Concept of Box Office in India

Indian Box Office is perhaps the most important thing in the life of an Indian Actor. It prides in being capable of turning the fate and fortune of Bollywood Actors. Bollywood Box Office has power to leverage an Actors reputation and position in Indian Film Industry.  It is undeniably one of the most popular terms used in Business of Bollywood. Thanks to the power and supremacy the Indian Box Office wields. Since all of us are avid watchers of Indian Films and passionate admires of Indian Cinema, we always show are curiosity in oodles to known each and every single thing that it takes to become a true Bollywood Lover. We all agree that the Box Office is an important aspect of Bollywood; even then we possess only little knowledge when it comes to describe how Box Office works in India. Concept of Box Office in India is not as vague as it is made out to be. The way Indian Box Office works has changed and evolved a lot over the past few decades. To get comprehensive information as to how the films make money at the Ticket Windows of Indian Box Office, read the entire article below.

Budget

It is the total amount of money that goes into the production of the film. Budget of the film includes salary of the entire cast and crew, along with the travel costs of shooting at national and foreign locals. This money comes from the pocket of the producer. The Producer is an individual who invest his money on movies making. In case, a film is being produces by a Production House, then the entire budget will be taken care of the Production House. Now, the Producer or the Production House can either release the film by him or can sell the whole movie to a third-party.

Acquisition Price

The Price at which the third party acquires the film rights is known as Acquisition Price. Acquisition Price for the third party is exactly what a budget is to the Producer of the film. The third party invests into the film as Acquisition Price.  The Average Acquisition Cost depends on the total budget of the film that has been invested in its production. A distributor of the film plays a vital role in marketing, exhibition and promotion of the film through theatrical release. Any film producer and production house for that matter cannot hope to produce and market his film on his own. In this scenario, the distributor comes into picture. He has the right resource and aptitude to attract the greater audience and market the film with right strategies. The distributor also knows the pros and con of the market and knows how to mass exhibit the film at the Indian Box Office.

Total Investment

Apart from infusing a whooping amount of money into Film Production, the Producer also invests a handsome amount of money into the Print & publicity of the movie. It varies from laks to crores. In some cases, publicity cost may be around 1/3 of the entire budget. For instance, Ra.One, one of the highly publicized Bollywood flick, invested a whopping 50 crores into this. Now, we have a total cost of the film, which includes Budget + Promotion and Publicity. This is the money which needs to be recovered after the film hits the Box Office to witness its fate.

Theatrical Revenue

Theatrical Revenue starts coming in as soon as the film hits the Multiplexes and Single Screens Theaters across the country. Theatrical Revenue has been categorized into three main categories. These include Gross Collection, Net Collection and Distributer Share.

Gross Collections: The total money that comes from the sale of tickets on the ticket window across all circuits is called Gross Collections.

Net Collections: The Government levies the Entertainment Tax of 30% on the exhibition of a film. This is an average percent of Tax all over India on Gross collections garnered by the film. Tax rates vary from 0-50%. After Tax deduction, the amount left is called Net collections.

Distributor Share: Multiplexes and Theatres keep a certain share of the Net Collections with them. The rest amount is given to the film distributors. The Money which is received by the film distributor/producer is called the Distributor Share. This is the money from which the budget is actually recovered.

Multiplexes keep around 55% of the Net Collections with themselves as “Exhibitors Share”. Whereas Single Screens keep only around 10-30%. This is because cost of running a film in Multiplexes is much higher than Single Screens. Usually, Distributor Share is 50-60% of the Net collections of the film.

Other Sources

Besides Theatrical Revenue, there are other sources of the revenue generating including Overseas Collections. Overseas collection of a movie depends on how many countries a film has been released in. Other lucrative sources of revenue generation are DVD Rights, Satellite Rights, Music/Video Rights, etc. Recent trends in Indian Films Industry shows that if a film gathers much publicity before its release and is embellished with promising star cast, it could easily fetch the entire or most of its cost through only Satellite Rights. Generally, Satellite Rights contribute as 20-30% of the total source of revenue. Apart from Theatrical Release, Satellite Rights are an important source of revenue and other rights contribute only 5-10%. Advertisements of Brands in the movies also contribute to the revenue generation.

Net Profit

Net Profit = Distributor Share (India+Overseas) + Sale of Rights – Budget Most Films are able to recover costs. But, only those films are called successful which are able to recover by the means of theatrical collections.