimar in 1972. They are operating Lido and Olympia but Shalimar was closed in the last decade.

The family had big plans for using the 1.5-acre land around Shalimar to build the first shopping mall in Mysore with a multiplex. Like the other malls in the country, this would also have to be a multi-story building, not the sprawling malls we see in the United States. This multiplex was to have 5 screens, each with about 250 seats. The estimated cost for the mall with a multiplex was Rs. 800 million ($16 million). As I toured this old relic of a theatre and the surrounding property with Sanat, I asked if they had found investors for this venture. Sanat said that they are looking for a joint venture with a foreign corporation to build, a possibility that exists only due to the relaxation of rules governing foreign direct investment. The proposed mall, however, never got built as others beat them to this game.

Linguistic diversity of Karnataka is helpful to Ajit Kumar’s economic situation. With patrons clamoring for the latest films in Hindi, Kannada, Tamil films, and the fact that there is competition among the distributors to enter the marketplace, exhibitors have an upper hand. The Lido plays Hindi and Kannada films whereas Olympia some times plays English films also (for example, Harry Potter films). The Kumars have upgraded their theatres with advanced digital sound technology, speakers, and other equipment for which they spent Rs. 3,200,000 ($60,000) each.

I wondered why such a heavy investment would pay off. Ajit Kumar responded by an optimistic analysis of the market. While the cinema audience declined with the arrival of television during the 1980s and its subsequent expansion in the country (Pendakur, 1989), exhibitors are noticing a big change in film consumption. “People are coming to watch movies on the big screen,” Ajit noted. I think the growing number of young people having money in their hands and lack of privacy in their homes where large families live under one roof are plausible reasons for this growth in cinema attendance.

Profitability to the theatre owners is high in this market because there are no advances and minimum guarantee deals, as is the case in some of the suburban theatres of Bengaluru. In Mysore, it is all fixed rental business. The distributor pays a fixed sum of money every week to the exhibitor. Labor costs are also lower compared to Bengaluru. For instance, a projectionist with ten years experience is paid only Rs. 2000 ($40) a month. Trade unions have not developed in the exhibition industry. None of Ajit’s theatres in Mysore have been converted to digital projection yet and they did not seem to be keen on it. Many exhibitors are still reluctant to invest in these new technologies and, to understand the reasons, we will examine the case of two theatres in a ‘C’ center, about 150 miles from Bengaluru.

Digital cinema houses: a new turn?

While the Hollywood Majors (Disney, Fox, Paramount, Sony Pictures Entertainment, Universal, and Warner Bros.) were unsure of what technical standard to adopt for digital cinema exhibition in the beginning of the last decade, Indian entrepreneurs moved ahead with digitalization of theatres with imported technology from the US and Europe. The Society of Motion Picture and Television Engineers (SMPTE), a US organization, had been working on a digital standard for cinema production and exhibition technology as early as 2000. The US Majors, however, decided that it was too slow a process and established their own company called Digital Cinema Initiatives (DCI) in 2002. They wanted DCI to come up with a standard quickly that the Majors could impose on the industry worldwide. DCI published their specifications in 2005, which were later approved by SMPTE.

The Majors started to push for the installation of digital projection technologies that met the DCI standard in 2007-2008, however, that did not receive an enthusiastic response from the larger theater chains in the US because per screen conversion costs were between $60,000 - $100,000. The US economic meltdown of 2007 became a major obstacle to secure the capital needed to make this big, expensive change. The Majors, however, came up with a way to subsidize digital conversion of theaters by providing a fee to each digital screening from their savings in not doing celluloid prints any more. Called the Virtual Print Fee, it has certainly helped the big theater chains in the US show first run films. While at the same time, it is prohibitively expensive for second run movie houses to do the same (MKPE Consulting, 2012). The subsidy to the theaters is for the first time conversion only. Any maintenance, repairs, and future replacement costs of the new technology is the responsibility of the exhibitors.

Another important reason for the DCI format to spread in the US quickly is the success of 3-D movies in the last five years. Avatar set the standard for high quality digital cinematography and it was available only in the digital 3-D format. The film grossed more than $760 million in the US and international markets (Box Office Mojo, 2012). The big exhibitors saw the golden rainbow in converting their theaters with such box office successes. As of this date, 50% of the US theaters have converted to digital projection. The market development in India, however, differs from this story. When you read the media coverage in India about digital theaters and various media releases by involved companies, it is easy to come away with the impression that it is a ‘revolution’ in cinema exhibition in India. The reality in the marketplace is far more complex than such media hype.

Digital exhibition technology essentially consists of a compressed data file (6-8 GB) that is downloaded via satellite into servers installed at the cinema hall, which in turn is displayed by a high quality projector onto a large screen in an auditorium. DG2L Technologies, a New York-based corporation, reportedly offers technology and training and is praised by their Indian partner, UFO Moviez as

“an end-to-end solution comprising film capture, encoding, encryption, management, and playback” (DG2L: Showest, 2006, p. 1).

In the United States, there is no satellite delivery of digital prints. Distributors ship a hard drive containing the movie file to each cinema in the country. In contrast, in India the digital file is sent via the Internet to the theater because the file is much smaller than the DCI file that a Hollywood movie requires.

Venture capitalists from different parts of the world flocked to this new opportunity to convert single screen cinemas. Apollo Tyres, which manufactures automobile tires, raised Rs. 1500 million ($60 million) to float UFO Moviez. The UK-based equity investor, 3i, invested more than Rs. 1000 million ($22 million) in this new company. The US-based DG2L also bought a 15% stake in UFO Moviez. The Apollo Group holds 60% stake in the company while certain individuals who are the original promoters of the new technology from the US hold 25% equity in the company. In other words, this is a US-India-UK partnership to bring this new technology to India and change the way films are distributed and experienced all over the country.

Digital cinemas offer some obvious advantages to distributors and exhibitors. Simultaneous release of 1000 prints can be enormously expensive in terms of printing, shipping, and managing transportation whereas a digital file can be quickly sent via satellite technology and downloaded hundreds of miles from a transmission point.[12] All that a theater needs are technological training, reliable electric supply, a server, projector, and other technologies needed to make it all work.

Krrish (Rakesh Roshan, Hindi, 2006), India’s version of Superman, had one of the biggest openings for an Indian film. It was released across the world with a record number of 790 prints, 250 of them in the overseas market. Krrish also went out digitally to 87 UFO screens in the first week and another 90 screens in week two. Aditya Shastri, CEO of UFO International, was quoted in his company press release:

“It is (sic) has been our privilege to be part of this success and bringing the latest in digital projection technology has surely been an advantage. We are proud of our association with Krrish and remain committed to ensuring pristine quality images with perpetual life with no compromise in quality. With Krrish’s trouble free shows under our belt, we can definitely stake our claim to a stable and rugged technology of digital viewing. The overall response towards digital cinema has been extremely positive and will be a constant source of motivation for us.” (http://www.dcinematoday.com/dc/pr.aspx?newsId=565, p. 1).

Adlabs, a Mumbai-based company that has diversified operations in production, distribution and exhibition as well as film processing, is engaged in digital conversion of theatres. Nishit R. Shetty, head of operations, Adlabs Digital, said, “Today digital distribution is relevant only in places that don’t get the prints in the first week of release. Once the quality of projection comes close to or even better than 35 mm projection system in India, then the concept of digital distribution assumes significance at bigger theatres” (Mazumdar, 2007, p.1).

Shastri and Shetty are good advocates of this new technology and what appears clear is that ‘B’ and ‘C’ centers see some advantages in this mode of distribution. If they can show a new film at the same time as an ‘A’ center, the whole system of classification that disadvantages the ‘B’ and ‘C’ centers will collapse. A new film, even if it is a dud at the box office, has some life in the opening week before the word of mouth spreads about how bad the film is. On the other hand, if the film is a success with the audience, the small cities and towns can enjoy simultaneous releases of new films. Some enthusiasts who travel several miles to go see a new film in a bigger city will be enticed to come to a single screen in their own town if the projection and sound quality are on par with the big city theatres. Wider release of a successful film brings in the box office quicker and a distributor does not have to wait a whole year or six months to see their film go through all the markets if more theatres can be reached at minimal cost (or at least less than what the distributor has to pay to strike that many prints and pay for shipping, replacement of worn out prints, etc.) Digital conversion of theatres offers these advantages to both distributors and exhibitors.

While economic logic appears to be on the side of this change, there were significant concerns on the part of theatre owners that had to be solved. To understand the complexity of this technological change, let us turn my home town in Karnataka, about 150 miles from Bengaluru. It is a small town with about 20,000 inhabitants, but the area surrounding has small villages that are populated by some 60,000 people. They come into town for a market day or to go to a government office. There are three single-screen movie houses that operate as small businesses with no equity investment or partnerships from outside firms. The owner of Krishna Picture Palace is Vishwanath Gangavathi. It is the oldest theatre in town with 600 seats and, relies primarily on Kannada language films because the market, unlike Mysore or Bengaluru, does not have that much linguistic diversity. An occasional Telugu film or a Hindi film may play a week or at a morning show, but the audience is primarily Kannada speakers who wish to see their own stars and stories. Kannada film industry turns out about 80-100 films a year that keep the 1000 single screentheatres in the state well-supplied.

Vishwanath decided to invest in digital cinema technology in 2006 because he pointed out,

“print costs and other distribution costs have been rising; quality of prints has always been a problem for exhibitors.”

Before investing, he compared the digital cinema systems offered by competing companies:

“We looked at different systems that are available and made the deal with a Bombay company called Universal Film Organization (UFO). We pay a total of Rs. 225,000 ($4500) to get their patented computer system and a digital projector; they will charge Rs. 150 ($3) per download of a film via the Internet on to the server. Installation and training of projectionists are included in the price. The other costs are a sound system and new chairs, etc. to convert this into a better theatre. I am going to use surround sound and remove all the benches to make only two classes—balcony and lower stall and raise the price for both” (Gangavathi, 2006).

When I asked if he would continue to maintain the analog projectors that unspool the 35 mm prints, Vishwanath noted,

“Digital theatre does not mean we will abandon the 35 mm projectors yet. Until the system works out and more titles become available, film will continue.”

Almost seven months after the telephone interview, I visited Vishwanath at his theatre in January 2007. He had experienced the digital ‘revolution’ and was not terribly impressed. He had bought the technology, which had been installed successfully, and his projectionists had been trained by UFO Moviez. He had also upgraded the sound system as he had planned with new seats and the ticket prices had gone up from Rs. 10 (20 cents) to Rs. 15 (30 cents) in order to pay for all these expenses. To accommodate the needs of this new but delicate computer technology, he had to air condition the room where the server and the projector were placed, along with a back-up generator because the electricity supply is unreliable.

Vishwanath was frustrated and wondered aloud why he had ventured into this new technology when he was sitting on guaranteed profits. The expected availability of film titles had not worked out because only 3-5 Kannada films were available for digital transmission. It meant some of the films that would have been attractive to his market were not in circulation in the digital format right away. That meant the primary advantage of securing a new film when it released in Bengaluru was not realized. It essentially relegated his theatre to a ‘C’ center.

Secondly, the distributors charged Rs. 250-300 ($5-6) per show for playing the movie and their computers were capable of keeping track of the exact number of times the movie file was used to play in any theatre. This was an added cost to his operation. While the distributor charged this fee uniformly to all screens whether they are in an ‘A’ center or ‘C’ center for using a digital file, the grossing potential is markedly different. For example, Vishwanath’s 600-seat capacity theater with Rs. 15 (30 cents) a seat can only gross Rs. 9000 ($180) per show. On top of this, distributors in Karnataka passed on the cost of converting a 35 mm print to a digital file, approximately Rs. 18000 ($360) per film. These new costs are a source of worry for the small, single-screen exhibitors while the revenues and profits of multiplexes are growing.

The most worrisome problem to Vishwanath was downloading from the satellite was rather slow, often taking three hours, and not reliable. The server developed problems too often. On the day I arrived he was faced with such a problem and, luckily, he had a 35 mm print of the same film ready to be shown. In effect, the distributors are shipping a print in addition to the digital file download, just in case. I visited Vishnu, the single-screen theatre next door, operated by Vishwanath’s brother, Lakshmipathi. He had also looked into buying digital projection technology, but decided against it. Instead, he invested in a digital Dolby sound system. That was comparatively less capital invested and his audience was pleased with better quality sound.

The promise held by digital cinema technology in small towns came slowly. By 2012, UFO Moviez and their competitors adjusted their business models to encourage single screen owners in small towns to convert to digital display. I interviewed Vishwanath by telephone (Gangavathi, March 2, 2012) and he was delighted to report all the positive changes that have occurred in a five-year span. The technology has improved dramatically in terms of download speeds and the UFO Moviez maintains the projectors and replaces parts at no cost to the exhibitor. They are also not charging the exhibitors to convert by providing the projectors for free. As a consequence, Vishwanath’s brother who owns the Vishnu Theater next door also converted to digital display two years ago.

In the new business model implemented by digital technology companies, they collect Rs. 10,000 ($200) for converting each print from the distributors. As the distributors save all print costs, they are willing to pay this fee. This is different from what the Hollywood Majors did in the US market but from the exhibitors perspective it was beneficial.

Furthermore, all of the films in Kannada, Telugu, Tamil, and Hindi languages are available in digital format. This was one of the biggest obstacles for success of this technology. Once that occurred, the old designation of A, B, C status given to single screen theaters disappeared. Small town audiences can have access to a new movie on the same day that is released in Bengaluru. The small town exhibitor has to still negotiate with the distributors to secure films on certain terms. Vishwanath told me that distributors are demanding bigger advances ($800 to $1000) per film and if the picture fails at the box office the exhibitor has to wait a long time to get the money back.

The rapid growth of multiplex theaters with digital projection and high quality sound and their success with urban audiences in the big cities created a new dynamic in the film industry and an unprecedented conflict for supremacy over the box office. This tug of war also affected the Hollywood Majors who were enjoying growth of audiences and revenues for their pictures in India’s multiplexes. We will turn to that interesting power struggle now and see how the contending parties argued their case and what role the Central Government played in sorting out this conflict.

Producer-distributors strike back

It is reported that by 2009 multiplexes took in on the average of about 60% of the total box office in the nation and the rest went to the single-screen cinemas. Some 643 producers of Hindi films in Bombay were members of various trade associations. While not all of them were actively producing films, some of these family-owned operations had created vertically integrated, production-distribution companies. Some had even expanded their distribution operations into lucrative markets such as the U.K. and the United States.

One such vertically integrated producer-distributor is Yash Raj Films, based in Mumbai, that produced many successful films, including the super hit, Dilwale Dulhaniya Le Jayenge (Aditya Chopra, Hindi, 1995). It was a romantic comedy set in the UK and had such a huge response with domestic and global Indian audiences that it paved the way for others to make films with worldwide Indian audiences in mind. Yash Raj Films decided to test their company’s muscle with the multiplex owners by trying to alter the revenue sharing agreements in 2006. Their major film, Fanaa (Kunal Kohli, Hindi, 2006), with Superstars, Aamir Khan and Kajol, and dealt with the contemporary issue of terrorism in India, was set to be released in May 2006. Yashraj Films demanded that the multiplexes give up 60% of the box office collections in the first week, 50% in the second, 40% in the third, and 35% in the subsequent weeks. As production costs are seldom in control, and that the multiplexes reap 100% of the profits from the food and beverage sales, the producer-distributors historically struggle to get more out of the theaters. Whether they succeed or not in that regard is usually a testament to their power and which side of the issue the state may weigh in. In this instance, the multiplex owners refused to budge and blocked the release of Fanaa in their theaters.

The reaction from the production-distribution sector was quick and forceful. Amit Khanna, President of the Film and Television Producers Guild, issued a stern statement to Deepak Asher, the President of the Multiplex Association. “We would like to strongly condemn the action of your members to boycott the release of our member Yashraj Films Fanaa.” Asher noted that this uncalled for action was against the spirit of free enterprise and amounted to cartelization. He further stated,

“…In case your members decide to go ahead with the blockade we too will have to advise our members to take whatever steps necessary to safeguard their interests” (One India News, 2006).

There were a few other big budget productions in 2006--Krrish, Kabhi Alvida na Kehna and Dhoom 2-that were about to be released by Yash Raj Films. If the multiplexes boycotted these films, which went on to become box office hits, the losses to the multiplex owners would be considerable. The producer-distributors could have released those films on single-screen theaters and still made most of their profits. Nothing of that sort happened in 2006. The Multiplex Association could not keep its membership together as individual companies in Mumbai and other cities began making deals with Yashraj Films within that week. However, the fundamental issue of what is the fair share of the gross box office from the multiplexes festered for a couple of years and resulted in an impressive show of strength by the producer-distributor combines.

Some of the leading production-distribution companies in Mumbai came together in early 2009 to form a new association by the name of United Producers and Distributors Forum (UPDF) to deal specifically with the rising power of the multiplexes. This group of producer-distributor companies is the “who’s who” of Bombay cinema:

These eminent personalities of the film industry, representing the interests of producers and distributors of Hindi films, decided to use their collective strength against the multiplex chains by launching a set of actions to force the chains to their knees. These producers not only withheld supply of films but also threatened to punish anyone in the industry who cooperated with the multiplex operators. The producers combine held well-publicized meetings where they discussed various tactics. They also declared to the media that no product would be released starting April 4, 2009 until they could extract more favorable revenue-sharing terms. In addition, the two industry associations—AMPTPP and FTPGI—issued letters to all their members about this organized boycott of multiplexes that carried a threat of suspension of those who violated this call. With such big producer-distributors and two of the three major stars of Hindi cinema, who themselves were producers attached to this group, the boycott was conducted openly with a press conference in Bombay. UPDF’s bold action to withhold product clearly had its intended effect on the marketplace. Except for a few low budget Hindi films, no major film was released during the boycott. The Multiplex Association of India, representing their members, buckled under this high pressure and agreed to new revenue sharing terms on June 9, 2009.

Although the multiplex owners agreed to new terms to obtain product, which is their lifeblood that brings in an audience, which in turn, buys pop corn and other foods, they resorted to legal action against the producers combine. The Multiplex Association of India filed a complaint against the UPDF and the other two trade associations on May 26, 2009 before the Central Government agency, The Competition Commission of India.[13] The Commission found the producer-distributor corporations guilty of the charges leveled against them and declared:

“The boycott of multiplexes by the OP (producer-distributors) was as blatant an act of limiting or controlling production, distribution, etc. of films as can be. Similarly, their joint stand on fixing the revenue ratio was unarguably an example of joint price fixing” (MRTPC, Order, 2011, p. 72).

While both sides had organized bodies to represent their interests, the Commission agreed with the complainant that the producer-distributors, who created 90 percent of the major Hindi films from Bombay acted like a cartel. Their collective threats against other producers and the boycott against the multiplexes worked to benefit the producer-distributor corporations in the cartel. The Commission disagreed with the respondents in the case that the multiplex owners had acted as a cartel by stating, “…it is an established principle of law that one wrong does not justify another” (MRTPC Order, 2011, p. 73) and indirectly stated that there was no existence of ‘cartel-like conduct’ by the complainant whereas there clearly existed such action on the part of the producer-distributor combine.

The Commission also found that the new revenue sharing agreement—fixed at 50%, 42.5%, 37.5%, and 30% for the 1st, 2nd, 3rd, and 4th week respectively, enhanced the producer’s share of the net box office by 2% from the first week and is also higher for the subsequent weeks (MRTPC, Order, p. 18). The Commission noted that across the country, the multiplexes had raised ticket prices in response to the new revenue sharing agreement by 15-20%, a burden that was passed on the consumers. The Commission, in addition found that the higher revenue sharing agreement is a barrier to entry into the multiplex market. The Commission emphasized the importance of the Competition Act of 2002 by exclaiming:

 “ …keeping in view of the economic development of the country, for the establishment of a Commission to prevent practices having adverse effect on the competition, to promote and sustain competition in market, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets in India. And, therefore, it is incumbent upon the Commission to protect the interests of the consumers under the provisions of the Act” (MRTPC Order, 2011, p. 84).

While sounding noble about the interests of consumers, the state was forced to step in to investigate the market distortion caused by the producer-distributor combine. There is no evidence to suggest that ticket prices have fallen due to this intervention by the Indian government. The terms and conditions regarding revenue sharing were left unchanged in this Order. The Order demanded that the producers file an undertaking to the effect that they would not indulge in cartel-like behavior in the future. The Order also included a penalty of Rs. 100,000 ($2000) to each of the named respondents, a measly sum of money given that their dealings are in millions of dollars. In the final analysis, this intervention of the state was no more than a show that the state was monitoring the competitive situation in the economy and that it would philosophically try to protect the neoliberal idea that competition is a public good.

Another significant development is the expansion of international markets for Indian cinema to which we will now turn.

Bollywood mania spreads

“Why do I love Bollywood movies? To an Indian, that’s like asking why we love our mothers; we don’t have a choice. We were born of them...My aunt’s family emigrated to Uganda from India a century ago; she now lives in England and has never been to India…none of the children under 5 in her extended family spoke English…The children, two or three generations removed from India, were living in this simulated Indiaworld (of Bollywood).”Suketu Mehta, novelist.

Mehta’s statement captures the ongoing love affair between the South Asian diaspora and Bollywood, and as we will see, the enthusiasm for this cinema has spread widely. In a matter of 15 years, the general awareness and perception of critics of Indian cinema all over the world has dramatically changed. Instead of being relegated to the margins of Hollywood and European art cinema in leading capitals of the world, Bollywood has in so many ways earned respect and widespread attention. Major news outlets in the US and Canada cover Bollywood movies’ openings and other events, stars and events, and the industry matters on a regular basis. What is interesting is that it is not simply excitement about the large market in India or worldwide for Bollywood cinema but also the masala form itself. Leading universities in North America and Europe are offering courses in Indian cinema, holding conferences and seminars. Dozens of books have been published. Major Hollywood directors began to take note of Bollywood’s impressive inroads into the international markets, and especially into the US-Canada markets. For instance, Baz Luhrman borrowed stylistic elements from Bollywood for his 2001 film, Moulin Rouge, and even included the hit song Chamma Chamma, the music for which was composed by Anu Malik. Luhrman told a Times of India reporter in Delhi:

“I first came to India 15 years ago with my wife. We wanted to do a stage production of Benjamin Britten's version of 'A Midsummer Night's Dream.' This is the visit when I was also influenced by Bollywood and felt the need to integrate elements from it in my work” (Sharma, 2011).

The star composer and major trend setter for Indian cinema (not just in Hindi language films but also in several south Indian languages) is A. R. Rahman. He won two Oscars for Best Original Music Score and Best Original Song in the British film, Slum Dog Millionaire (Danny Boyle, 2008). The musical extravaganzas performed live with Bollywood stars, singers, composers and dancers appeal to sell out crowds in cities worldwide. For Canada Day celebrations in Toronto last year, at a large gathering of multicultural audiences young Indian-Canadians performed dance numbers to Bollywood tunes and taught the ‘moves’ to the audience.

Stars have what marketing executives call, “aspirational value.” In other words, their fans aspire to buy those commodities—clothing, watches, makeup, handbags, expensive jewelry including diamonds, and foreign travel—endorsed by their favorite screen idols. Indian movie stars have been hired to represent international product brand names at home and abroad. Aishwarya Rai, the leading lady of many Bollywood movies, started endorsing L’Oreal products worldwide in 2000. Others have followed suit. Some of the major stars have been employed as ‘brand ambassadors’ for various Indian states. Amitabh Bachchan, who has played the lead role in hundreds of Bollywood movies, provided the most controversial endorsement to the state of Gujarat (http://www.youtube.com/watch?v=S6TAdOQh5K4).[14]

These days, it is common to see major stars from Bollywood sitting on the juries of prestigious international film festivals at Cannes, Toronto, and Berlin. Shabana Azmi, Amitabh Bachchan, Anil Kapoor, Nandita Das and others have played roles in Hollywood films. The most recent was Mission Impossible: Ghost Protocol (Brad Bird, 2011) in which Anil Kapoor played a lecherous Indian capitalist who controls a satellite crucial to the plot. Bollywood films have world premiers in key markets—London, New York, Sydney, Toronto—with all the glamour and glitter that is attached to such promotional activities for big budget films. Tom Cruise, major star and producer of Hollywood blockbusters, attended the premier of Mission Impossible: Ghost Protocol in Mumbai. The latest to join in this excitement for Bollywood culture is FinnAir with a commercial that celebrated India’s Republic Day on January 26, 2012. It is a song and dance number inside a plane by the whole crew to the delightful surprise of passengers heading to Delhi. (http://www.youtube.com/watch?v=mEsnb3kUDAw). Madame Tussaud’s wax museum in London has at least five Bollywood stars to show off.

All this excitement and international recognition is pretty heady stuff, but Indian popular cinema has had a long presence in countries where Indians migrated during the colonial period either as indentured workers or for trading, education and other purposes. After the abolition of slavery in the late 1800s, millions of poor Indians were taken to the far reaches of the British Empire as indentured servants and most did not return home. More recent migrations of workers from India to the Gulf countries began in the 1980s. Nearly a million Indian migrant workers, consisting of skilled and unskilled people, now serve in construction, engineering, education, nursing, and domestic labor (http://www.asianews.it/news-en/Indian-migrant-workers-exploited-and-enslaved-in-Arab-countries-23121.html). They are the “reserve army of labor” who are forced to return home after a few years because they can get only temporary work visas.

The pattern of immigration to the United States and Canada has been different in the sense that it is miniscule compared to the situation in the Middle East and most who come to North America do not return. Until the 1960s, immigration for Indians and Chinese workers was nearly impossible because immigration laws explicitly forbid Asians. However, during John Kennedy’s brief administration in the United States and Pierre Trudeau’s long tenure as Prime Minister of Canada, more professionals were given visas to enter and settle down as permanent residents. Family reunification policies in Canada also helped Asian immigrants that were related to those who had come during the British colonial period. Once they attained permanent residency, they were also allowed to “import” brides or grooms for their offspring from the home countries.

All in all, the Indian diaspora stands at an estimated 27 million people scattered across 190 countries around the world. They support their families back home by remitting funds to India that amounted to $21 billion in 2003 and rose to $55 billion in 2010 (Mukherji and D’Mello, 2011).[15] They are also avid moviegoers. In my own case, I have seen Bollywood films playing in Nairobi, Dar Es Salaam, Burkina, Tehran, Cairo, London, New York, Miami, Chicago, Los Angeles, San Francisco, Vancouver, and Toronto. Even those who don’t understand Hindi go to see Bollywood films because they entertain the whole family. In West Africa where they speak French, I saw audiences enjoying Bollywood imports at single screen cinemas and to my surprise the prints were not even dubbed into French.

Until the early 1980s, only the ‘art’ cinema made it to the film festivals and college campuses in the U.S.-Canada markets. Indian films that were made for the Indian masses had been extremely popular in the former Soviet Union and parts of Africa and Latin America. They were primarily Hindi language exports. Tamil cinema traveled a bit more compared to other language cinemas because the Tamil diaspora in East Asia was keen on watching films from the home country.

In recent years, some Hindi films have grossed higher revenues abroad compared to their performance in the domestic market. Jodhaa Akbar (Ashutosh Gowarikar, 2008), an epic historical drama about the Mughals, is one such example of a big budget production with major stars, sets, and locations. Its success in India, measured by box office revenues is a mere $3.4 million, whereas the revenues from international markets for the film amounted to $ 23.4 million or 87.2% of the global revenues (Box Office Mojo, 2012). This shift began slowly first in the U.S.-Canada market when people bought VCRs and poor quality videos came into circulation. In cities with large Indian populations—New York, Chicago, Los Angeles—Indian entrepreneurs began to lease single screen theaters over the weekends and started screening 35 mm prints of popular films. I remember going to these single screen cinema halls in Chicago with my teenage daughter in the winter months when the outside temperature would go down to 20 degrees F below zero and the theatre operator would not switch on the heating system. These entrepreneurs also owned a local video rental operation. For example, Video Sound, Atlantic Video, and several other stores on Chicago’s Devon Avenue were quite successful at rental and sell-through of VHS tapes of Bollywood and other language films. Video Sound also screened Hindi language films at Adelphi, a Rogers Park area theater.

All of this began to change with the success of Hum Aaap Ke Hai Koun? (Soorj Bharjatya, 1994), and subsequently, Dilwale Dulhaniya Lejayenge (Aditya Chopra, 2005). In the Gateway Cinema with 1600-seat capacity, these two films were sold out for weeks. Both the films offer not only the visual pleasures of song, dance, and a narrative that surrounds family, but they are also about an India that the diaspora audiences crave for. Hum Aap Ke Hai Kaun? is a story about two Hindu families, idealistic in their representations, and their large extended family and friends. It is filled with numerous songs, dance numbers, and family get-togethers. It is about falling in love and also about women sacrificing their life for the welfare of the whole family. In this film, there are no villains or super human heroes of the earlier Bollywood films that fought against corrupt politicians, the police, and rich people. There is no poverty and people live in big mansions, conduct businesses internationally, wear expensive clothing, jewelry and drive imported cars. Class or caste conflict that was grist for the cinema of the earlier decades simply disappeared.

Dilwale Dulhaniya Lejayenge played with the concepts of nostalgia and alienation of Indians abroad in a culture dominated by Anglo-Saxons. Centered around a small, trader’s family in London, and their extended families in India, the film connected the themes of the strong desire to maintain family ties and also maintain Indian traditional culture where patriarchy reins supreme. A star studded and song and dance filled narrative takes the audience on a tour of Europe and brings them “home” to a town in Punjab where familial bonds are stronger than what is presented as life in Britain. The protagonists in the film, played by Shahrukh Khan and Kajol, fall in love while they accidentally meet on a tour of Europe. When the heroine’s father learns of the situation, he takes her to India to get her married to a man whom she never knew. The hero has to overcome the patriarch’s strongly held belief in the arranged marriage system. The father of the bride also has to change his views about how British-born Indians are in terms of their character and accept the protagonist’s love for his daughter. Instead of eloping with his lover, the hero wins her parents’ hearts by his honorable and loving behavior. The music in both films and the song and dance numbers were big successes with the audience all over the world, just as their mass appeal of love triumphing over various odds posed by custom, tradition, family, and patriarchy.

The biggest markets till the 1990s had been in the Middle East and, as such, producers in Mumbai did not take the foreign market expansion in the West seriously. The huge success of the two films mentioned above woke them up.

By 2007, there were nearly 100 cinemas located in some 20 states in the US that regularly screened Hindi films in the 35mm format (Fahim, 2007, p. 1). Some of the biggest multiplex chains in the US—AMC, General Cinema—also started to show Bollywood movies in one of their many screens in cities such as Chicago and Newark. UK, Australia, Canada became substantial markets in terms of revenue generation for these films. Industry insiders reported that markets for Hindi films were growing at approximately 12.6 per cent per year inside and outside the country (Joshi, 2006, p. 75). Australia, which used to be worth $50,000 in distribution revenue potential for a Hindi film grew ten times (Joshi, 2006, p. 75).

Tamil, Telugu, Malayalam, and Kannada films command screenings also, although not to the extent of the Hindi films. It is not unusual to see a Hindi film open simultaneously in Mumbai and other Indian cities as well as London, Toronto, New York, Sydney, Chicago, Los Angeles, Houston, and other cities worldwide where South Asians live.

The films used to be marketed by a handful of Indian-owned, small private firms. Eros International and Video Sound were the leading distributors that brought Indian entertainment to the US shores. Seeing the success of films in the early 1990s, major Indian companies began direct distribution in the US-Canada and other markets. For instance, Yash Raj Films established an office in New York. Similarly, Sony Entertainment Television, which has a significant presence in India through SET, decided to enter film distribution and in turn began to finance Hindi films. SET established an office in New Jersey to oversee their Bollywood distribution operations in the U.S.-Canada markets.

The presence of South Asians in these two countries is of considerable importance not only because of the size of this community but also because of their high purchasing power. The U.S. Census Bureau created a new category called ‘Asian Indian’ to better report numbers based on national origin. By 2010, Asian Indians (people of ancestry from India only) totaled 2,843,000. If we added people with ancestry from Pakistan, Sri Lanka and Bangladesh, the numbers went up to 3,373,758. (http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=DEC_10_SF1_QTP8&prodType=table).

The South Asian households are not typical in the sense that a number of relatives may be living under the same roof in order to help each other and also accumulate enough savings before branching out on their own. As such median household incomes are larger than the average U.S. household (http://www.asian-nation.org/indian.shtml).

Nevertheless, they love Bollywood movies and music. Asian Indians in the United States are concentrated in various cities of California, New York, New Jersey, Chicago, Seattle, and Miami as follows (Proximity, 2012):

Bollywood commands an audience of not just Asian Indians but people from around the world, especially Indo-Caribbeans, people from various parts of Africa, East Asia, Middle East and Central America (Guyana, Suriname). In areas of the United States where a higher concentration of South Asians lived, Indian entrepreneurs had launched multiplexes to screen Bollywood movies. For instance, in North Bergen, New Jersey at Columbia Park Cinema 12, half of its screens were dedicated to Hindi films (Fahim, 2007, p. 1). It is now owned by Big Cinemas that shows Telugu, Tamil, Malayalam, Hindi, and Hollywood films. In Los Angeles, another major city with a sizeable South Asian population, Naz8 screens imported films from India regularly. Just as Devon Avenue in Chicago has restaurants, travel agencies, grocery stores, clothing shops, video stores, and bookstores to cater to South Asians, Naz8 is located in Astoria that has a whole street filled with such stores.

As consumption of entertainment becomes more diverse, not just feature films but also television shows, music CDs, live entertainment (especially in which the major stars perform), Internet and mobile platforms, and video-on-demand, South Asian entrepreneurs are setting up new businesses to extract revenues from the market. The latest of these is BODVOD, a company that is offering Indian movie entertainment as video on demand. In an interview the co-founder, Vinod Bhatt, described his company’s operations:

“In terms of what the company does, we hold exclusive rights to a basket of movies and music primarily coming from India—primarily Bollywood music and movies—and we package, distribute and market that on pretty much all digital platforms. Mostly video-on-demand, anything delivered using IP protocol-Google Video, iTunes, etc., as well as services run by mobile carriers and also mobile devices” (Aditham, 2007, p. 4).

Bhatt further noted the following about the size of the market:

“To date, our distribution is actually in about 11 million households, on all of Time Warner and all of Cox. We’re covering probably around 70% of the South Asian population in the US today…I think when you look at the South Asian market in the country today, it’s probably the most affluent group out of any of the ethnic or even non-ethnic groups that exist. I think the median household income is $68,771 according to the latest census update. When you look at education levels, about 61% of them have a college degree. Then on top of that, they’re overall Web and tech-savvy with 81% of them having broadband access in their homes” (Aditham, 2007, p. 4).

Even though Bhat’s assertion that all South Asians are technologically savvy is exaggerated, such high subscription rate among them for broadband services is impressive. Interestingly enough, if Indian imported content is available for a certain price on cable television and in the video-on-demand format, the huge library of films from the earlier decades, which older audiences consider as their ‘golden age’ of cinema, will have demand. It is also likely the fine films produced by directors such as Guru Dutt, Shantaram, Bimol Roy, etc., just to name a few, or certain films of the 1970s and the 1980s which came to be known as the ‘New Cinema’ will become available without the annoyance of commercial interruptions on television. Online sale of DVDs of cinema in various Indian languages and genres has grown with Amazon becoming an outlet for better quality DVDs unlike the pirated versions in the Indian-owned grocery stores. Netflix has a large collection of Indian films in the DVD format and their collection of streamable videos is likely to grow in the near future. These developments are clearly phenomenal improvements for Indian cinema’s availability to South Asians in the U.S. markets when compared to the down-market, chilly theatres of cold Chicago in the mid 1980s.

Conclusions

Bollywood is thriving on the foundation of the high-octane economic growth of the last 15 years, higher disposable incomes in the hands of the bulging middle class in India that demands more entertainment and also growth of revenues from global markets. The spread of Bollywood culture abroad and the excitement it commands in the Western media and in the large, South Asian diaspora around the world have added more confidence to the investors in Bollywood cinema.

The malling and multiplexing of India, along with the introduction of digital distribution and exhibition, are remarkable shifts in the film industry. They reflect the changes in national policy intended to reshape India for the 21st century global economy as a capitalist power. The balance has been tipped to serve the priorities of enhancing the capitalist market and the fast growing middle class. The upscale mall and the luxurious multiplexes, while expensive for those Indians who cannot afford to buy a full meal every day, are nevertheless offering a wider variety of film entertainment to an elite audience. The multiplex audience, perhaps the most globalized of all, appear to enjoy the benefits offered by these developments and, as they walk past the world famous brands of merchandize at the glistening mall, they get to enjoy the best that Indian, and even Hollywood cinema, can offer.

I have shown in this paper that the state’s intervention in the economy is not simply about the broad strokes of policy to liberalize the command and control economy of the previous 50 years, but it is also about sorting out conflicts that arise between contending capitalists. More often than not, as we have seen in the case of multiplex theater chains and their battle with producer-distributor combines, the state functions as a mediator to preserve the interests of competition. It is not a neutral arbiter of power. As we have seen in this case study, the net effect of the state’s mediation buttressed big investors in the multiplex theatrical market. The large firms in production-distribution on the other hand lost out this time.

The state attempts to legitimize its intervention by arguing that it serves the public (consumers of films or ticket buyers at the multiplexes) and, if competition is preserved, the market mechanism ends up serving the broader public good. However, as we saw, ticket prices actually went up.

The digital theatre has written the swan song for the age-old distribution and exhibition system in the country where prints were shipped to thousands of theaters by bus or rail. A digital file arrives via satellite to these newly converted theaters that feature DTS, Dolby and surround sound. The older classification of theaters—A, B, C centers—has become irrelevant in this time of change because a new film can be released simultaneously in large cities and small towns. The distributors use computer technology to establish a higher degree of control over the single-screen exhibitor.

It is clear to me that not all people will benefit by these technologies or structural changes equally. In cities where affluent populations live and where transport and energy supply may be abundant, exhibitors and distributors benefit by introducing new distribution technologies. The large, urban middle class certainly has access to a wider selection of films from within and outside India. The multiplex market has also resulted in more opportunities for new filmmakers and established producers to make a greater variety of films. However, the audience will end up paying higher and higher prices at the box office to support these new ways of finding digitized pleasure.

Notes

1. Cinepolis owns 275 cinemas that consist of 2550 screens in their worldwide operations. Their Indian holdings in 2011 were a total of 20 screens in four cities (Bengaluru, Thane, Amritsar, and Patna). See, www.CinepolisIndia.com/corporate/

2. The antecedents to the modern malls are the Grand Bazaar in Istanbul, Cairo and Tehran. The one in Istanbul is almost 600 years old. That city also prides to have the Spice Bazaar, an indoor mall that smells heavenly with myriad spices. None of these old bazaars, however, have security guards at the gates and any one could walk into them.

3. The state-controlled Doordarshan and many private networks beam programs over-the-air and via cable and satellite delivery systems. It is an advertiser supported system. The film industry supplies talent and programs to these networks. In rural India, well to do farmers have satellite dishes on top of their houses. What audiences prefer is
programming in local languages, not imported programs from the West as it is the case in many countries of the world.

4. I have written about the centrality of music and dance to Indian popular cinema, their roots and appeal with the mass audience (Pendakur, 2003, pp. 119-143).

5. In the last 12 months, two major opposition movements developed and had a great deal of success against Central Government’s policies regarding foreign direct investment and the rampant corruption in the country. The Cabinet had made the fatal decision to allow 100% foreign direct investment in the retail sector that would have meant Walmart and other global retailers would have entered the multi-brand retail sector and possibly wiped out a huge number of family-owned shops. The government ended up rescinding that decision for the time. There have been numerous corruption scandals since 1991, which have been exposed in the media. The ones that stood out were the Commonwealth Games in Delhi and the spectrum allocation case that was a “fire sale” to India’s big capitalists. Several ministers are languishing in jails. In the wireless frequency sale case, the Supreme Court ordered that all those who received such licenses a few years ago should return them to the government, an unprecedented and historic decision by the highest court in the land and a victory for those who opposed public properties being put on sale to private interests.

6. Six vertically-integrated corporations that own diverse operations in production, distribution and exhibition and control nearly 85% of the U.S. box office revenues are known as the Hollywood Majors. They are Paramount, Fox, Universal, Warners, Disney, and Columbia Pictures. They produce and distribute nearly all the big budget productions, have worldwide distribution networks and in some areas of the United States control theaters by way of direct ownership. Their principal lobby organization is called the Motion Picture Association of America which does not allow any other corporations to become members. Its sister organization was called the Motion Picture Export Association of America and in the last few years has changed it to Motion Picture Association and has offices in nearly 50 countries to lobby the local governments for open access for their members’ films, lower taxes, and to get the local authorities to invest money and effort to prevent piracy. See Wasko (2003).

7. Big Cinemas is a subsidiary of Reliance Corporation, a telecommunications giant in India. 250 of their screens are in India and the rest are in the United States. This corporation also invested nearly $500 million with Steven Spielberg’s DreamWorks to produce Hollywood movies for the worldwide market. Their goal is to build a vertically integrated production-distribution-exhibition corporation to compete with the Hollywood Majors, something that was not achieved by the UK-based Rank Pictures Organization, the Cineplex-Odeon Corporation based in Canada, Seagram’s, also a Canadian Corporation with deep pockets, and most recently the France-based Vivendi.

8. See The “Indian Entertainment Industry Report” by FICCI-KPMG, which predicts that by 2013 the number of multiplex screens in the country is likely to cross 1,600 (Sethi, 2010).

9. PVR built the four-plex in an outdoor mall in Delhi first and then expanded their operations to other cities in collaboration with an Australian company called Village Roadshow Entertainment. They are not partners any more as PVR bought them out.

10. In general, action-adventure films do well at the box office in India. James Bond movies were always a big draw in the cities. Walt Disney’s animated films also had a good market with mass audiences in the cities. Movies with special effects are incredibly popular. Avatar (2009) was hugely successful with Indian audiences. Hollywood’s strategy of dubbing films into Indian languages is paying off because dubbed films are shown even in small cities and towns. I saw Twister (1996) dubbed into Kannada and it was bizarre for me to experience that in a rural theater. I was in disbelief because of the way white people spoke my mother tongue. While that was comical for me, my friends and family who went to see this film with me enjoyed the film with all the special effects. A howl went up when cows started flying in the air! With the growth of English language speakers, especially in the cities, Hollywood’s overall box office performance in India has doubled in the last twenty years. While China limits the total number of Hollywood imports to only 20 per year, India opened up the market thereby inviting more films, higher investment and also higher profits for the Hollywood Majors and others from the United States.

11. One my nieces, who completed an engineering degree last year, just graduated from this program at InfoSys. In 12 months, she was not allowed to go outside the campus until the training program was over. As such, she had not seen a movie at a theater in Mysore.

12. Print and advertising costs in Hollywood often exceed the cost of production of a film. Print costs in India may run up top 25% of a film’s production cost. Each print may cost Rs. 80,000 ($1600) to Rs. 100,000 ($2,000) in India and $2000 in the United States.

13. The Competition Act of 2002, a federal law, established the Competition Commission of India in October 2003. The Commission has six members and a chairperson, all appointed by the Central Government in Delhi. This body is entrusted with the responsibility of implementing the Act to ensure that capitalist markets work in a competitive manner. The Act “prohibits anti-competitive agreements, abuse of dominant position by enterprises and regulates competition combinations (acquisition, acquiring control and Mergers and Acquisitions) which causes or likely to cause an appreciable adverse effect on competition within India.” This law is similar to the antitrust laws that were created in the United States and Canada starting in 1890. See http://www.cci.gov.in/index.php?option=com_content&task=view&exp=0&id=12

14. That state has a notorious reputation under its current Chief Minister Narendra Modi, who has been implicated in conspiring with Hindus in terrorizing and butchering thousands of Muslims in 2002. As a result of a campaign by concerned people in the Indian diaspora, the U.S. government has declined to grant a visitor visa to Modi. There are pending court cases against Modi and culprits at the Supreme Court level in India to bring them to justice.

15. India receives the highest remittance from Indians abroad, followed by China ($51 billion) and Mexico ($22.6 billion), Philippines ($21.3 billion) and France ($15.9 billion).

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