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Big-budget films are still viable
August, 06th 2009

From movie budgets to celebrity endorsements, all the segments in the entertainment industry have experienced a correction in budgets and costs due  to the economic slowdown, says Percept Holdings vice-chairman and managing director Harinder Singh. He spoke on the entertainment industry. Excerpts:

How do you see the Indian movie industry restructuring its cost structures given the economic slowdown? Will big budget movies go out of fashion?

Overall, budgets of films are usually divided into four broad categories talent cost, shooting & related costs, post production & special effects, and advertising & promotional spends. Over the past few years, budgets escalated as talent costs rose. That is now getting corrected due to the slowdown; budgets are now lower by 30-40%.

Big budget films are still very viable today, provided they are made within a budget of Rs 40-45 crore, rather than of Rs 50-80 crore. Similarly, the marketing and promotional budgets that had risen over the past few years have become more rational.

Time spent on marketing promotions have been compressed to 4-6 weeks, from the earlier 6-8 weeks, thereby reducing marketing budgets by around 30-40%.

How has the slowdown affected media consumption globally and in India, given that it is the most cost-effective entertainment available?

Globally, the entertainment and media consumption even in a slowdown remains constant. However, looking at the multiplex and film pricing, which is almost $7-8 on a weekend, movie-going has become very selective.

Only those movies that enjoy good word-of-mouth, critical praise and production values are being visited. In India, fewer people are going to the cinema halls, due to an increase in piracy, DTH and home video viewing.

Is the revenue-sharing terms between multiplex and movie producers fair? Are we going the Hollywood way?

The arrangement is constantly evolving and the current arrangement is more fair than the previous one. It is yet to evolve like in Hollywood. However, performance-driven profit-sharing is set to be the guiding principle for revenue sharing.

How has the celebrity endorsements and talent management business fared in tough times? Have the rates charged by celebrities rationalised?

This business has gone through some interesting learning curves. Clients who represent the demand side of the business often treat celebrity endorsements as a tertiary and 'good to have' persuasion in their marketing mix.

There was a notable squeeze and pressure on the commitments from this end. On the contrary, celebs are 'well-to-do' individuals representing the supply side of the business, and were in no hurry to drop their rates and that created a huge price mis-match to push the business in a corner initially, till better sense prevailed.

Given the above issues and the transactionality of the business, it was one of the first to get into the slowdown mode and would probably be the last to get out of it. In a nutshell, this business is on the most volatile end of the communication/entertainment business block.

You handled the Congress media campaign during the general elections. Do you see political campaigns getting more professional and organised?

There has been a marked change in the political campaigning over the past few years and particularly for the last elections. Political brands recognised that 42 million new voters were added since the last general elections and that half of India's population of 1.15 billion are below 25 years.

TV and print continued to be the primary medium for political advertising this time too. But, inspired by the success of Obama's campaign on the internet, political parties used new media such as internet, mobile, blogging and social networking sites.

However it was just a start. Other than the Congress, and to some extent the BJP, none of the other political parties used advertising and media in an organised manner. The Congress campaign right from research, development, planning to media, creative execution and monitoring was extremely professional and thorough.

We also used research to help us understand the effectiveness of advertising. What political brands have to learn, of course, is that brands cant be built only at election time. Political brands, much like other brands, need to be built continuously over a period of time.

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