I will not beat around the bush when it comes to this article. It’s inspired by the government’s statement that there’s no economic slowdown because three films made crores. It’s amusing that the Indian film industry, notoriously one of the biggest and yet, informal industries in the world made its way into a government statement. What’s more amusing is that the statement was about the financials of a film, particularly, the box office collections.
In an era when perception is above everything else, and everyone takes everything about Bollywood with a dollop of salt, it was stupefying to see a minister talk about how much a film has made at the box office. I agree a journalist will tell me that Ravi Shankar Prasad never used the word ‘box office collections‘, but then, he spoke about ‘how much a film made’ on October 2. I have no other option but to think that he was talking about box office collections—or ticket sales.
That statement has inspired me to give a clearer picture of how Bollywood and its finances work. This primer will be correct for 99% of Bollywood media projects. You might have heard some of these terms while reading entertainment articles, and their description here is the only one that’s perfect.
One of the most ambiguous terms in Bollywood is the ‘producer’. The common perception is that a producer is the one who bankrolls a project. Wrong. Go back to any of the films of the nineties, and you will see the terms ‘Executive Producer’ or even ‘Production Controller’. These are the guys who execute the project—hire the talent, pay them off, hire the locations, pay them off, so on and so forth. They are the ones who ‘control the financial flow’ of a film. They are spending money, yes. But they are not spending their money. They are using money that’s loaned to them, or given as an investment—by financers.
When the shooting is wrapped up, the producer starts selling the project to other investors who’d like to invest in the completed project. That way, the financers get their money from the investors and the investors are now backing a concrete, complete project. Sometimes, the money that these new investors bring is used for promotions. In the weird world we live in, the promotion budget of a film is almost equivalent to the actual budget of a film. Once that is in place, the producer starts selling the song rights. That is when the actual ‘collections a film makes’ mumbo jumbo starts. That’s where things get sketchy, so pay attention.
Even while the film is being shot, the producer will be peddling around the song rights, the video song rights, the radio song rights, the remake rights, the digital distribution rights, the cable (I am not sure what they call this now) rights, so on and so forth. These are transactions worth crores. Producers outright sell audio rights of a film to a music company. Music companies then sell the music to music channels, radio channels, so on and so forth.
Later on, the digital distribution rights and the remake rights are up for sale. Earlier, the terminology also included terrestrial rights—that was the cable. These sales are also in crores. Television channels vie for premiere rights. Nowadays, the producer is already in the market selling streaming rights. That’s the reason you see a film that’s released a month prior already on the streaming platforms.
After this, the distributors and the exhibitors come into the picture. In some cases, the distributors are the exhibitors too. The distributors are the people who actually put in their money to buy the screening rights of a particular film in a particular area. Of course, some of these distributors might have financers backing them, but you get the picture.
These distributors then, are the people who talk with the exhibitors to show the film in their theatre. The going rate for a per show is around 50,000 rupees. It is these 50,000 rupees that should come back to the exhibitors and the distributors to ensure that the film has worked for the working class.
The sale of the other rights is something that’s always been in another orbit. They have nothing to do with Mr Sharma and family coming to a theatre and buying three tickets for the family.
This is also the reason that the crew and the talent of a film aren’t affected if a film doesn’t rake in those 50,000 rupees at the box office. That’s because, generally, the actors and the crew are paid well before the publicity of the film begins.
As I wrap up this article, I did some research about which three movies Prasad was referring to. I could find only two that released on October 2: “War” and “Sye Raa Narshima Reddy”. Unfortunately, I cannot give specific details about whether these films followed some other formula—like not selling the rights before the theatre releases—but that would be an industry first, that’d be a cause for headlines.
So, that’s how the world of box office collections work. It’s quite different from how people think it works. The same goes for black money. It’s not like people are storing currency wads in Echolac and VIP suitcases in the walls of their houses.