Two factors ? the global meltdown and pricing of stars ? may impact the profitability of Bollywood. Currently pegged at around $2.9 billion according to some estimates, the film industry is slated to grow at a CAGR (compound annual growth rate) of 16-20%. But the overall slowdown in the global market is beginning to worry the top players.
Says Sandeep Bhargava, chief adviser of the London-AIM listed Indian Film Company: ?It?s going to impact the Indian entertainment industry in some way. We don?t know yet whether the impact will be small or major.?
?The Indian film industry is growing, but it could have grown faster,? points out Rajesh Sawhney, president, Reliance Entertainment. The other issue that?s causing concern to most of the major production houses is the asking rate of stars which is rising much faster than the revenues.
According to analysts, the entire market appears to be in ?a state of high exaggeration?. ?With stars like Akshay Kumar charging Rs 30 crore a film; people like John Abraham asking for Rs 10 crore and stars like Katrina Kaif seeking Rs 1.5 crore for an item number, there is a huge disbalance and a correction is coming,? says an insider. ?Pricing is an issue. Prices of key talent have increased so much that it will impact profitability,? admits Sawhney. Stars are perhaps also asking for the moon because there?s such a shortage of creative talent. ?Very few have demonstrated ability to create hits. We only have one Shah Rukh, one Aamir, one Hrithik and one Abhishek. Naturally, the few who can carry the film on their shoulders are asking for more,? he adds.
Not surprisingly, some production houses such as UTV Motion Pictures are focusing on a mix of projects to keep the revenues coming. Says Siddharth Roy Kapur, director, UTV Motion Pictures: ?Typically, 25% of our films are with a large star cast, 50% have a medium budget and 25% are low budget films.? Currently, says Shailendra Singh, joint MD, Percept, ?The talent fee is unrealistic but still controls the business.? Singh hopes that moving forward, ?good concepts and scripts will be the key driver, not stars.?