According to industry estimates, overall production budget for films is expected to decline by 30-40%
As production of films has been halted, the movies industry is the latest to join the bandwagon to deduct salaries in an effort to reduce operational cost. According to industry estimates, A-lister actors including Ranbir Kapoor, Ranveer Singh, Deepika Padukone, who usually charge anywhere between Rs 20 crore to 35 crore, per film, is believed to have taken a 40%-50% cut in the price, while actors such as Ayushmann Khurrana, Tapsee Pannu, among others, have slashed their rates by 20%-30%. These set of actors charge anywhere between Rs 5 crore – Rs 10 crore. “Film industry is also facing budget restraints problems as we don’t know when theatres will reopen but the cost of production will keep on increasing as long as the movie is on hold. So I think the pay cut is definitely the new normal and negotiations are already underway, ” Taran Adarsh, film critic and trade analyst, told BrandWagon Online.
When contacted, popular production companies owned by Karan Johar, Rohit Shetty, remained unavailable for comment.
Meanwhile, megastars such as Shah Rukh Khan, Salman Khan and Akshay Kumar, among others who also co-produce their films are renegotiating the deals. These actors usually charge between Rs 40 crore to Rs 60 crore, in addition to signing a profit-sharing agreement. Typically these megastars walk away with 40%-50% of the profit earned from the box collected. In the current situation, these actors are now renegotiating where instead of charging a fee, they are being allowed to keep just the profit earned by their films. For Komal Nahta, film critic and trade analyst, it all depends on the budget of the movie, the actor and the producers, “The film industry does not work on a fixed standard and hence where an actor might take a 10% salary cut for one movie, he might just take a 40% cut for another or decides to completely forgo his salary and only take compensations from the profits of the film.”
Recently, the Producers Guild of India issued a statement highlighting how the interest costs are mounting on amounts raised to fund films, which producers have to bear. To further reduce cost, production costs which include rental, equipment cost and salary of technicians have also been reportedly reduced by 5%-10%. “The film industry works on a gig economy structure, Majority of the people working on a movie are hired as a freelancer rather than on a payroll. If the production comes to a halt, they don’t get paid,” Jehil Thakkar, partner, Deloitte.
Even as the Producers Guild of India and the Government of Maharashtra have allowed filming with guidelines in certain states, it would still take about a month for production to resume. However, production firms may not opt for lavish settings anymore, thereby reducing the overall budgets of films by 30%-40% – as right now the focus is on to staying afloat.