[icernet] Time for a retake for film firms

[Arul Selvan]

It is a complex business, and only venture capital comes close to it in 
terms of risk. The film industry launches hundreds of films every year, 
but in the end only a few of them prove profitable. Like the 80:20 rule, 
which says that 80 per cent of the profits come from 20 per cent of the 
business, a handful of films contribute to the bulk of the industry's 
profits. The imponderables are many, as the success of a film depends on 
its appeal to viewers whose tastes and preferences keep changing every time.

The Indian film industry is one of the largest in the world, with over 
1,200 movies released every year. Despite this, the industry shows a 
dismal performance in terms of profitability. The industry recorded a 
loss of Rs 300 crore (Rs 3 billion) on gross revenues of Rs 3,900 crore 
(Rs 39 billion) last year, which itself was down 12 per cent from the 
previous year. Mainstream Hindi films were worst-affected and accounted 
for almost 90 per cent of the industry's losses on gross revenues of Rs 
1,650 crore (Rs 16.50 billion). Hollywood, on the other hand, produced 
about 225 films and earned a handsome profit of $9.3 billion. So what 
really ails the Indian film industry? Industry experts feel that the key 
reason for the dismal performance is its high cost of production and 
continued dependence on high-cost debt from private financiers.

Source:
http://www.rediff.com/money/2003/apr/21spec.htm