A silent revolution is taking place in the world of cinema while the television industry has tied itself up in knots over conditional access system (CAS).When the constituents of the TV industry - broadcasters, cable operators and multi system operators - finally "wake up", the consumer could well be spending a larger share of his "money for jam" in outdoor outings to entertainment complexes, multiplexes and even upgraded versions of theatres. After all, in this "Attention Economy" (a phrase coined by media personality Amit Khanna) you can either be "quick or be dead".

As Hollywood‘s star director of Indian origin Manoj Night Shyamalan would say, "The signs are all pretty visible" (or should we say ominous). After a dismal 2002, the first six months of the current year 2003 have seen films belonging to different genres making hay at the box office - Tips‘ Ishq Vishq (teen romance); Pooja Bhatt‘s Jism (a sensuous Bipasha Basu was a perfect foil to the brilliant debut making John Abraham); Suneel Darshan‘s Andaz (how the heck did this one become a hit?); Ram Gopal Varma‘s Bhoot (spine chilling multistarrer with Ram Gopal Varma‘s magic touch); and UTV-Dreamz Unlimited‘s Chalte Chalte (Shah Rukh Khan brand of "I love you I love you not" saga).

Film distribution and marketing consultant Shonjoy Bhattacharjii had predicted that the film industry would get its act together right at the beginning of this year.

Compare this with the television business: no new hits in the first half of the year; shows such as Karishma - The Miracles of Destiny that could possibly have changed viewing habits are stuck in legal limbo (allegedly sabotaged by "outside forces"); others such as Kuch Diil Se haven‘t been properly promoted; Kyunki…and Kahaani were thrown off their pedestals before Kyunki .. managed to reinstate itself in the first week of July; others such as Balaji‘s Kahaani Terri Merri were aborted midway because they bombed at the ‘home box office‘.

Literally, a lot has happened in the film distribution sector since December 2002 - just about the time when the Cable Television Networks (Amendment) Bill was passed in the upper house of the Indian Parliament. In fact, CNBC‘s "The Entertainment Industry: Taking The Big Leap" brainstorming session held on 19 December 2002 in Mumbai, resulted in a lot of soul-searching amongst film industry experts and heated debates involving the reasons for 2002 being billed as the year of ‘no-show‘ business.

The film fraternity has taken up the cudgels whereas the television industry constituents have passed their time either in pro or anti-CAS lobbying and little else. The cinema industry started the process of cleaning up its act and while the film industry has declared its intentions of "lighting up numerous screens", the television industry is talking of "blackouts".

On the day (11 July) when Mumbai based cable operators threatened to conduct blackouts if the monthly FTA (Free to Air) bouquet charges were not raised to Rs 150, the Subhash Ghai promoted Mukta Arts entered into a joint venture with the Manmohan Shetty promoted Adlabs to form a new company called Mukta Adlabs Digital Exhibition that would seek to upgrade 400 "B" class theatres across India within the next year. Similar efforts will be definitely made by groups such as the Subhash Chandra owned Essel group (including ventures such as Fun Republic), INOX, Shringar Films amongst others. There are media reports that a whopping Rs 20 billion will be invested in 78 multiplexes around the country.

Reliance Entertainment chairman Amit Khanna calculates that 11,000 odd theatres in India with an average seating capacity of 700 seats indicated a total of 35 million viewing audiences per day and a revenue of Rs 46 billion.

Film distribution and marketing consultant Shonjoy Bhattacharjii says: "The greatest change and opportunity in the Indian market is the vast improvement in the exhibition sector. The market share of cinema as a medium has shot up due to improved infrastructure in the existing theatres and advent of multiplexes. This trend is more prominent in the big cities at present but will eventually filter down to the ‘B‘ and ‘C‘ markets. And then the revenues will improve by leaps and bounds."

WPP Media owned BroadMind national director Suku Murti has already given a warning about the declining share of traditional media: "Many clients and brand custodians are asking traditional media teams to evaluate non-traditional media streams or new economy media. Recent times have witnessed the emergence of new ways to connect to the consumer - be it through films, or music, or sports, or syndication rights, or promotions, or interaction. the mass media component of the ad pie could be 50 per cent or less in the next three to five years."

Amit Khanna states that the growth rate of the film industry compares favourably with that of the IT sector- it has been around 11 percent year-on-year. But what about the TV industry?

TV industry growth would be under pressure due to CAS rollout over the next few years:
In 2001, the entertainment industry in India was estimated to be around Rs 128 billion ($2.5 billion - a FICCI-Arthur Andersen estimate). In terms of total revenues in 2001, the size was around Rs 94 billion of which TV broadcasting accounted for Rs 36 billion. The film industry was adversely affected in 2002 and recorded a loss of Rs 3 billion on gross revenues of Rs 39 billion.

The size of the TV pie has grown albeit marginally in 2002-3 despite the fact that in 2002, the entertainment industry was growing at a rate ahead of the GDP. In fact, the entertainment sector is one of the few industries which continued to do well even in a recession economy.

During the CNBC seminar, KPMG‘s entertainment business head and executive director Rajesh Jain revealed that the television pie constituted 62 per cent - whereas films were 34 per cent of the entire chunk in 2002.

But Ficci estimates are favourable:
A Ficci Frames 2003 report states that with total revenues of Rs 111 billion, television now accounts for over 60 per cent of the entertainment industry‘s revenues. The sector is expected to continue its rapid growth at a CAGR of 21 percent and achieve an annual revenue of Rs 292 billion by 2007.

However, despite the Ficci Frames estimates, the major constituents haven‘t considered the ground realities. Media Reach Research vice president Kapil Anand warns of the disintegration of the cable distribution business in the B,C class markets: "Larger Indian broadcasters are not bothered about this. There is a different cable TV mechanism that exists in peri urban areas that are on the outskirts of towns and cities. Most of the cable TV control rooms that had mushroomed in these areas in the early 1990s when channels were FTA have died a natural death as channels turned pay. At present, the control rooms in the towns or cities cater to anything between 25-45 villages on the outskirts."

It is critical that the television fraternity will have to set aside their individual differences and work unitedly for the betterment of the industry in order to attain the above mentioned growth projections. Observers say that the individual prices of pay channels are on the higher side because the broadcasters aren‘t quite sure of their reach in the smaller towns and rural areas.

Film industry poised to touch Rs 93 billion by 2007:
A Ficci report during its annual media summit Frames 2003 mentions that the film industry is expected to grow at approximately 19 per cent annually to reach Rs 93 billion by 2007.

Going forward, exhibition is likely to move away from traditional stand alone, poorly maintained theatres to high quality multi-screen theatres concentrating on offering an enhanced cinema viewing experience, thus providing a competitive edge over other formats and increasing footfalls in theatres. Consumers‘ willingness to pay more for such an experience further helps in increasing revenues.

The government has come forward with various tax rebates to provide incentives for growth but with as many as 200 multiplex screens planned in the near future, a short term over capacity is expected that might lead to consolidation.

In addition to this, film industry observers say that there are other factors:
State government sops: Certain states have been encouraging the exhibition sector to adopt the latest technology by giving holiday taxes and other subsidies to promote cinema and its economy. A good example is UP, which has more than a 1,000 theatres. The state has given a 100 per cent tax exemption to multiplexes and 50 per cent for updating the old theatres. The same response of updating their cinema halls has also been shown by Bengal, which has 700 theatres in the state.

Enhanced marketing efforts: The fact remains that the Indian cinema industry has always marketed its products much better than the television industry. The film industry has realised the need for specialised marketing outfits and consultants. Producer-directors such as Ram Gopal Varma, Yash Chopra and Subhash Ghai are amongst the savvier lot. The multimedia spin that these film makers give their film during the pre-release stage has definitely helped films get a great initials.

Companies such as mobile2win, hungama.com, contests2win.com and ENIL‘s indiatimes.com have cashed on the film mania to a greater extent and do lesser TV-related promos. Even lesser known English films manage better tie- ups. "Paramount‘s movie releases will now be pre-promoted using the wireless medium as a vehicle. We have already started this mode of marketing with Paramount‘s new film How To Lose a Guy In 10 Days," Mobile2Win vice president (sales and marketing) Rajeev Hiranandani was quoted as saying in media reports.

"SMS contests are interactive and instant and many people who generally do not participate in contests get hooked on to this medium. We have tied up with Mobile2Win for conducting wireless promotions," Paramount Films of India marketing manager Jacinto Fernandes was quoted as saying in media reports.

The distribution and exhibition scene will spearhead growth even as several ‘distributors‘ have started ‘producing‘ films:
Real Image Media Technologies director Senthil Kumar, who recently launched Qube Cinema High Definition Digital Cinema Player, says: "A cinema outing has become a social outing and experience. In the US, prints are still in vogue as the distribution chain has a capability to put out up to 4000 prints; 3000 of these prints eventually make their way to other countries in the world. In India, we cannot have worldwide releases for every film as we don‘t have a huge export market. In Europe, there is a similar situation as what prevails in India and they are looking at other options."

Senthil also says that the availability of sophisticated equipment at cost effective rates will also stimulate growth: "The Indian market is very unique and vernacular language plays an important role here. I feel that we have lost of opportunities as good vernacular language films haven‘t been shown to discerning audiences or even metro audiences due to lack of simple technological advancements such as multilingual sub-titling. With concepts such as Qube cinema systems, these issues will be sorted out."

Senthil would know his facts because the company has revolutionised the industry by introducing the generic concepts of digital cinema sound and non-linear editing in India.

Qube Cinema, Real Image‘s High Definition Digital Cinema Player is a uniquely powerful and flexible system for digital cinema designed and manufactured in India to achieve a very attractive price point of just Rs 500,000. The projector models and lenses used would vary based on the theatre and screen sizes.

B and C class towns‘ theatre owners will earn returns on investments. New machines such as Qube Cinema also has subtitling facilities in multiple languages and can create new markets. It can also deliver digital advertising. There could be ads (condoms or aphrodisiacs) that are shown during the night shows.

Mumbai based distributor Manmohan Shetty‘s company Adlabs has got a great reponse for its projector system that costs around Rs 750,000. Shetty is on a deal making spree and has recently negotiated deals with shopping malls (Runwal group‘s R Mall, Shringar-Ajmer‘s City Mall in Mumbai) as well as with existing theatre owners (the historical Metro theatre in south Mumbai is rumoured to have been brought at an estimated cost of around Rs 100 million).

Meanwhile, Shetty is also producing seven films under the banner of Entertainment One which he describes "as a division of Adlabs". How many MSOs in the television business have ventured into producing quality content?

"Sooner or later, film distributors will buy equipment and lease it out to theatre owners in smaller towns. Those who distribute around 100 prints and release 15-20 films can save money on them and recover their investments in two years flat. In the near future, I see distributors and exhibitors buying equipment and leasing it out to the theatre owners in B and C class towns. Many of these theatre owners in B and C class towns are finding it difficult to survive or make a profit," says Senthil Kumar of Real Image Media Technologies.

A strong willed effort to curb losses due to piracy:
The film industry has proactively appointed investigating agencies and sought the help of enforcement authorities to curb piracy. The digitalisation of the chain will further simplify matters.

Real Image Media‘s Senthil Kumar says: "Digital Rights Management and security features make futuristic concepts such as Qube Cinema systems a very secure platform for movie screening. The system only allows authorised players to decode content and it allows start date, end date and number of plays to be controlled and monitored. This means that the theatre owner cannot show any film more than a specified number of shows."

"Also, the data from the central server can keep tabs - or should we say invisible eyes - on the theatre owners‘ activities. For instance, the Qube system watermarks the content to indicate player serial numbers and play dates and time so even the source of a pirated copy made using a camcorder in the theatre can be uniquely identified. The Real Image system offers options to enable accurate reporting and daily As-Runs logs sent to the central server will bring unauthorised shows to an end," Senthil says.

There are some media companies that have latched on to the changing tide. Media companies such as Zee Telefilms, UTV and Nimbus Communications have stepped up activities to increase exposure to feature film production, distribution and exhibition. These companies are no longer merely dependent on revenues from the television business but are staggering their risks.

Film distribution and marketing consultant Shonjoy Bhattacharjii says: "Some broadcasters contribute nearly 20-30 per cent of the production costs by buying the rights of the films. Some broadcasters have also ventured into various aspects of the film chain - similar to models of companies such Time Warner."

The message is very clear - when you can‘t beat them join them! It is time that the various constituents of the television industry latch on to the ground realities and move accordingly.

As research specialist Prashant Sanwal says: "Globally, it is an accepted norm that television is always strong in those areas where the film industry is strong. Consider a place like California where both cinema and television are strong as against South America where cinema is weak and therefore there is dearth of original TV programming." Going by this logic, if the film industry distribution improves the situation, the allied television industry in those regions should also benefit. Amen!