Wednesday, 22 February 2012

BOX OFFICE IN INDIA EXPLAINED

There are many accusations that box office in India is very obscure and little real data is available but this is not the case today. No doubt it is not an open book as in the West but it is not as bad as it is made out to be. A case can be made that figures were hard to access 10 years ago but today they are more readily available today and most people who track box office in the industry have actual figures.



The accusations of poor box office details available in India mainly come from those who want to throw their perception and they believe as everything is obscure they can give any sort of details and numbers and it will be taken at face value.

When a film is being made the biggest decision is the economics of a film and to assume that these multi crore decisions are made without knowing actual box office collections is ridiculous. Every major production house and corporate tracks box office collections and knows the amount a particular film collected at the box office. Collections today are much easily available compared to what they were ten years ago and today distributors and exhibitors more readily share collections with each other.

If there is a problem with box office figures in India is that exhibitors report nett collections which are the least important figures as the film fraternity is interested in distributor share and for people outside the industry who follow box office collections its the gross collections as nett collections give a false picture when some movies go tax free.


The box office for Hindi films is split into many sectors which the trade calls circuits or territories. The main territories are as follows


Mumbai territory is formed by Mumbai City and Suburbs, Gujarat, parts of Maharashtra, parts of Karnataka and Goa
Delhi/UP territory is formed by Delhi City and the states of Uttar Pradesh and Uttaranchal Pradesh
East Punjab territory is formed by the states of Punjab, Haryana, Himachal Pradesh and Kashmir.
West Bengal territory is formed by the state of West Bengal including Kolkata City.
Bihar territory is formed by the states of Bihar and Jharkhand and parts of Chhattisgarh
CP Berar territory is formed by parts of Maharashtra, parts of  Madhya Pradesh and parts of Chhattisgarh.
CI Territory is formed by parts of Madhya Pradesh.
Rajasthan territory is formed by the state of Rajasthan.
Nizam/Andhra territory is formed by Hyderabad and Andhra Pradesh and parts of Maharashtra
Mysore territory is formed by parts of Karnataka including Bangalore.
Assam territory is formed by the state Assam and surrounding states.
Orissa territory is formed by the state of Orissa.
Tamil Nadu territory is formed by the state of Tamil Nadu.
Kerala territory is formed by the state of Kerala.

NETT GROSS AND GROSS
The amount collected at the ticket window is taxed in India. This tax is called entertainment tax. These taxes vary from state to state. Nett gross figures are always after this tax has been deducted while gross figures are before this tax has been deducted. The entertainment tax rate has come down a lot in practically all the states since 2003. The highest rate today is in Uttar Pradesh of 60%. The gross collection of a film at the present time (2010) can be anywhere from 30-35% higher than the nett collections today depending on where the collections are coming from.

DISTRIBUTOR SHARES
The distributor shares are what the industry is interested in as they are the bottom line. The distributor shares are nett gross minus theatre rentals. The theatre rentals vary. Multiplexes give 50% in week one, 42.5% in week two, 37.5% in week three and 30% thereafter to the distributor. If a film collects 17.50 crore nett from the six major chains then the first week and second week share is 52.5% and 45% respectively. Single screens are mainly on rental for big films so if a film generates big collections then 80% or even 90% of that can be the distributor share. It all depends on how ahead the collection is of the theatre rental. Smaller films find it hard to get a release at single screens as exhibitors know that the film may even struggle to collect the theatre rental. So single screens exhibitors are very choosy when it comes to showing a smaller film at their theatre.

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