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THE BOLLYWOOD BOX OFFICE FRAUD

box office

I was pleasantly surprised when I found that my blog about producers routinely inflating box office figures has made its way to the top of Google search pages.

After that blog was posted, numerous articles on the same topic followed and every single article confirmed that Bollywood producers are routinely fudging figures — right from the opening to the life-time collections of a film.

Stars like Saif Ali Khan and Aamir Khan have come forward and admitted as much on public platforms too. 

“I’d be a fool if I told you that nobody inflates figures, ” Saif has been quoted as saying. 

“Numbers have been getting fudged since forever. There is nothing new about it. But if one decides to manipulate figures they are fooling themselves. There is no merit in doing that,” said Aamir Khan.

Hrithik Roshan, on the other hand, vehemently refuted allegations of Krrish 3 box office figures being inflated in a Post made on Hrithik Roshan‘s Facebook page.

So, what went around as Chinese whisper across the ballroom in Bollywood success parties was suddenly out in the open. 

Now as I write this post, everybody is admitting that sometimes when gross collections are about to touch the Rs 70-80 crores mark, a section of producers claim their wrongful place in the Rs 100 crore club.

So, the nation wants to know…

What is the pressing need to fudge figures at the box office?

Twenty years ago, the standard yardstick for box-office success was the number of days a film would spend at the theatres and unlike Rs 100 crores, ‘100 days’ would mean box-office success. Those were the ‘jubilee days’ of Indian cinema. 

Today, most producers don’t get to see a a second week at most multiplexes, which is why they aim to garner as much money as possible in the initial week itself as there is another potential blockbuster jostling to seek limelight the next Friday.  There are very few Fridays that extend into public holidays in a calendar year. Hence some powerful Bollywood filmmakers try to push each other out of the way to get the Friday of their choice and try to rake in as much money as possible in the first three days itself. I wrote a blog about this too.

In order to retain the footfall in the first week of the release in multiplexes, the audience must be conveyed that the film is popular. Hence, inflated box office collections have now become the most popular propaganda for the unsuspecting Bollywood audience.

The simple math

cinticsIf you want to know why it is absolutely a financial necessity to draw audience at the theatre in the first week itself, then let’s do this simple math.

Multiply 3000 (number of screens showing a film) X 4 (number of shows per screen) X 500 (number of audience per show) X 7 (number of days in a week) X 500 (average price of each ticket).

Theoretically, if you have a full house for the first week, you will net much more than a thousand crores.  Of course, this amount varies  drastically on occupancy levels which falls with each passing day even though a big multiplex property has the ability to run as many as 20 shows a day for a big-ticket Bollywood release. 

The box office shares

The amount collected at the ticket window comes under entertainment tax, which varies from state to state. Some state government collect 30 per cent on the ticket price as entertainment tax while there are others who collect 45 per cent. The amount that remains after the tax deduction is the nett collection of a film.

What the distributor gets is the nett gross minus theatre rentals, which varies too (plexes have a fixed rate card though); theatre rentals start becoming cheaper from the second week.

The total collection is immaterial from a tax point-of-view because nobody calculates the tax over the gross national collection, leading to fudging.

Let’s assume that the distributor- exhibitor share ratio is 40:60 on a film’s nett collection. Then, if a film’s gross box-office collection is Rs. 100 crore, then distributor earns about Rs. 28 crore and the exhibitor, Rs. 42 crore (I have deducted 30 per cent entertainment tax from Rs 100 crores and then distributed it in 60:40 ratio).

That is why the distributor and the exhibitor are very careful about their collection figures and almost never give it out.

So, if inflated figures lead to more tax, why the producers do it in the first place?

Tax and the producer

ticket window1When a producer (now they are called filmmakers) finishes a film, he usually sells it at a premium to another distribution house or a studio who acquires the distribution rights.

Depending on the buzz (the probabilities of a film getting full house on the opening day), the producer can get double or even five times the film’s making cost. The producer might choose to retain the right of the content and some other rights like music, satellite etc.

But the distribution rights of the film, in most cases, are sold off.

So the entertainment tax burden on the producer is zero. A producer will have to file his own tax returns out of the money that he’s earned out of selling the finished product to another company who’s distributing his film.

Since, entertainment tax is collected on every ticket sold off the ticket window, it is solely the responsibility of the guy selling the tickets, that is, the exhibitor.

The producer is not impacted by entertainment tax at all, which is exactly why he would inflate figures.  It really doesn’t bother him!

The distributors or the exhibitors, on the other hand, would never declare the exact figures of the number of tickets sold because that would give away their earning and hence the tax amount too.

So, the producer can go on to say anything about the all India collections of a film because that figure doesn’t concern the tax man.

A producer will jack up total collections to simply prove that he is a hit filmmaker. Since, the yardstick for being a successful producer is how many 100-crore films you have made, producers try desperately to get to the 100-crore mark with every film.

It also gives a notion to his business associates (distributors, financiers)  that his films make a lot of money. So next time, when they buy the film from him, they will pay even more.

It also helps in putting some pressure on the exhibitors of allotting more screens to his film. If a film is making more money, then most multiplexes yank off smaller films and start screening the money-spinner in more screens.

Lastly, you will see the producer hosting a success party even before the press bites the bait and pronounces the film as a hit. His PR also goes on an overdrive to ensure that his brand value increases. It’s an ego boost beyond measure to see newspapers and magazines splashing your face across their pages.

Need we say more?

The pictures used on this blog were taken from Stock Pictures, a website which allows you use their pictures free of cost for blogs. Statutory credit: Nita Jatar Kulkarni.

Here is one more interesting blog about why Bollywood producers fudge figures.
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3 replies »

  1. This is really a nice and informative, The yardstick for being a successful producer is how many 100-crore films you have made, producers try desperately to get to the 100-crore mark with every film. containing all information and also has a great impact on the new technology. Thanks for sharing it.
    Thanks

    Like

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