CHENNAI/BANGALORE: Ficci, in collaboration with Ernst & Young (E&Y) presented a report titled â€?Indian Entertainment Down South – From Script to Screen’ at the first Media and Entertainment Business Conclave (MEBC-2009) by FICCI at Chennai last week.
The South comprises four states – Andhra Pradesh (AP), Karnataka, Kerala and Tamil Nadu (TN).
The E&Y report categorises music rights, domestic home video, internet and mobile rights as other revenue streams. The report does not provide a breakup of the revenues garnered individually by each of these rights. Music is an integral part of Indian cinema.
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The aggregate size of the Tamil (TN), Telugu (AP) and the Malayalam (Kerala) film industry segments in terms of revenue generated for FY 2009 is INR 17.3 billion.
Of the aggregate market size, Tamil and Telugu contribute INR 7.7 billion (45 per cent) each, the Malayalam segment INR 1.4 billion (8 per cent) and the Kannada (Karnataka) segment INR 500 million (2 per cent).
In all the four South Indian states, typically music rights of a film are sold by the producer to music-company on an outright basis for perpetuity, well before the release of the film. Producers generally look at the revenues from these rights as a â€?bonus’ and are not looking to grow them.
Earlier, music rights were a significant source of revenue for the Tamil industry. However with increasing digitisation of music, piracy, in the form of illegal download of songs, ripping of CDs and peer-to-peer sharing of music content, has virtually eaten up the market for film music. As a result the value of music rights of a film has crashed to price points in the range of INR 0.5 to 5 million per film in both TN and AP.
In the case of TN, all other revenue streams contribute a mere INR O.1 billion (less than 2 per cent) to the total revenues earned from films. In the case of small and medium budget films, other revenue streams contribute just 4 per cent, while other revenue streams bring in just one per cent to the overall revenues garnered by big budget films. The number of music companies competing for music rights of a film has drastically reduced; there are only two or three players left in the market.
Other revenue streams contribute six per cent (about Rs.0.4 billion) to the AP film industry. In the case of medium and small budget films, other revenue streams contribute as much as 10 per cent to the total revenues, while large budget films have lower incomes from other revenue streams – about four per cent of the total revenues.
However, in the case of AP, for blockbuster hits the music rights value may go up to INR 8.0 to 10.0 million. Here too, there are very few players here vying for music rights – there is one dominant player and another large player that has recently entered the market and hence realisation of value is sub-optimal. There are some small players who are not very active.
For the Malayalam film industry, music rights, home domestic video rights, mobile and internet rights contribute about INR 43 million (three per cent overall – two per cent for large budget films and four per cent for small and medium budget films) to the total market size of INR 1.4 billion for FY 2009 in terms of total revenue generated by films.
In the case of the Kannada film industry, other revenue streams contribute about 10 per cent to an industry size of about Rs 500 million.
Internet and mobile rights are emerging platforms for film content distribution, but in terms of revenue are quite small, except for the odd blockbuster film. The rights for film music and other audio-visual film content such as clips and wall paper are bought by content aggregators who in turn tie up with mobile operators. The revenues generated on internet and mobile are shared between various parties. However, according to film industry sources, there isn’t enough clarity and transparency regarding revenues generated through these platforms and the rightful share of the film industry in these revenues.
The E&Y report suggests that rights can be monetised in a better manner. In order to exploit each and every revenue opportunity to the fullest, rights should be sold separately for a limited period of time after which they should revert to the producer. Further, wherever possible, the producer can enter revenue sharing agreements with the users of the rights instead of selling the rights on an outright basis. The producer can thus retain the intellectual property rights over the content as well as get a share of the market opportunity. Instead of considering these revenue streams as a bonus, the producers should focus on growing them into significant revenue streams.
