Bollywood studios eye profits at last as India goes smartphone mad

UFO Moviez India

06/04/2016 24:00

By Himank Sharma 
    MUMBAI, April 6 (Reuters) - India's all-singing, all-dancing 
movie hits capture the attention of hundreds of millions of fans 
- but they generate precious little in box office profits for 
the world's largest cinema industry. 
    Now, with smartphone sales booming and India preparing for 
nationwide 4G Internet access, India's film and TV industry 
hopes the ease of tapping your phone for the latest release will 
generate profits at last, overcoming the problems of woefully 
few cinemas and rampant piracy. 
    India has about 10,000 cinema screens across a country of 
1.3 billion - 8 for every million people, compared with 120 in 
the United States and 30 in China, according to digital film 
distribution network UFO Moviez  UFOM.NS . 
    That low density means that for most Indians, pirated 
content is the only way to see movies, costing the industry some 
30 percent of potential annual gross collections. 
    "Even if we can manage to get a small fraction of the people 
to pay on their phones, you are looking at a market that can 
potentially become bigger than the box office," said Girish 
Johar, head of revenue at Essel Vision Production, part of Zee 
Entertainment Enterprises  ZEE.NS , one of India's largest media 
groups. 
    The profit boost for studios will in large part be driven by 
the rush for local-language content from platforms like Netflix 
Inc  NFLX.O , which launched in India this year and is 
aggressively adding to its Hindi-language catalogue. 
    Homegrown rivals, though keen to forge partnerships with 
online streaming companies, are introducing their own platforms, 
a new revenue stream for production firms that earn little from 
either cinemas or DVD sales. 
    And the numbers add up. 
    Seven out of 10 Indians watch at least one online video a 
month, and in the next three years nearly 90 percent of all 
Internet data in India is expected to be used towards streaming 
movies and television. 
     
    PAYING UP 
    Key to the boom is cheap, fast, mobile broadband nationwide, 
which this year promises to bring millions online, even outside 
big cities. 
    That means better viewing - and easier payment. 
    India's cash-rich Reliance Industries  RELI.NS  is expected 
to roll out one of the world's largest 4G networks this year 
when it launches its Jio mobile network.  
    To keep up, incumbent players Bharti Airtel  BRTI.NS , 
Vodafone India and Idea Cellular  IDEA.NS  are cutting Internet 
charges and building out their own high-speed data networks. 
    The results are good already for providers like YouTube, 
which says Indian usage has soared, outpacing global peers, 
thanks to mobile traffic which more than doubled last year. 
    "Traditional film and TV content still continues to drive 
massive watch time  while studio-made songs, movies and clips 
continue to be some of the most popular content nationwide," 
said Gautam Anand, YouTube's Asia Pacific director of 
operations. 
     
    LIGHTS, CAMERA ... CASH! 
    The hope is that cheap, convenient content, perhaps 25 
rupees (37 U.S. cents) for a movie streamed to your phone, will 
make piracy redundant. 
    Of course, getting cash out of the consumer remains a 
challenge, and subscription is an untested model. 
    "In the US, everybody has been paying for content but in 
India people don't pay as easily," said Gaurav Gandhi, chief 
operating officer of Viacom18, a venture between U.S. group 
Viacom and Reliance. Indians feel they pay for data, so the 
content should be free, he says. 
    But the growing use of phones as credit cards, to pay for 
small purchases, will help. 
    So too, say industry insiders, will unique content. 
    "We have to come up with our own model and a large part of 
that would rest in creating unique content for online," said 
Radhika Kapoor, head of content Fox Star studios India that runs 
the Hotstar streaming platform.  
    Others argue the secret will be ad-driven content, that can 
be provided free. Indeed, getting users to stay loyal to one 
platform to leverage subscription revenue might be challenging, 
but getting advertisers interested is not. 
    Global advertising spends on digital media is likely to grow 
to 36 percent by 2020 compared with 21 percent in 2010, and 
consultancy Deloitte's Hemant Joshi says India will lead the 
trend with digital ad spending likely to grow more than 400 
percent to 354 billion rupees ($5.3 billion) in the next five 
years. 
    "We have seen that advertisers get better reach through 
mobiles in India simply because there are more phones than TV 
screens," Joshi says. "That will only multiply." 
 
 (Additional reporting by Shilpa Jamkhandikar; Editing by Clara 
Ferreira Marques, Robert Birsel) 
 ((Himank.Sharma@thomsonreuters.com; http://twitter.com/@wolvhim; 
 +91 22 6180 7207; Reuters Messaging: 
himank.sharma.thomsonreuters.com@reuters.net)) 
 
Keywords: INDIA TELECOMS/BOLLYWOOD