Inflation impacts cost of film production

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: will not be impacted because of inflation, but maybe the ones that are going to be launched will require a bit of reshuffle in the budgeting.”

Singh points out that when you are making a film with a certain budget, there is always a component to take into account the escalated costs. “This is normally there in all aspects of production, distribution or marketing…. But if the costs escalate, then various kind of solutions like tie-ups, sponsorships or partnerships are brought in to control the costs,” he says.

However, inflation hits all the players in the chain from pre-production to exhibition. The producer bears the burden as he has to bear the costs as well as sell to distributors, as Sampat of Cinemax India points out. “The producer has to bow to the ever-rising demand of cost of production. He, in turn, expects a good return from the distributor, who asks for more from the exhibitor.”

Ask the players in which regions have inflationary pressures hit the hardest and most say it has impacted urban centres more than the rural. Says Saminathan: “In urban centres, the inflationary expectation itself creates some kind of a resistance to spending.”

Patnaik believes tier-2 and tier-3 cities or towns are more affected, “as the pressure on spending on leisure is felt more at that level”.

All this brings us to one key question: will inflation impact growth in the film industry? Says Singh: “Growth will not really be affected as it’s just a small phase of inflation until now. One or two blockbusters will bring back the crowds and the enthusiasm to the theatres.”

Saminathan is not so optimistic. “The film industry may not grow at all if inflation continues the way it does.” The Pyramid Samaira MD is already talking about consolidation. “Small players may not be able to sustain and sell out to bigger players,” he adds.

Patnaik of Religare says the film industry is expected to grow at 13% compounded annual growth rate (CAGR) for the next five years, but admits that any increase in inflation from these levels will marginally impact growth.