Description
MARKET ANALYSIS OF UTV MOTION PICTURES
UTV Motion Pictures A market analysis
Submitted to Prof. Rajeev Roy Abhishek Chatterjee Roll No. : U112002 PGDM (BM) 2012-14
Table of Contents
Company Profile
UTV Software Communications Ltd. is an Indian media and entertainment company. It is owned by The Walt Disney Company India Pvt. Ltd., a subsidiary of The Walt Disney Company. It started out as UTV Software Communications Pvt. Ltd. in 1990 as a producer of television content and ad films for Doordarshan, before becoming public in 1995 and renaming itself as UTV Software Communications Ltd. With the advent of Satellite television in India it started producing content for Zee Television. After venturing into in-flight entertainment programming, television post-production, special effects & animation, television broadcasting, it went into movie production and distribution business under the name UTV Motion Pictures. Although the subsidiary was launched in 1996 and the first film was produced in 1997 (“Dil Ke Jharoke Mein”), the company actively started producing and distributing films only 2000 onwards. In 2011, The Walt Disney Company bought out stakes held by public shareholders and other promoters of the company in a deal valued around Rs 2,000 crore making UTV a wholly owned subsidiary of the group. Today, the UTV Group looks into 5 verticals namely –
? ? ? ? ?
Television Content Motion Pictures Games Content Broadcasting Interactive
In the following market analysis we would be focusing only on the Motion Pictures vertical in India which contributes to over 50% of the company?s total revenue.
Introduction
The UTV Group has pioneered the studio model in India. A studio model is a system where one enters with a script, and once it is approved, everything from availing of production resources to final sales and distribution of the movie is taken care of by the creative personnel of the company. They have always supported novel story ideas and backed movies without a big start cast which led to the development of a new breed of film making in the country. Some of these films are – „Dev D?, „Oye Lucky Lucky Oye?, „A Wednesday? and „Khosla Ka Ghosla?. These movies not only got critical acclaim but also did well commercially by sheer strength of content. In 2008, a special sub-division of the company- UTV Spotboy was launched to make movies which are low on budget and star cast, but high on content. Movies like „Aamir?, „Welcome to Sajjanpur? and „Paan Singh Tomar? are some of the movies produced by this sub-group. The success of these movies led other leading production houses in the country to adopt a similar model. Their business spans the integrated model of creative development, production, marketing, distribution, merchandising and syndication worldwide. UTV?s portfolio includes Hindi Movies, Regional Movies, Animation Films, International productions and co productions, besides an exclusive distribution arrangement for India with The Walt Disney Company. One of the first Indian companies to produce and distribute movies abroad, UTV has coproduction agreements with several international production houses like Overbrook Entertainment and Sony Pictures Entertainment. In 2008-2009, UTV Motion Pictures became the first Indian Studio to co-produce a mainstream Hollywood movie - M. Night Shyamalan's “The Happening”. Not only this, UTV also distributed Disney's productions – “Confessions of a Shopaholic” and “Bedtime Stories” in India. This coupled with innovative marketing initiatives and a concentrated campaign to leverage value across existing and new media platforms, further reinforced their stature as not only the leading motion picture producers in India, but also the most innovative.
Along with production, UTV successfully distributes its movies in more than 45 countries around the world on the same day as their theatrical release in India. UTV Motion Pictures accomplished the feat of being among the Top 20 Distributors in North America and is the first Indian film studio ever to have crossed the US $5 million revenue mark in the first half of a year, thus redefining the scope of overseas distribution of Indian films.
Total Market Size of Indian Movie Industry
The size of the Indian film industry is estimated at Rs 13000 crores growing at a CAGR of 11.5 per cent. Out of Rs 13000 crores, the domestic box-office collections account for Rs 9877 crores with overseas box-office, ancillary rights and home video making up the balance. This growth is primarily attributable to the growth in average ticket prices, increasing from Rs 25 (USD 55 cents) in 2008 to Rs 40 (USD 88 cents) in 2012.
The Indian Film Industry
Domestic Box-office Overseas Box-office
Factors leading to growth in the Industry: 1. The growth in India?s per captia income has led to a large part of the population willing to spend on discretionary items. 2. India produces the largest number of movies in the world. Growing International market and their interest in India has also led to a variety of content available to people over here. 3. Hollywood and other international players have been trying to consolidate their position in India through joint productions. Some of the major companies in this race are the Warner Brothers, Sony Motion Pictures and Twentieth Century Fox. 4. Improved exhibition facilities through the advent of multiplexes in the country.
Future Growth
The industry is growing at a CAGR of 11.5 %. Around 70% of the revenue still comes from theatre viewership. DVD, VHS, cable, satellite and pay-per-view make up for the rest of the revenue. The theatrical revenues continue to grow at 17 % while the satellite revenues are growing at 22%. With improved digital technology and stringent laws to curb piracy and additional 600 crores INR may get added to the revenue. The estimated market size is expected to be Rs.17000 crores by the end of 2014 with Rs.12400 crores coming from domestic Box-office collections alone. The Overseas box-office is supposed to grow up to 1450 crores INR. One look at the growth rate of the Hindi Film Industry (Bollywood) alone over the past few years show that such figures are well within reach.
Market Share of UTV
If we consider the entire Indian market then UTV would have a market share of around 5%. A country which makes over 900 films in a year with Independent Producers still forming a large chunk, this is an adorable market presence.
Competitors
The major competitors for the company in Hindi Film Segment are 1. Yash Raj Films 2. Dharma Productions 3. Viacom 18 4. Mukta Arts Ltd. 5. Excel Entertainment 6. Aamir Khan Productions 7. Red Chilies Entertainment 8. Tips 9. Venus 10. PVR 11. Reliance Entertainment 12. Balaji Telefilms 13. Eros Entertainment In the regional film domain the major competitors are 1. Prasad Art Pictures 2. Padmalaya Studios 3. Geetha Arts 4. Sri Venkateswara Creations 5. Madras Talkies 6. Bharat Bala Productions
7. Gemini Studios If we look at the language wise distribution of the number of films made in India we will realize that the regional film production houses (especially the ones in Southern part of India) are as much a competition to them as the ones in Hindi film segment.
However, unlike its counterparts in Hindi Film industry UTV has been one of the first production houses to realize the importance of regional film market and has already started making films in South Indian and Marathi languages. Some of the regional films produced by UTV in the recent past are Harishchandrachi Factory (Marathi), Vettai, Kanaamochi Yenada (both Tamil) and Eanadu (Telugu) UTV has also realized the importance of collaboration in creative business and continuously tiesup with major production houses in making and distributing movies. Some of the companies it has frequently collaborated with are Dharma Productions, Aamir Khan Productions and Excel Entertainment.
Market Profitability
The total profits before tax (PBT) generated by UTV motion pictures in a single year is over Rs. 500 crores (it was Rs. 524 crores in 2010). The following profit comes through total revenue generated through theatrical release, satellite distribution, music, home video sales, film merchandise and internet downloads.
Industry Cost Structures
The total cost of production of a film, including its publicity cost, can vary from 5 crores to 50 crores depending on the content and star cast. UTV follows the Hollywood model of production and reserves as much as 40% of the film budget for publicity alone. An experimental film like „Paan Singh Tomar? based on the true life story of an athlete-turneddacoit may cost only Rs. 6 crore while a film like „Guzaarish? having an A-list star cast (Hrithik Roshan and Aishwarya Rai) may cost up to Rs. 70 crore. Usually if the content is not mass friendly, the production houses try to curtail the production costs of the film and spend as much as possible on the publicity campaign of the film. Usually such films turn out to be greater revenue generators than the usual run-of-the-mill stuff. Films like „A Wednesday?, „Dev D? which was produced by UTV with minimalistic budget ended up generating over 100% profit on their budget. While UTV distributes its own films and later on releases it on its own broadcasting network, it is difficult to gauge how it goes about generating revenues when it comes to distribution and satellite rights of films produced by other production houses. Such reports are kept confidential. However it is known that a big budget film sells at 1.5 to 2 crore INR on an average in each territory as far as theatrical distribution is concerned. Similarly the satellite rights are priced can be anything between 10 crores to 30 crores INR depending upon the performance at the box office. The music and home video rights are sold at a combined value of 10 crores INR on an average.
Distribution Channels
Once the film is made, it is bought by distributors who take it to various territories in India such as Central India (M.P., Chattisgarh), Nizam Region (Hyderabad and areas in South india where Hindi is prevalent), Northern Belt, Southern India etc. The distributors in turn sell it to exhibitors (single screen and multiplex) who give them a cut in the share only when the film generates profit for them. The revenue generated from parking of vehicles and food items are kept by exhibitors. The overseas theatrical distribution is usually done by the same distribution company that does it in India. However certain movies cater to niche market. So they are distributed accordingly in select art house theatres. Such distributors usually come on board when the film is taken to International Film Festivals. The film premiers on television after a considerable run at the theatres. It can be viewed on direct-to-home television service also on a pay-per-view basis. People with broadband connection can also watch the movies online on channels such as Youtube who buy the rights of most of the films.
Market Trends
Movie making is a very unpredictable business. While the content in the 80s was primarily towards pleasing the masses, there started a gradual change in the content towards the late 90s. With the advent of Satellite television, the viewers were becoming increasingly aware of the quality of movies abroad. Success of films likes „Hyderabad Blues? and „Satya? (1998) paved the way for similar movies in times to come. The multiplex theatres which brought along with them neat and clean viewing space, good food service and air-conditioned movie hall, became a regular place for family outing for the urban audience. They were willing to pay more for greater comfort and variety in content. The success of „Dil Chahta Hai? (2001) started a new wave of cinema in Bollywood which catered to urban milieu. UTV was quick to foresee the change and backed anybody who had a different story to tell. It knew that if they kept the budget low, the revenue generated from multiplex would help them break even. The results were unprecedented. These movies started giving them over 100% profit. The size of the niche market was not limited to multiplex going audience alone, but rubbed its effect in interiors of the country as well. However, since the last few years, the success of mass-friendly films like „Wanted? and
„Bodyguard?, most of which are remakes of South Indian films has shifted the market trend back to the kind of films that were being made in the 80s.
Key Success Factors
As we saw the movie business is unpredictable and no one can judge which film might work. However, the following factors may help in earning profits for a film:1. Knowing your audience well: Each film has a target audience. Hence the distribution and marketing of film needs to be done accordingly. A Hollywood exhibited in India needs to be dubbed in regional language if it?s shown in Tier B and Tier C cities. 2. Budgeting the film smartly: If the content of the film is something which will alienate the masses then it needs to be kept low on costs. However if a film requires lavish production values and it is guaranteed that it will enhance the viewing quality of the film then the producers must not compromise on the budget. 3. Good promotional campaign: The first look and songs of the film help create a great impression in the minds of the people who have too many films to choose from these days. Apart from that generating visibility through social networking sites also adds to awareness about the film.
Conclusion
UTV has always been a frontrunner when it comes to innovation in movie business. It pioneered a specific kind of films in India, started a new trend in movie production and distribution and most importantly brought discipline in an otherwise disorganized industry. Hopefully, with the world waking up to the talent that lies in India and potential of India as a market for movie business, we will be seeing UTV spearheading the movement in putting India on the world map in the film business through more international collaborations in the future.
References
Sources:http://en.wikipedia.org/wiki/UTV_Software_Communicationshttp://en.wikipedia.org/wiki/UTV_Motion_Pictureshttp://www.boxofficeindia.co.in/size-and-contribution-of-the-indian-film-industry/http://www.scribd.com/doc/2438171/Indian-Entertainment-Industry-Focus-2010http://www.utvgroup.com/investors/pdf/utv-earnings-release-2q-fy-2010.pdfhttp://www.slideshare.net/arveen/indian-film-industry
doc_496889552.docx
MARKET ANALYSIS OF UTV MOTION PICTURES
UTV Motion Pictures A market analysis
Submitted to Prof. Rajeev Roy Abhishek Chatterjee Roll No. : U112002 PGDM (BM) 2012-14
Table of Contents
Company Profile
UTV Software Communications Ltd. is an Indian media and entertainment company. It is owned by The Walt Disney Company India Pvt. Ltd., a subsidiary of The Walt Disney Company. It started out as UTV Software Communications Pvt. Ltd. in 1990 as a producer of television content and ad films for Doordarshan, before becoming public in 1995 and renaming itself as UTV Software Communications Ltd. With the advent of Satellite television in India it started producing content for Zee Television. After venturing into in-flight entertainment programming, television post-production, special effects & animation, television broadcasting, it went into movie production and distribution business under the name UTV Motion Pictures. Although the subsidiary was launched in 1996 and the first film was produced in 1997 (“Dil Ke Jharoke Mein”), the company actively started producing and distributing films only 2000 onwards. In 2011, The Walt Disney Company bought out stakes held by public shareholders and other promoters of the company in a deal valued around Rs 2,000 crore making UTV a wholly owned subsidiary of the group. Today, the UTV Group looks into 5 verticals namely –
? ? ? ? ?
Television Content Motion Pictures Games Content Broadcasting Interactive
In the following market analysis we would be focusing only on the Motion Pictures vertical in India which contributes to over 50% of the company?s total revenue.
Introduction
The UTV Group has pioneered the studio model in India. A studio model is a system where one enters with a script, and once it is approved, everything from availing of production resources to final sales and distribution of the movie is taken care of by the creative personnel of the company. They have always supported novel story ideas and backed movies without a big start cast which led to the development of a new breed of film making in the country. Some of these films are – „Dev D?, „Oye Lucky Lucky Oye?, „A Wednesday? and „Khosla Ka Ghosla?. These movies not only got critical acclaim but also did well commercially by sheer strength of content. In 2008, a special sub-division of the company- UTV Spotboy was launched to make movies which are low on budget and star cast, but high on content. Movies like „Aamir?, „Welcome to Sajjanpur? and „Paan Singh Tomar? are some of the movies produced by this sub-group. The success of these movies led other leading production houses in the country to adopt a similar model. Their business spans the integrated model of creative development, production, marketing, distribution, merchandising and syndication worldwide. UTV?s portfolio includes Hindi Movies, Regional Movies, Animation Films, International productions and co productions, besides an exclusive distribution arrangement for India with The Walt Disney Company. One of the first Indian companies to produce and distribute movies abroad, UTV has coproduction agreements with several international production houses like Overbrook Entertainment and Sony Pictures Entertainment. In 2008-2009, UTV Motion Pictures became the first Indian Studio to co-produce a mainstream Hollywood movie - M. Night Shyamalan's “The Happening”. Not only this, UTV also distributed Disney's productions – “Confessions of a Shopaholic” and “Bedtime Stories” in India. This coupled with innovative marketing initiatives and a concentrated campaign to leverage value across existing and new media platforms, further reinforced their stature as not only the leading motion picture producers in India, but also the most innovative.
Along with production, UTV successfully distributes its movies in more than 45 countries around the world on the same day as their theatrical release in India. UTV Motion Pictures accomplished the feat of being among the Top 20 Distributors in North America and is the first Indian film studio ever to have crossed the US $5 million revenue mark in the first half of a year, thus redefining the scope of overseas distribution of Indian films.
Total Market Size of Indian Movie Industry
The size of the Indian film industry is estimated at Rs 13000 crores growing at a CAGR of 11.5 per cent. Out of Rs 13000 crores, the domestic box-office collections account for Rs 9877 crores with overseas box-office, ancillary rights and home video making up the balance. This growth is primarily attributable to the growth in average ticket prices, increasing from Rs 25 (USD 55 cents) in 2008 to Rs 40 (USD 88 cents) in 2012.
The Indian Film Industry
Domestic Box-office Overseas Box-office
Factors leading to growth in the Industry: 1. The growth in India?s per captia income has led to a large part of the population willing to spend on discretionary items. 2. India produces the largest number of movies in the world. Growing International market and their interest in India has also led to a variety of content available to people over here. 3. Hollywood and other international players have been trying to consolidate their position in India through joint productions. Some of the major companies in this race are the Warner Brothers, Sony Motion Pictures and Twentieth Century Fox. 4. Improved exhibition facilities through the advent of multiplexes in the country.
Future Growth
The industry is growing at a CAGR of 11.5 %. Around 70% of the revenue still comes from theatre viewership. DVD, VHS, cable, satellite and pay-per-view make up for the rest of the revenue. The theatrical revenues continue to grow at 17 % while the satellite revenues are growing at 22%. With improved digital technology and stringent laws to curb piracy and additional 600 crores INR may get added to the revenue. The estimated market size is expected to be Rs.17000 crores by the end of 2014 with Rs.12400 crores coming from domestic Box-office collections alone. The Overseas box-office is supposed to grow up to 1450 crores INR. One look at the growth rate of the Hindi Film Industry (Bollywood) alone over the past few years show that such figures are well within reach.
Market Share of UTV
If we consider the entire Indian market then UTV would have a market share of around 5%. A country which makes over 900 films in a year with Independent Producers still forming a large chunk, this is an adorable market presence.
Competitors
The major competitors for the company in Hindi Film Segment are 1. Yash Raj Films 2. Dharma Productions 3. Viacom 18 4. Mukta Arts Ltd. 5. Excel Entertainment 6. Aamir Khan Productions 7. Red Chilies Entertainment 8. Tips 9. Venus 10. PVR 11. Reliance Entertainment 12. Balaji Telefilms 13. Eros Entertainment In the regional film domain the major competitors are 1. Prasad Art Pictures 2. Padmalaya Studios 3. Geetha Arts 4. Sri Venkateswara Creations 5. Madras Talkies 6. Bharat Bala Productions
7. Gemini Studios If we look at the language wise distribution of the number of films made in India we will realize that the regional film production houses (especially the ones in Southern part of India) are as much a competition to them as the ones in Hindi film segment.
However, unlike its counterparts in Hindi Film industry UTV has been one of the first production houses to realize the importance of regional film market and has already started making films in South Indian and Marathi languages. Some of the regional films produced by UTV in the recent past are Harishchandrachi Factory (Marathi), Vettai, Kanaamochi Yenada (both Tamil) and Eanadu (Telugu) UTV has also realized the importance of collaboration in creative business and continuously tiesup with major production houses in making and distributing movies. Some of the companies it has frequently collaborated with are Dharma Productions, Aamir Khan Productions and Excel Entertainment.
Market Profitability
The total profits before tax (PBT) generated by UTV motion pictures in a single year is over Rs. 500 crores (it was Rs. 524 crores in 2010). The following profit comes through total revenue generated through theatrical release, satellite distribution, music, home video sales, film merchandise and internet downloads.
Industry Cost Structures
The total cost of production of a film, including its publicity cost, can vary from 5 crores to 50 crores depending on the content and star cast. UTV follows the Hollywood model of production and reserves as much as 40% of the film budget for publicity alone. An experimental film like „Paan Singh Tomar? based on the true life story of an athlete-turneddacoit may cost only Rs. 6 crore while a film like „Guzaarish? having an A-list star cast (Hrithik Roshan and Aishwarya Rai) may cost up to Rs. 70 crore. Usually if the content is not mass friendly, the production houses try to curtail the production costs of the film and spend as much as possible on the publicity campaign of the film. Usually such films turn out to be greater revenue generators than the usual run-of-the-mill stuff. Films like „A Wednesday?, „Dev D? which was produced by UTV with minimalistic budget ended up generating over 100% profit on their budget. While UTV distributes its own films and later on releases it on its own broadcasting network, it is difficult to gauge how it goes about generating revenues when it comes to distribution and satellite rights of films produced by other production houses. Such reports are kept confidential. However it is known that a big budget film sells at 1.5 to 2 crore INR on an average in each territory as far as theatrical distribution is concerned. Similarly the satellite rights are priced can be anything between 10 crores to 30 crores INR depending upon the performance at the box office. The music and home video rights are sold at a combined value of 10 crores INR on an average.
Distribution Channels
Once the film is made, it is bought by distributors who take it to various territories in India such as Central India (M.P., Chattisgarh), Nizam Region (Hyderabad and areas in South india where Hindi is prevalent), Northern Belt, Southern India etc. The distributors in turn sell it to exhibitors (single screen and multiplex) who give them a cut in the share only when the film generates profit for them. The revenue generated from parking of vehicles and food items are kept by exhibitors. The overseas theatrical distribution is usually done by the same distribution company that does it in India. However certain movies cater to niche market. So they are distributed accordingly in select art house theatres. Such distributors usually come on board when the film is taken to International Film Festivals. The film premiers on television after a considerable run at the theatres. It can be viewed on direct-to-home television service also on a pay-per-view basis. People with broadband connection can also watch the movies online on channels such as Youtube who buy the rights of most of the films.
Market Trends
Movie making is a very unpredictable business. While the content in the 80s was primarily towards pleasing the masses, there started a gradual change in the content towards the late 90s. With the advent of Satellite television, the viewers were becoming increasingly aware of the quality of movies abroad. Success of films likes „Hyderabad Blues? and „Satya? (1998) paved the way for similar movies in times to come. The multiplex theatres which brought along with them neat and clean viewing space, good food service and air-conditioned movie hall, became a regular place for family outing for the urban audience. They were willing to pay more for greater comfort and variety in content. The success of „Dil Chahta Hai? (2001) started a new wave of cinema in Bollywood which catered to urban milieu. UTV was quick to foresee the change and backed anybody who had a different story to tell. It knew that if they kept the budget low, the revenue generated from multiplex would help them break even. The results were unprecedented. These movies started giving them over 100% profit. The size of the niche market was not limited to multiplex going audience alone, but rubbed its effect in interiors of the country as well. However, since the last few years, the success of mass-friendly films like „Wanted? and
„Bodyguard?, most of which are remakes of South Indian films has shifted the market trend back to the kind of films that were being made in the 80s.
Key Success Factors
As we saw the movie business is unpredictable and no one can judge which film might work. However, the following factors may help in earning profits for a film:1. Knowing your audience well: Each film has a target audience. Hence the distribution and marketing of film needs to be done accordingly. A Hollywood exhibited in India needs to be dubbed in regional language if it?s shown in Tier B and Tier C cities. 2. Budgeting the film smartly: If the content of the film is something which will alienate the masses then it needs to be kept low on costs. However if a film requires lavish production values and it is guaranteed that it will enhance the viewing quality of the film then the producers must not compromise on the budget. 3. Good promotional campaign: The first look and songs of the film help create a great impression in the minds of the people who have too many films to choose from these days. Apart from that generating visibility through social networking sites also adds to awareness about the film.
Conclusion
UTV has always been a frontrunner when it comes to innovation in movie business. It pioneered a specific kind of films in India, started a new trend in movie production and distribution and most importantly brought discipline in an otherwise disorganized industry. Hopefully, with the world waking up to the talent that lies in India and potential of India as a market for movie business, we will be seeing UTV spearheading the movement in putting India on the world map in the film business through more international collaborations in the future.
References
Sources:http://en.wikipedia.org/wiki/UTV_Software_Communicationshttp://en.wikipedia.org/wiki/UTV_Motion_Pictureshttp://www.boxofficeindia.co.in/size-and-contribution-of-the-indian-film-industry/http://www.scribd.com/doc/2438171/Indian-Entertainment-Industry-Focus-2010http://www.utvgroup.com/investors/pdf/utv-earnings-release-2q-fy-2010.pdfhttp://www.slideshare.net/arveen/indian-film-industry
doc_496889552.docx