The Bollywood multiplex strike has far reaching implications on the economy of India's biggest industry.
It's not the first time this has happened either. Last year India's premier production house Yash Raj Films had a similar standoff - albeit smaller - that saw them take the misguided stance of releasing their much anticipated movie Tashan in standalone cinemas (i.e. cinema halls with single screens). The result: a high profile flame out that put the brakes on the careers of Saif and Kareena and began Akshay Kumar's alarming slide at the box office.
In its current form the strike is hurting a slew of good releases - hugely screwing the creative team behind each of these movies - potentially throttling or derailing careers (is that Akshay sobbing in the back that I hear?)
Just in case you need a recap and don't have time to read this great Strike tutorial, here is what has transpired.
Producers: We should be getting 50% of ticket receipts!
Multiplex owners: Hell no and why now anyway?
Producers: Because we are hurting. It costs more money to make flicks these days.
Multiplex owners: But you guys still deliver enough flops that we need to make money off the big hits to cover our expenses!
Producers: So how would 50% hurt?
Multiplex owners: Ok, how about we share more if the movie is a hit and less if it flops
Producers: Given our track record this is a bad idea. But aren't you making money off sales of those diamond encrusted samosas?
Multiplex owners: Who told you they were diamond encrusted?
Producers: We took a guess based on their price!
Multiplex owners: You're wrong and we don't make enough money off them because they are quadruple fried and the price of oil has gone up.
Producers: What about the money you make off parking?
Multiplex owners: The mall owners take that - haven't you done your homework?
But there is a way to test the waters with a different distribution model. You can try it right here in the US. It's almost guaranteed to work. And Bollywood producers have virtually nothing to lose.
Recently I was invited by a composer pair to check out a movie for which they had composed the background score. The movie - a scary flick starring a veteran who chaffs at being still called a "newcomer" - wasn't playing in theaters. I realized I had three options: (1) order some pissy Shemaroo type copy (if I can find it) and wait for it to arrive (yawn!) (2) go buy a (pirated) copy for $2 at the local store or (3) ask my friend to download a (pirated) copy for me. Then pray the copy won't suck outright in all cases.
Needless to say, any which way I looked, the best options ended up with me and a pirated copy spending an evening together.
Hold that thought while we discuss another bit of economics at play. To understand this part, it helps to have a decent grip on The Long Tail phenomenon in ETail. (Read at least the introduction and first chapter of this groundbreaking book if you are interested).
The basic idea is this: although conventional wisdom says you need to sell a lot of a little to make money (the 80/20 principle), there is just as much money in selling a lot of a lot (i.e. the long tail). For the first time in retail history, the latter scenario is viable thanks to the Internet.
What is the biggest problem with Bollywood multiplex releases in the US?
Its only viable in cities with a high density of desi people (the primary Bollywood goers). In cities with a smattering of desis, keeping a Bollywood movie on a screen - even for a limited time - is not financially viable. By going the traditional (multiplex) route, producers lose out on all these small niche desi audiences all over the world. I am willing to bet these micro-markets add up to a lot of money. The only problem is - how do you deliver your movie effectively to these people without having to rent a theater?
The answer, of course, is staring every Bollywood producer in the face: its called Online Video (or if you under 15 - its called YouTube). Online Video took off a few years ago. Last year it became a commodity play. This year, there will be a shakeout. Next year - it will become a platform that every retailer will be able to embed in their online offering. Many are already doing it.
Legal, online (streaming or downloadable), on-demand Bollywood movies is a great idea. Its one I would pay up to $8 a pop for - more for a movie with Bips in it. It can be delivered anywhere to the desi diaspora. You have much better control over the quality of your product. And it'll give the pirated DVD market a serious run for its money.
My phaltu Drift advice to the Bollywood producers is this: don't wait for Hollywood to bring everything to you. You can leapfrog Hollywood here - and the economics are in your favor. There are several models available.
Strike a deal with Netflix, digitize all your flicks and take a cut for every stream or download. Strike the same deal with Blockbuster Online.
Strike a similar deal with Comcast On Demand and have copies delivered to DVRs.
Stick the damn thing on the terrific Hulu.com, break up the movie in chunks and make money off ads in and around the movie. (Google will be more than happy to strike a deal for their InVideo product)
The only fall out (other than the fact that someone will have to do some smart, creative business development) is that this will piss off US multiplex owners. Bully for you, I say.
Multiplexes - if they don't reinvent themselves - are going down in any case. Work out a deal with them where you give them two weeks (the average run time of a Hindi movie in theaters in the US) before you make online streaming available.
There might be one more excuse - you can't reach your largest audience (India) effectively with any of these models because enough people aren't online with cheap, fast connections yet. Fair enough. But you can still make enough money off international audiences with this model. The cost of entry is falling literally on a quarterly basis. Early momentum in this space will set the studios up nicely when the burgeoning number of Indians going online reaches critical mass.
And guess what it'll take to start delivering the same content and quality to new Indian audiences?
That's right - almost (next to) nothing!