Recession fears hit Bollywood

Bollywood braces itself as Indian cinema-goers prefer to hold onto their cash and corporate backers look for guaranteed returns for their money. -- PHOTO: REUTERS

MUMBAI - BOLLYWOOD is tightening its belt in the face of the global economic downturn, as Indian cinema-goers prefer to hold onto their cash and corporate backers look for guaranteed returns for their money.

Producers and analysts say that although the Indian economy has been spared the worst effects of the banking collapse, negative sentiment and fear of contagion have still affected the US$2.1 billion (S$3.1 billion) film industry.

That means more financial scrutiny, particularly after two recent big movies - sci-fi fantasy 'Drona' (Saviour) and the thriller 'Kidnap' - bombed at the box office.

'Some corporates have suffered huge losses and are feeling the cash crunch,' said Bollywood trade analyst Komal Nahta in his magazine Film Information.

'Coupled with this is the recession abroad. That's why the practices of paying unjustified prices to stars and producers and of trading in films are likely to come to an end.' Big name players in Hollywood have been taking an increasing interest in Bollywood in recent years, with Sony Pictures, Warner Bros, Twentieth Century Fox and Disney all signing tie-ups with Indian studios.

Major Indian conglomerates have also tapped into the fast-expanding market, especially lucrative television rights, DVD and video sales and other marketing spin-offs.

But producers are having to think again if they believe funding for their projects will be unlimited and revenue from cinema ticket sales guaranteed, said Mr Nahta.

'Corporates have slowed down and are now going to be extra particular about the films and the heroes they back,' he added.

'Some corporates are reportedly going back on their contracts and relinquishing the rights of films they had acquired when the market was booming. After suffering heavy losses, it's time to become accountable.' Indranil Charkraborty, head of Mumbai Mantra, the film arm of conglomerate Mahindra and Mahindra, said the current atmosphere in the industry was one of 'wait and watch'.

'The fresh funds that were coming into the film industry have stopped now.

They (companies) want to see the outcome of the films that they have invested in before going on with the new projects,' he said.

Film producer Mukesh Bhatt said the recession fears had been exacerbated by the inexperience of many companies that dived into the film industry with little knowledge of its workings.

'The recession is for those new entrant corporate companies in Bollywood who jacked up the prices of actors without understanding the business and spoiled the market,' said Bhatt, who runs Vishesh Films.

'Now many of their films have bombed so they are ducking for cover. They don't know where to go. All their future projects are in limbo.

'Every film has its own audiences and economics. These corporates didn't understand this simple business idea. Now the recession is hitting badly and they have no clue what to do,' he said. -- AFP