Even though 3 Idiots released with a big bang in December 2009, netting Rs 244 crore worldwide theatrically, the satellite rights for the Aamir Khan-starrer weren?t sold till May this year, with Multi Screen Media acquiring exclusive TV rights for the film for five years in a deal licensed through Eros International. But while in 2009, few movies were pre-sold for TV broadcast, this year has seen a huge shift, with satellite, music and home video rights of most films, especially big films, sold months prior to their release. For example, this year, Colors picked up the rights for Farah Khan?s Tees Maar Khan, set for a December release, six months prior to the launch. The satellite rights of My Name is Khan and Raajneeti (Star), Kites, Raavan, Golmaal 3, Dabangg, Guzaarish (Colors) were all pre-sold.
?If the star cast is established, and so is the banner, satellite rights of those films are being picked up early,? says Sneha Rajani, EVP and business head, Max. ?But our strategy is that we are a little cautious,? she points out, adding that Max bought the rights of 3 Idiots post-release. ?But we have picked up the satellite rights of a couple of films that will release in the second half of next year,? she says.
Industry sources say satellite and other rights of films that are slated for a 2012 release are already being negotiated and bought.
Analysts say with established studios, like UTV and Eros for example, announcing its slate of films for the next 18-24 months, it?s easier for broadcasters and other new media to buy out the rights well ahead of the release date and plan their marketing, promotions and advertising strategies months in advance.
While Max is clear that it will buy the rights of only those films that have moved at some pace?whose technical crew is lined up and shooting on?some broadcasters are also buying out the rights even before the film is on the floor.
?Last year there was a lull and even two-three years back, satellite rights were not as big a revenue source. But now there is definitely a reduced dependence on theatrical rights, while there are a lot of new revenue streams opening up?from satellite, music, home video to mobile downloads, gaming and merchandising,? says Ashok Rajgopal of Ernst & Young.
?The satellite rights of most big films over the next two years have already been pre-sold,? says Amrita Pandey, VP, international distribution and syndication, UTV Motion Pictures. ?It makes sense for both parties. We know our movie slate well in advance and selling off some of the rights pre-release de-risks the business; for broadcasters; it?s a win-win to buy early so that they can plan their screening strategy well in advance,? she adds.
?Our acquisitions are aggressive,? says Kamal Jain, CFO of Eros, ?but we are not buying rights of movies in the Rs 100-crore range, preferring to stick to the Rs 40-60 crore budget movies.? Eros, which plans to invest Rs 900-Rs 1,000 crore over the next 18 months, has already secured 80% of its costs by selling satellite and other new media rights.
?The satellite rights are now the second-biggest contributor to revenues,? says Gaurav Gandhi, chief commercial officer, Viacom 18 and head international business, ?and prices have doubled from the 2007-08 levels.? Industry insiders say a hefty sum of Rs 30-35 crore was paid for the TV rights of 3 Idiots, but films released this year haven?t got such a high price for satellite rights. ?But prices have moved up significantly in the past three to four months,? points out Rajani.
?The 3 Idiots kind of deal won?t happen pre-release,? says Pandey, adding, ?when you are buying a film pre-release, you usually look at a combination of factors, like actors, studio, director, genre.?
?When you buy a slate of movies in advance from a studio, you look at pricing based on average to above average box office performance and the star director credentials. In advance deals you gain on some and lose on some interms of values paid for each film,? says Gandhi. Colors picked up the satellite rights of Dabangg pre-release, and it surprised everyone by having a great run at the theatres. Sometimes, broadcasters pick up movies from producers in a package deal. For instance, when Colors bought the rights for Aisha from PVR, it also bought Ashutosh Gowarikar?s Khele Hum Ji Jaan Se.
Of all the broadcasters, Colors has been the most aggressive in buying film rights, and analysts point out that the channel is stocking up its library, as it plans to launch a movie channel next year.
Is this trend sustainable? Eros? Jain says the Indian film industry is gradually de-risking the entire model. ?We are trying to pre-sell the maximum rights pre-release from satellite to merchandising,? he adds. In Hollywood, 70% of a film?s revenues are secured pre-release, and only 30% is dependent on theatricals. Insiders say in India, over the past six months, the dependence on theatricals has come down to 45%, and the rest has come from satellite (30%), overseas (20%) and others (5%). Max?s Rajani feels that the major part of a film?s revenue should come from theatricals and not the broadcaster. ?The prices are not sustainable in the long run. Right now, the mood is buoyant and gung-ho, but it won?t last beyond a certain point of time,? she points out. Adds Rajani: ?We paid a high price for 3 Idiots, but it can?t be compared with any other film. The film?s TV runs justify and vindicate the price we paid for it.? For the box office, the year has been disappointing so far but for a handful of movies such as Dabangg, Houseful, Rajneeti and Golmaal 3.
However, the producers aren?t complaining if broadcasters are willing to shell out money to buy rights for films months ahead of release. After all, it?s a winning situation for them at least.