Big actors take a big chunk of Bollywood profits, but will recent flops lead to content and revenue correction?

• From Ranveer Singh’s Jayeshbhai Jordaar to Ranbir Kapoor’s Shamshera, recent Bollywood movies are bombing at the box office.
• Bollywood producers currently pay fixed income and about 55-60% profit drop to major actors like Aamir Khan, Akshay Kumar, Shah Rukh Khan, etc.
• Aside from the theatrical collection, much of Bollywood’s revenue also comes from digital streaming rights and satellite before the film’s release, which is being recast.
• https://londonbusinessblog.com/ India speaks with analysts to find out whether successive movie flops will affect the revenue model and purchase of movies by streaming platforms.

Bollywood’s recent big-budget releases like Lal Singh Chaddha, Shamshera, Prithviraj Chauhan and Ek Villain Returns have disappointed audiences, but the industry has always had its table profits to fall back on.

Table profit refers to the large portion of Bollywood’s revenue from the sale of digital streaming, satellite broadcasting rights and merchandise before the film is even released in theaters.

However, after successive flops, Bollywood’s films can lose their luster to bidders, affecting table winnings. Experts believe that streaming platforms and TV channels can become picky about the movies they buy and cut back on spending hefty amounts.

Gautam Jain, partner at Ormax Media, said how the approach could change: “There would now be stronger connections with box office performance. Even the smaller films that don’t have big stars or directors in the lead role, which are the direct-to -streaming route will be prompted to go the theatrical route and then return to streaming.

Elara Capital’s senior VP – research analyst, Karan Taurani, told https://londonbusinessblog.com/ India that currently about 90-95% of Bollywood movies are pre-sold with a few clauses.

“If the collection number exceeds a certain threshold, producers are paid more. If it falls below a certain threshold, OTT platforms pay less to producers.”

After a string of big budget flops, producers may need to prove themselves at the box office first.

“The OTT platforms pay a lot of money for these films. Now that the content is not doing well, they will become stricter in terms of the budgets they invest in. They will have to become selective and approach it in a different way,” Taurani told https://londonbusinessblog.com/ India.

Are big Bollywood stars losing their shine?

A Bollywood film with established stars could be counted as a surefire hit at the box office. Not anymore. Movies featuring films like Aamir Khan, Akshay Kumar and Salman Khan seem to be losing their appeal, forcing producers to rethink their fee structure.

The recent big-name releases have disappointed critics and audiences to such an extent that even the production costs could not be recouped.

“Every recent film has seen a loss of almost 40-50% of their production costs because they were unable to recover (the costs) because theatrical performances were a setback,” Taurani said.

Despite box office losses, big stars take home 55-60% of profits and a steady income, analysts say.

“Higher talent fees will remain for a while. But then again, not many studios will be willing, or producers will now be willing to go through with those high fees, given the fate of the last few films at the box office,” Jain told https://londonbusinessblog.com/ India.

This is likely to push the industry toward greater adoption of a revenue-linked payment model for actors, Taurani said. “Most actors already have a flat fee plus a revenue share. I think the flat fee component could go down, where they will want to go for more web-share models.”

However, famous actors have not lost all their luster, as evidenced by the hefty additional revenue their films have received from streaming platforms and satellite channels.

To illustrate, the Aamir Khan starrer Lal Singh Chaddha, according to Elara Capital, was made in the range of ₹200-250 crore and has only collected about ₹70-80 crore in theaters but is believed to be in black after his table win.

“Perception [of big actor films] might be negative, but the kind of money their movies are pulling on non-theatrical platforms is huge. Akshay Kumar, Salman Khan or Aamir Khan, most of these great non-theatrical acting movies are pulling huge amounts of money. Aamir Khan’s non-theatrical film is already a plus film, they already have that money on the table,” says film critic Bharti Dubey.

However, with poor box office collections, Dubey said correction will be inevitable. “Whether it’s production, whether it’s actors, correction is the need of the hour,” Dubey told https://londonbusinessblog.com/ India.

Source: Elara Capital When Bollywood songs skip a beat

Earlier, Bollywood songs were also a huge draw for music streaming platforms. Now they are also falling flat, further affecting the industry’s annual revenue collection.

“Music is a section that has taken a beating in recent years for not doing well with the music. People don’t pay attention to music. It used to be a huge chunk of revenue, which isn’t there now and needs to be revived,” said Dubey.

Analysts think the roles could still turn for Bollywood. The industry has pinned its hopes on upcoming releases like Brahmastra, Circus, Ram Sethu and Thank God to bring about a turnaround, but a recovery seemed difficult, Jain said.

Dubey believes 2023 will be the year of recovery for Bollywood.