Indian film industry taps new revenue streams

Indian filmmakers are targeting the country's burgeoning cable and satellite television sector as well as the Internet for new sources of income to recover from a two-year slump, experts say.

The sale of cable, satellite and music rights, as well as DVDs, Internet and mobile phone downloads, is emerging as a potential money-spinner for studios keen to offset losses at the box office.

A new Hindi-language comedy "F.A.L.T.U" (Useless), which was released on Friday, is offering its entire movie soundtrack for download. The film will also be available on the Internet outside India.

Last year, another Bollywood movie, "Striker", was premiered overseas on the video-sharing web site YouTube.

Until recently, Indian filmmakers could be virtually assured of high box office returns, with cinema one of the few forms of entertainment and movie-goers traditionally loyal to big name stars.

But a combination of poor quality content, rising overheads, the global economic downturn and an increase in other ways for people to spend their spare time and hard-earned cash has hit studios in the pocket.

Overall revenues fell 20 percent in the last three years from $2.3 billion in 2008 to $1.85 billion in 2010, global consultancy firm KPMG said in its latest report on India's media and entertainment sector.

"In the future, the contribution of local theatrical revenues to the overall industry is expected to reduce, while the share of cable and satellite rights is set to increase," KPMG's media and entertainment head Rajesh Jain said.

"In the coming years, greater impetus is expected to be levied on leveraging alternate marketing and distribution platforms and tailoring content to suit changing consumer preferences," he added.

Studios have previously sold satellite television rights to multiple broadcasters, allowing viewers to see just-released movies which may not have fared well at the box office.

TV rights to Bollywood superstar Shah Rukh Khan's upcoming sci-fi superhero movie "Ra.One" have reportedly been sold for $8.88 million to Star India, months before its release.

The satellite rights for last year's blockbuster "Robot", starring South Indian star Rajinikanth, were sold for $5.5 million.

Combined with home video and audio rights, the maker of "Robot", Sun Pictures studio, is thought to have made $41.6 million, virtually covering production costs even before bumper theatrical sales were counted.

According to KPMG, cable, satellite and ancillary streams could make up nearly 20 percent of total revenues by 2015 - nearly twice the level seen in 2009.

Some analysts estimate the figure could even be as high as 40 or 50 percent.

Television is seen as particularly lucrative, with the number of channels mushrooming from just five in 1991 to 550 by August last year.

In 2010, the sector was worth $6.6 billion and had nearly 600 million viewers.

Some 138 million households now have television sets, making India the world's third-largest TV market behind China and the United States.

The country is also poised to become the world's largest direct-to-home (DTH) satellite pay TV market by 2015, with a projected 70 million subscribers.

Bollywood stars in particular have been quick to exploit the growth in television, increasingly appearing as gameshow and reality show hosts or simply to promote their latest films.