MUMBAI: Traditionally, films enjoyed a 90-day theatrical window before making their debut on streaming platforms. With the pandemic restricting theatrical monetisation of films, industry stakeholders, including OCC services, collectively agreed to shorten this window to an eightweek period for Hindi movies, with a shorter fourweek window being followed in the south film sector.
Now, with the world returning to normalcy, industry representatives believe this release window has caused theatre footfalls to be restricted. Additionally, OCC services, faced with pressures to improve margins, have started to link content acquisition and licensing spends to box office performance. A shorter window hence creates an imbalance, with the monetisation potential of films being artificially onstrained, even as pressure for films to do well
theatrically mounts.
A new report by the Motion Picture Association (MPA) in collaboration with Deloitte was launched at the inaugural World Audio Visual Entertainment Summit (WAVES) in Mumbai.
Rising cost of production: Increasing production costs are a commonly cited challenge for the sector. Industry representatives attribute this cost surge primarily to escalating actor and entourage fees. These increased expenses have put pressure on film budgets, even as uncertainties about a film’s success have increased. As a result, the film sector is perceived as risky, with banks hesitant to provide financing for films and private sector investment being limited due to the inherent risks.
Hence, there is a need to formalise funding for a film, as we have seen in ACME Group’s Rs. 300 crore connect fund for the AVGC sector. This will introduce greater discipline in film production, hopefully leading to increased success.
Over-regulation of the film sector: Excessive government intervention can stifle artistic expression in the film sector. The recent reinstatement of 10 percent TDS has sparked widespread opposition from industry stakeholders. This, combined with GST, local taxes, and additional state-level levies such as the 2 percent cess in Karnataka, has surged the overall cost of movie-going, deterring families from frequent visits to theatres, which in turn impacts revenues.
Other forms of entertainment: As the entertainment landscape has evolved, the film sector faces competition from emerging entertainment formats such as OCC. The rise of short-form video platforms and the prevalence of second-screen viewing habits have significantly impacted audience attention spans and consumption patterns, challenging the traditional cinema-going experience.
The Occupancy Challenge: Occupancy has not fully recovered and continues to be below pre-pandemic levels, but industry experts remain optimistic about a return to normalcy. Cinema occupancy is still on the road to recovery, with overall occupancy pegged at 25.6 percent in FY2024, well below the FY2020 occupancy levels of 34.9 percent. One of the challenges is the low weekday occupancy rate, which typically hovers around 10–15 percent, while weekends see occupancy rates of close to 40 percent.
Despite this downturn in footfall and occupancy, there has been a 15 percent growth in gross box office collections in 2023 compared to 2022, which paints a positive picture for exhibitors. This increase was driven by a rise in the Average Ticket Price (ATP), indicating that people watching movies in theatres are spending more per ticket than before. ATP continued its upward climb in 2024, rising 3 percent YoY, to reach a price point 26 percent higher than pre-pandemic times, i.e., in 2019.
Pricing strategies: To bridge the gap between ticket prices, low occupancy and audience interest, exhibitors are experimenting with retention and pricing strategies. One multiplex chain has introduced a monthly movie passport – a movie ticket subscription service – which aims to retain audiences and encourage repeat attendance. Some exhibitors have also adopted a dynamic ticket pricing strategy, the FLEXI model (Pay for what you watch model), where ticket prices fluctuate based on demand, allowing revenue maximisation.
Another initiative is National Cinema Day, where movie tickets are typically discounted. This also attracts massmarket audiences. One caveat to this discounted price is that it does not apply to premium formats such as IMAX and is only available in certain markets.
Content diversification: Exhibitors diversify their content offerings to nonfilm content, such as the Republic Day parade, music concerts, ICC World Cup screenings, stand-up comedy shows, and other sporting and non-sporting events. This is intended to fill in slow weeks and months and establish the appeal of the big-screen experience for larger-than-life events and stories.
Re-releases of films such as ‘Tumbbad’, ‘Yeh Jawaani Hai Deewani’, ‘Ghilli’, ‘Kal Ho Naa Ho’, ‘Rockstar’, ‘Gabbar Singh’ and ‘Murari’ have also performed well at the box office, attracting audiences during slow periods when there are no significant releases to draw audiences to theatres.
Premiumisation of the theatrical experience: Exhibitors are also increasingly focusing on the experiential aspects of the cinema, with investments in premium screens, high-quality audio-visual experiences, luxurious seating and focus on comfort, and expanded food and beverage options. This, in part, contributes to the increased ATP. Audiences are now willing to pay a premium for exceptional cinematic experiences. This has also prompted an increase in the number of IMAX screens in the country.[53] It is expected to have 100 screens by the end of 2025.
Economic impact
Direct impact
Gross output: Gross output reflects the combined revenue of all film sector participants. It is derived by adding up revenues of players across the value chain, which includes revenues of intermediate services/products. It includes entertainment taxes and service taxes. The direct gross output of the film sector is estimated at Rs. 33,292 crore ($ 3,963 million) with the two key sectors of production and exhibition contributing 33 percent and 57 percent, respectively.
EBITDA/Gross Operating Surplus (GOS): GOS reflects total returns to capital and direct taxes (i.e., income taxes, and corporate taxes) paid by the sector. It is estimated based on the financials of listed players where available and extrapolated the results through industry discussions. The film sector’s GOS in FY2024 was estimated at Rs. 2,559 crore ($305 million).
Wages: Wages represent the returns to labour, which includes payments made to contractual workers. Wage payments in FY2024 were estimated at Rs. 5,041 crore ($ 600 million), with the production sector constituting 57 per cent of the total wages paid, largely due to the escalating fees paid to the lead cast in films.
Gross Value Added (GVA): GVA refers to the value add created by labour and capital inputs employed directly by the sector (i.e., EBITDA + wages). In FY2024, it was estimated at Rs. 7,600 crore ($ 905 million).
Net indirect taxes (NIT): The GST collection details for the sector have not been reported yet. For the study, the value has been extrapolated, taking 15–18 percent as the average rate for the segments. The NIT is estimated at Rs. 4,269 crore (US$ 508 million).
Total value added (TVA): This is the sum of GVA and NIT and represents the total direct impact of the Indian film sector on the economy. This is estimated at Rs. 11,869 crore ($ 1,413 million).
Employment: This reflects the number of jobs created as a direct result of film sector activity in India. The report has estimated this by first segmenting movies according to their budgets (small/medium/large) and then estimating the person-hours needed, based on industry discussions. It is estimated that about 2.72 lakh persons were directly employed in the Indian film sector in FY2024.
Emerging technology trends in the film sector
Artificial Intelligence (AI): AI, though still in early days of application in the film, television and OCC industry, serves as a catalyst for creativity and efficiency. A recent survey estimates that AI could expedite film production timelines by 25 percent, while cutting costs by 30 percent.Though nascent in India, AI is already starting to be incorporated into creative, technical and business processes.
Some studios in India use AI to assist with script generation based on human-generated storylines and conceptual inputs, generating supporting imagery for character development and environment building. Other players in the film, television, and OCC industry use the technology to streamline technical and business processes. Some techno-creative use cases include AI-generated video thumbnails and AIsupported video editing workflows. On the business end, some companies employ predictive AI algorithms to inform content acquisition strategies and identify avenues for revenue growth.
AI is revolutionising the music sector as well, enabling the recreation of iconic voices. Notable examples include Yuvan Shankar Raja’s use of AI to revive his sister Bhavatharini’s voice in ‘G.O.A.T.’ and A.R. Rahman’s use of AI to bring back the voices of Bamba Bakya and Shahul Hameed in Lal Salaam.
Additionally, Malaysia Vasudevan’s voice was digitally recreated for Manasilaayo song in Vettaiyan.
Virtual production: Virtual production is changing the way films are made. It is a process that uses Computer-Generated Imagery (CGI) to create virtual environments that can be used in place of real-world locations. This technology is becoming increasingly popular as it offers several advantages over traditional filmmaking methods, such as green screens.
With virtual production, there is no need to travel to distant locations or build expensive sets. Instead, filmmakers can create any environment they can imagine using CGI and get real-time view of the same. This can be a major cost saving, especially for large-scale productions. It empowers actors and directors by providing real-time visualization of the final product. This immediate feedback allows for more nuanced performances and refined direction, enhancing the creative process.
Blockchain: Blockchain technology is being applied in the creative sectors by providing a secure, transparent, and efficient platform for managing digital assets and transactions. Creating an immutable record of film assets and financial transactions empowers stakeholders with real-time visibility into the project. It helps to avoid intermediaries in film distribution, preventing fraud and piracy.
As Per industry discussions, the film sector is increasingly using blockchain technology to streamline and enhance production processes, specifically for use cases such as intellectual property rights management and digital rights management.
