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India cinema picks up

News, 30 May 2017
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DELHI: After a lacklustre couple of years for Indian cinema, a brace of blockbuster movies is helping to boost the industry's fortunes, at the same time a forecast growth of 15% in cinema advertising revenues hints at the new opportunities for brands.

Though the Indian film industry grew 3% in 2016, this represented a dip in growth from an average of 7% in the preceding three years, according to Bloomberg.

However, a recent film, Baahubali 2: The Conclusion, raked in a record-breaking Rs 16bn ($248m). And while it was popular around the country, the film's southern provenance illuminates a broader trend in the industry.

Coming from "Tollywood", the film was originally shot in Tamil and Telugu without the typical big (Hindi-speaking) stars that tend to guarantee a hit – an indication of the surge of activity in regional cinema and regionalism in general.

As the hinterlands have grown in economic power, helped along by government welfare spending and a reduction in the basic tax rate, Tier II and III cities are beginning to demand more.

However, poor infrastructure has dogged the country's development. Cinema faces many of these same problems. There are not enough screens to cater for people: currently, India has six screens per million viewers, compared to 23 per million in China and 126 in the US.

Multiplexes are growing in major cities and are penetrating into smaller towns, spurred, according to Deloitte, "by improved per-ticket realisation, rising urbanisation, and growing disposable incomes".

Elsewhere, a complicated tax system has made filmmaking difficult. But the introduction, in July, of the goods and services tax (GST) is expected to simplify the tax system, allowing films to be made more cheaply thanks to the ability to claim a credit on services.

In Pitch Madison figures published in February (available to Warc subscribers) cinema advertising was forecast to grow 15%, ahead of all Indian adspend at 13.5%.

Though cinema advertising continues to be a small player overall, the authors credit the proliferation of multiplexes, digitisation of single screens, and the growing popularity of Hollywood and regional movies as "fuel" for the growth of Indian cinema advertising.

Data sourced from Bloomberg, Deloitte, Pitch Madison; additional content by WARC staff

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